If you want a sense of how crucial automation has become to a modern finance organization, take a look at the shift in what CFOs see as the most important skill for new hires.
Three years ago, 78% said it was proficiency with Excel. Last year, only 5% listed Excel as the top skill.
What expertise are finance execs most seeking now? The ability to adapt to new technologies.
In large part, CFOs are talking about technologies that automate traditionally manual tasks like data entry, verification, reconciliation, and more. The reason is that static tools like spreadsheets are no longer the deft engines of insight that businesses need in the age of urgency.
As CFOs see it, the rising volume and complexity of data present challenges that step-by-step, manual tasks can’t meet. Just look at the plans CFOs had for their finance groups last year. In the Adaptive Insights CFO Indicator report Q4 2017, which surveyed 160 CFOs, the top three initiatives for 2018 were to create or refine their finance group’s visual analytics reporting, upgrade technology, and develop professional skills.
A powerful ally
Automation can be a powerful ally in achieving these goals. When the ACCA reports that 75% of finance professionals’ time is wasted re-keying and manually rolling up data, it’s not a big leap to conclude that refining analytics and developing professional skills could happen much more easily if finance wasn’t buried by manual, menial tasks.
In fact, CFOs see automation having its greatest impact in areas that can improve the impact of finance itself. In the same CFO Indicator Report, these execs said automating manual processes will bring:
- Faster and higher-quality insights for executives and operational stakeholders (40% named this a priority)
- A more strategic role for finance in the business and in decision support (26%)
- Improved productivity in finance (16%)
- Improved accuracy of reporting, planning, or other tasks (12%)
Their trust is well founded. At P.F. Chang’s, which operates more than 300 Asian-themed restaurants in 25 countries, automation has been the critical first step in transforming how the company develops plans, budgets, and forecasts. Jim Bell, the restaurant giant’s CEO and former CFO, notes that relieving his FP&A team of productivity-killing busywork gives them time to do a better job transferring “business acumen to financial performance”—Bell’s definition of what agility really means to a business.
With the freedom to concentrate on strategic work like identifying why some restaurants were experiencing shortfalls in wine sales growth margins, the finance group at P.F. Chang’s helped those locations implement new best sales practices that led to a 300% increase in wine margins in just a month. And in 2018, when restaurants in 18 states scrambled to preserve margins after minimum wage increases, P.F. Chang’s was able to analyze productivity so effectively that it optimized its cost of labor by 30 basis points, even as its publicly held competitors were walloped by an average labor cost hit of 50 basis points.
Eliminating busywork, not jobs
Before your staff worries that software bots will eat their jobs, you can reassure them that finance automation more frequently leads to a shift in skill sets (learning more strategic roles rather than, say, data entry or report building) that will help them become more desirable in a knowledge economy. In fact, a recent study by Robert Half found that automation will create more finance jobs than it replaces. This is powerful, considering that as much as 34% of a financial manager’s time could be automated by adopting technology, according to a study by McKinsey Global Institute.
It all couldn’t come at a better time as business data volumes are doubling every two years. So if automation seems important today, it will be life-saving tomorrow. Fortunately, finance tools won’t be sitting still either. Advances in artificial intelligence (AI) and machine learning will further free up analyst time by automating the creation of high-volume, high-complexity what-if scenario modeling at scale. Recognizing this, 89% of CFOs surveyed for the CFO Indicator Report Q4 2017 said they believe AI software will help their teams more easily surface insights and suggest plans of attack. Notes one CFO: “If we can automate collection, as well as some lower routine tasks, and then train machines to run our what-ifs, we’ll be most fresh, when we are usually fatiguing in the process.”
The days when finance hired people primarily for their Excel skills are over. Automation is changing the landscape for finance teams by freeing them to think and act strategically. In the process, they’re becoming more agile and valuable to the business—and at the very moment those strengths are needed most.