The golden triangle of the CFO world comprising of insights, controllership and efficiency dimensions is ubiquitous and well known. Over the past few years, technology and digital solutions have mushroomed, each vying with one another on the scale and speed of the impact they deliver. After several waves of digital transformation, it can be concluded that there are two kinds of technology – smart and dumb.
What is the difference? Intelligent technology solutions solve the full problem stream; they simplify, integrate, aggregate and automate. Lesser efficient technology solutions, or so to say, ‘dumb technology’ look at how work is getting done, and is solely focused on automation.
Take the example of a manufacturing and services company that requires reliable reports by the third day of every month. There can be multiple elements in the value chain: from timely accruals, intercompany transactions, sales finance accounting to knottier issues of inventory and cost runs. Smart tech will work on end-to-end functions, taking care of accounts, data sources, thresholds and rules. Once this is done, only then it will start the automation process. The less efficient technology will daringly deep dive into each of the problem areas and start the automation process. When the latter is finished, what remains are pockets of automated activities, along with under-exploited potential and user frustration.
Another instance of this is how the technology windmill has devoted its energies to churning out proof of concept after proof of concept on generative AI. The users, thanks to ChatGPT, are already mass trained on the irresistible urge of prompting, increasing the appetite for Gen AI. However, a capable CEO can recognise that Gen AI cannot support business functions until the plumbing and wiring via master data, data flows, chart of accounts and trusted data at source gets fixed, and gets fixed fast, reliably and sustainably.
Smarter cost allocation, cost categorisation and subsequent analysis is yet another area of intelligent application of technology. While human intelligence will prioritise areas of maximum impact and balance with ease of execution, technology can drive unprecedented visibility and transparency of the underlying cost drivers. Technology will do this at apace and efficiency, which leads to structural and strategic cost management rather than getting entangled in the mire of policing cost reduction via spending approvals. What will the less efficient technology do in this case? It will automate workflows for cycles of approvals with multiple escalation levels baked in. These approvals will keep accumulating in the queue while business dynamically carries on and makes decisions. Or even better, or rather worse, another possibility is reams of analysis of cost heads with superficial variance analysis, leading to limited visibility on linkages and integration with downstream business actions where costs have been incurred or planned for.
Partner & Leader – Finance Transformation
PwC India
One of the panelists in the recently held ET edge CFO Strategy Summit in Mumbai summed this up by saying that the future economic robustness for India will revolve around two pillars – technology and business growth. In its most strategic avatar for the CFO, intelligent technology partners with data and people to continuously integrate business strategy and financial strategy. In its most transactional and limiting avatar, it focuses on delivering automated pockets of activities with ineffective linkage to business execution, outputs or results.
