Trends in Finance for 2019, Part 3: Leveraging Technology for Smarter Decisions and Reduced Risk
Since 2008, there has been a huge shift in business. Those years were dominated by a recession, but now businesses are dealing with a new world—a new workforce and innovation are the norm–a requirement for every business in every industry is to be a “technology” business.
The role of finance has changed as well and must continue to change to stay in sync. The days of the accounting department sequestered in the back office, working on budgets and reports, are done; today’s finance leaders are the connecting tissue between every department, leveraging technology and data to help guide corporate strategy while keeping an eye on stability and risk.
In this third installment of six blogs, we focus on the tools and technology that are helping financial professionals be more proactive and productive. Be sure to read previous blogs in this series:
Part 3: Leveraging Technology for Smarter Decisions and Reduced Risk
The Push for Big Data
As businesses continue to produce more and more data, the job of managing and analyzing this information is becoming increasingly complex. Financial professionals must identify good data from bad data, useful data from incomplete data – and then make sense of the information, look for trends and insights, and make that information relevant to the leadership team.
CFOs and their staff need the tools to quickly analyze this data in real time. In fact, a recent study by Ernst and Young showed that the top priority cited by CFOs was to get better data analytics for forecasting, risk management, and understanding value drivers.
Another priority for CFOs is managing the data itself, including storage requirements and ensuring the quality of the data collected. In order to make the correct decisions, the financial team needs to ensure they are collecting the correct data.
Artificial Intelligence and Machine Learning
To help in their decision making, CFOs are also relying on Artificial Intelligence (AI) and Machine Learning (ML).
AI uses computers to perform cognitive functions, such as speech recognition, visual identification, and decision making. ML, a type of AI, uses algorithms to identify data patterns and outputs and “learn” to make optimal decisions.
Together, AI and ML are used to automate tasks, including detection, classification, probability, and optimization.
Detection – AI can analyze large data sets to identify patterns, with applications in fraud detection, buying behaviors, and market trends.
Classification – Intelligent systems can also be used to classify data and evaluate correlations between various data sets.
Probability – AI has been used to create data models to quickly test how changes will impact outcomes, such as the affect different prices will have on revenue or how changes to payment terms will affect cash flow.
Optimization – Another use for AI and ML is to optimize processes to maximize profits, reduce errors, or minimize inventory levels at peak times.
CFOs are now expected to offer accurate, proactive analysis rather than simply reporting on past performance. Modern systems are being used by finance professionals to apply AI and ML to their data, resulting in more accurate forecasts of future sales, customer demands, and market fluctuations.
Increasing Operational Efficiency
Modern intelligent systems are also helping businesses automate processes to cut costs, improve quality, and increase productivity. Intelligent systems are being used to automate many financial tasks as well, such as reconciling the general ledger, automating invoicing, evaluating risk, and performing audits.
These increases in operational efficiency have the additional benefit of reducing the time financial staff spend on routine tasks and applying themselves to more valuable work, such as predictive forecasts and strategic insights.
Financial professionals need modern tools to produce the strategic insights for the business to remain competitive. AKA can deliver the technology necessary to gain real-time visibility across your organization, leverage artificial intelligence and machine learning to make smarter decisions and reduce risk, and automate workflows to help your staff be more productive.
Stay tuned for more blogs in this series. Part 4 will discuss managing uncertainty, from trade wars to changing regulations, and how the financial team can forecast company performance and assess risk despite this uncertainty.
Catch up on the previous blogs in this series:
Download this Microsoft whitepaper, 2019 Finance Trends Report, to read more about trends in finance.