With the arrival of process automation, cognitive tools, and blockchain, finance organizations are facing the potential for major transformation. In this second of a three-part blog series, Deloitte looks at how cognitive is shaping the future of finance.
By Girija Krishnamurthy and David Carney, Deloitte Consulting LLP
In our last blog we talked about how disruptive automation tools like smart bots and data visualization are helping finance become more efficient and strategic. Those are just a few of the many disruptive forces that are rapidly transforming finance into something that earlier generations of accountants and CFOs would barely recognize.
Another group of tools and technologies, which we group together under the umbrella term “cognitive,” includes artificial intelligence, machine learning, and predictive analytics, many of which mimic (to varying degrees) how the human brain thinks.
Cognitive solutions can help companies get smarter and more efficient over time—just like humans do, only faster and more accurately. Far from esoteric, these solutions can have very practical uses. For instance, artificial intelligence and machine learning software can help organizations spot non-paying and late-paying customers pro-actively by tracking their behavior over time and flagging repeat offenders. And they can help on the payments processing side by using machine learning to recognize priority invoices, discard duplicate payments, and uncover fraudulent purchasing patterns.
Cognitive also encompasses the field of predictive analytics, which harnesses a variety of statistical techniques to help finance organizations effectively navigate an uncertain future. For example, we work with a company that ships packages across the globe. Managers are constantly watching out for bad weather that could bottleneck shipments and frustrate customers, threatening revenue. The company is now using predictive analytics through an AI platform that uses weather data to plot alternative shipping routes before a storm hits. As a result, the company can sidestep bad weather and give customers more accurate delivery times.
With advanced cloud-based analytics, finance can erase the line traditionally separating transactional and performance management systems. It enables both sides of finance—operational and strategic—to come together on a common system, helping financial planning and analysis teams efficiently zero in on factors that are driving (or hurting) growth and profitability. For example, we work with an organization where managers need to understand the profitability of each product on a frequent, near real-time basis. Getting that analysis in the past was a tall order because they were preoccupied (not surprisingly) with transaction-oriented tasks like paying bills, collecting revenue, and closing the books on time. Now, after deploying advanced analytics in the cloud, the CFO can quickly and easily get to the data that can help them add value to the organization as a strategic partner—such as profitability by product and customer.
Predictive analytics solutions let you look at as many variables impacting the business as you want. Grocery chains, for instance, are using their predictive powers to trace the movement of perishable foods around the globe and decrease spoilage. Increasingly we’re seeing finance collaborate with other parts of the business on these innovative projects, which frequently integrate cloud-based analytics with tracking mechanisms and sensors connected to the Internet of Things (IoT). Pharmaceutical companies are using a combination of analytics and IoT to track drugs to their source, efficiently identifying and removing bad batches from the supply chain.
Cognitive solutions have the potential to help CFOs conquer one of their toughest chores: producing quarter-end earnings reports for Wall Street. Remember, modern CFOs are not just glorified book balancers. Increasingly, they are the face of the company when it comes to explaining all things financial to investors, analysts, journalists, and regulators. It's a role that requires fast access to relevant facts and trends—and cognitive technologies can help.
Recently we showed a Fortune 50 telecom company an effective cognitive tool running on Oracle Cloud. In just minutes, the tool sifts through volumes of P&L statements going back a decade or even longer. Using machine-learning tools and natural language processing and generation technologies, the tool creates a report in plain English summarizing revenue and growth drivers over the entire period. It’s a job that may likely have taken an army of financial analysts months to do.
The vast majority of this work is automated with the help of natural-language chatbots—yet another cognitive tool that is transforming how finance works. We predict that, not long from now, the tedium of emailing IT to write SQL queries to unearth data and insights will be a thing of the past. You’ll simply ask your chatbot of choice to get the answers you need. Imagine what you could do with the time savings.
There are a few wrinkles to iron out with chatbots, notably surrounding security. After all, you don’t want just anyone walking into your office and chatting up your company secrets. But we're confident these challenges will be solved and that chatbots will soon become a taken-for-granted feature of the modern finance organization.
Girija Krishnamurthy is a principal with Deloitte Consulting LLP and leads the Digital Finance area of Deloitte’s Technology practice. Girija brings over 17 years of deep finance transformation and implementation experience for clients spanning North America, EMEA and Asia Pacific. She holds an undergraduate degree in Engineering and an MBA in Finance and Information Systems.
David Carney is strategy & operations principal with Deloitte Consulting LLP. With over 25 years of professional experience, David has advised senior executive teams and boards of directors, typically of large, global clients, on issues of improving shareholder returns. He is a trusted advisor to many Fortune 500 CFOs and other finance executives. With a strong background in mergers & acquisitions, he has led many consulting projects involving some of the world’s largest, most complex life sciences, high tech and telecommunications integrations and divestitures. David also leads Deloitte Consulting’s Finance practice, advancing the Chief Financial Officer (CFO) agenda and advising the Finance function to increase contributions to company performance.
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