CFOs Look to Automation and Data Analytics for Digital Transformation, Survey Finds
Leaders of financial departments express enthusiasm for AI, ML, and other technologies but implementation faces some hurdles.
- By Richard Seeley
- March 15, 2021
Optimism about digital transformation of financial operations appears to be the prevailing attitude among executives, according to a new survey released by AppZen, a vendor of AI software for finance. However, many held regrets about not transitioning sooner, and they face potential roadblocks.
As with other departments, finance has been impacted by the pandemic. The AppZen survey report states: "A massive 86 percent of survey respondents said they accelerated their digital transformation projects in 2020, and 79 percent said that the COVID-19 pandemic forced their organizations into those accelerations."
Executives surveyed indicated they see the pandemic conditions as an opportunity to adopt new technologies including advanced analytics, AI, machine learning (ML), blockchain, and robotic process automation (RPA), which Wikipedia defines as business process automation technology using software robots (bots) or AI/digital workers.
Roadblocks to Adoption
Budgets may constrain such optimism. About a quarter of survey respondents expect their organizations will experience negative growth in 2021. This group plans to focus more "on cost savings than long-term investment," the report notes. Another potential roadblock to digital transformation is lack of support from corporate leadership.
"According to the research," the AppZen report explains, "the top challenge for digital transformation projects is support from C-suite executives, such as CEOs and chief information officers, as cited by 20 percent of the respondents." The report authors warn this is an ominous situation: "The lack of support from the C-suite is particularly worrying, given the large number of organizations that accelerated transformation efforts in the past year. If these projects do not ultimately have the support of the C-suite, are they destined to fail?"
Another problem faced by CFOs is the nature of the finance department's daily work. Unlike sales and marketing -- where analyzing data to identify consumer buying and business purchasing trends fuels new technology adoption -- accounting departments put a greater focus on mundane tasks such as processing expense reports. These tasks could be much more efficient with the right automation, but the investment isn't there yet. Looking at the responses from CFOs and others surveyed, the report notes: "The research showed 72 percent said their finance team spends more time policing expense reports than analyzing expense trends and areas of improvement."
Data ingestion and extraction are top candidates for automation, but most finance departments have not taken full advantage of this. "Ingestion and extraction of key fields had only 12 percent of respondents achieving 100 percent automation coverage in this area," the AppZen report states. "AI-based invoice processing and expense auditing were two areas of weakness for financial automation that were exposed in the survey. Only 41 percent of the respondents currently automate ingestion and extraction of data from invoices, while 44 percent of organizations still take seven or more days on average to process an invoice."
Regrets, They Had a Few
Some survey respondents regret that they hadn't moved to digital transformation, especially advanced analytics, before the pandemic forced changes on them.
"More surveyed executives wished they had invested more in finance technologies over the last five years, versus investing less or not changing their allocations," the report points out. Respondents had second thoughts about not moving sooner into all the technologies mentioned in the survey, including AI, ML, blockchain, and bots. "Advanced analytics was the strongest regret," the report authors note, "with 67 percent of the respondents saying they would have invested more in the technology in hindsight."
Finance departments such as accounts payable (AP) that are not yet applying machine learning to issues such as fraud detection risk falling behind. "Machine learning in AP automation helps CFOs better understand vendor payment risks, forecast future spending increases or decreases, and detect the statistical probability of invoice anomalies and fraudulent expenses," the report authors explain. "Those CFOs that did not invest in this are realizing their mistake -- with 42 percent of the respondents highlighting AI and machine learning as a missed opportunity for investment."
AP automation is one area where the survey indicates that CFOs are "stepping up to the plate now."
In Search of the Tech Savvy
Although finance departments may benefit from AI and ML, they also need knowledge workers who understand how a concept such as blockchain can be applied to accounting.
"CFOs increasingly need tech-savvy finance teams capable of employing analytics, as reflected by 34 percent of the survey respondents citing improving analytical skills as a top priority for the year," according to the survey report. There was "near unanimous support for reducing manual processes," but "... less than half of the surveyed executives' systems for expense audit and control were highly automated, [and there were] weaknesses in their AI-based invoice processing and expense auditing." It would appear that enterprises need tech-savvy people to address these issues.
The survey, conducted by AppZen with CFO.com Research, found enthusiasm for AI, ML, and other new technologies for data processes and analytics in financial departments. Whether that translates into digital transformation may depend on how CFOs lead the charge.
As the report concludes: "Overall, even with the widespread support for investment in digital transformation among the CFOs, CEOs, and other senior finance executives in the survey, there appeared to be much room for improvement."
The report is available at https://www.appzen.com/resources/whitepapers/cfo-survey-report-why-optimism-abounds/.
Rich Seeley is an editor at TDWI.