Technology and business blogs are currently flooded with articles containing buzzwords like “digital transformation”, “innovation”, “disruptive”, or “automation”, and all this jargon stresses executives: what is digital transformation? Is my competition already implementing it? Do I have to make a digital transformation in my company? Where do I start?
A digital transformation is a project touching the whole organization: it is about changing the way in which internal processes are executed, to offer an extraordinary experience to customers. This requires fast and flexibles processes, based on digital media, like mobile devices or internet, centered on the customer. For many companies, digital transformation is no longer optional, but the only way to survive competition (just think about the fierce competition currently going on in the banking sector). However, such transformation does not make sense if it only affects sales or commercial processes, because as the business flows downstream to the rest of the organization, it will suffer from lethargy at best or, even worse, squirm in absurd ways, delivering the worst possible experience to our customers. A successful digital transformation requires the capacity to monitor processes in real time, in order to make timely decisions, and respond fast to the competition. It means, above everything else, speed of execution.
Let us add to this challenge additional complexity elements that most companies face: lack of internal coordination; current systems are isolated (they are usually specialized), and the communication among them is difficult or inexistent; there is a lack of specialized staff, budget and/or time in IT areas to transform existing systems… the scene is not a nice one. A different approach is required. Quickly.
Finance executives know all too well this context, as they are the ones being demanded the timely provision of accurate strategic information, to guide the company’s investments, to identify the most profitable businesses and to effectively deal with risks. This is why they have developed a very sensitive smell to recognize improvement opportunities, while being at the same time accustomed to the discipline required by innovative and disruptive solutions.
One of these emerging solutions is RPA (Robotic Process Automation). A definition of RPA provided by ACCA (Association of Chartered Certified Accountants), CA ANZ (Chartered Accountants Australia and New Zealand) and KPMG (the world wide known consulting firm) is as follows: “RPA is a software that end users may easily program or configure to execute high volume and repetitive tasks, based on rules, for today’s world, where multiple systems integrated flexibly are common”. RPA combined with lean methodologies, design thinking and other intelligent emerging technologies, are the answer to this disruptive leap that will allow the finance areas go beyond the Excel macros and the application program interfaces (APIs), built to enable the communication among the different systems.
All this sound good but, how has it really worked in the organizations across the world? Which is the level of adoption of RPA? Has RPA worked for companies in any vertical?
Back in 2018, ACCA, together with CA ANZ and KPMG, conducted a survey among 2,700 companies worldwide, asking about their experience with RPA. The survey included companies from many verticals: retail, industry, professional services, public sector, NGOs, and outsourcing firms.
The first thing drawing attention from the survey are two overwhelming figures: 50% of the companies said they had not tried or implemented RPA in their finance area, regardless of the vertical in which they operate. What has stopped them? 45% of these companies that had not tried RPA said that their biggest hurdle was their willingness to “know exactly what RPA is”. Finance departments have an opportunity to take advantage, understanding and convincing the organization.
Out of the companies that have implemented RPA, 63% said they have done it with a fully dedicated team, while the remaining 37% has done it with partially dedicated internal resources. 29% of them has implemented RPA in some or all of their relevant finance processes, and 17% was still in the testing, conception or pilot phases. The strategic drivers they built upon for the implementation of an RPA Project were:
- Be part of the company’s digital transformation. 58% of the survey respondents identified a bigger digital transformation initiative in their business as the key driver for an RPA adoption.
- Strategic aim for cost reduction. The reduction in effort through automation goes, according to the study, from 15% to 55%. This undoubtedly reduces process costs. However, we have to be careful when measuring efficiency only in terms of staff reduction, as this metric alone could be somehow deceiving.
- Move talent in Finance to higher value roles. The CFO must lead a cultural change in his/her area, and clearly communicate the impact derived from the change, both in the short and in the long term, as well as the way in which Finance roles will change and new skills will be required. By having additional time available, Finance staff may dedicate some of it to strategic analysis tasks.
The key benefits derived from the implementation of RPA that were mentioned in the survey were:
- Improvements in internal controls
- Higher processing velocity
- Cost reduction
Which are the challenges they faced? The ACCA / CA ANZ / KPMG report shows, in order of importance: resistance from the staff to adopt RPA (45%), difficulty to understand how to combine RPA with other technologies to create process efficiency (42%), and dealing with legacy IT systems that made RPA implementation difficult (34%). Staff resistance is even clearer when looking at the biggest challenges regarding people faced by companies: first, lack of RPA skills; second, cultural resistance and; finally, the loss of knowledge around key processes as they are automated.
Clearly, Finance executives face extraordinary changes that entail huge challenges. Moreover, they also have a unique opportunity to transcend their roles, very well summarized by the analysts from ACCA / CA ANZ / KPMG: “CFOs have the chance to reshape their organizations, and adopt a proactive approach to configure their teams to combine human and digital labor. This will require visionary leadership from the CFO, a change in the culture, and an agile mindset both in Finance and in the whole organization”.
Author: Jorge OropezaTags: account reconconciliation, accounting reconciliation, automation, BSP reconciliation, conciliac, Credit cards reconciliation, Fintech, Inventory reconciliation, Stocks reconciliation