David Williams, CFO of Tungsten Network, outlines what CFOs need to know about digital disruption, and how they can outwit the robots.
New technology is fast encroaching on every industry – from the Uber-isation of transport to the extended stay of Airbnb, digitisation isn’t about to stop. Irrespective of your role or your industry, there’s a question we must each ask ourselves: is a robot on its way to take my job?
One of the latest robotic innovations to come out of the US is a robo-security guard that features 60 sensors including lidar, ultrasound, depth sensors and cameras, as well as wide angle day and night cameras to detect people around them. It also includes microphones and a two-way video chat screen that allows building managers to remotely interact with a person whom the robot approaches, while RFID scanners on board can check a person’s badge.
Like security guards, finance teams are wise to remain conscious that they are living in an era of flux. But just how fast is digital disruption changing the financial services sector? And what can CFOs do to succeed in today’s environment and outwit the robots? The role is changing, and a new set of skills is required.
A strategic approach
On a national level, business tech in general just got a boost. The government’s long-awaited digital strategy has at last been published, and gives crucial insight into what the future holds.
Outlined in Westminster’s approach are plans for creating a “world-leading” digital economy, by addressing the digital skills shortage, implementing better infrastructure and encouraging long term investment in the digital sector. Originally due in the summer of 2016, its appearance has been welcomed by many industries, FinTech included.
And it’s no surprise that the government is throwing its weight behind the digital revolution, given that figures from the Department for Culture, Media and Sport show that digital sectors contributed £118bn to the economy in 2015, over 7% of the UK’s gross value added.
What the government’s announcement really tells you, however, is that now is the time to embrace digital or die. After all, where business leads government follows. And digital businesses in the UK are among the best in the world, at the cutting edge of what’s possible.
Don’t pack your bags yet though, as the rapid growth of digital brings with it an equally rapid growth in jobs. Tech City UK, a government organisation focussed on accelerating the growth of digital businesses across the UK, estimates that the digital sectors are creating jobs nearly three times faster than the rest of the economy. And those new start-ups and high growth companies all need financial expertise.
Equally, those finance professionals who are brave enough to embrace what digital has to offer will reap the rewards. Take the production of monthly and annual accounts as an example. In 2015, when I was first appointed CFO at Tungsten, the team used a whole series of interconnected spreadsheets to produce the company accounts – over 50 at the last count. As of this month, we have a system that requires zero, and is infinitely better at giving me the information I need to advise the business on our financial strategy. So how did we do it? With some hard work from the team and the help of our talented coders to automate the process. That is the pace of change currently under way, and while I suspect we are ahead of the curve, it is far from unusual to consider how switching to digital processes can help finance teams target inefficiencies.
We are a business that in a short period of time has moved from being well behind the curve to being at the forefront of the digital revolution, and we’ve experienced first-hand the rocket fuel that people with digital expertise can bring to the financial mix. Laborious systems and processes are being replaced with more agile and responsive ways of working. These are vital to enable businesses to embrace growth – having set up and run a number of small businesses myself in the past before taking on a role for a FinTech disruptor, I can report first hand on the frustrations and red tape inherent in finance at all levels.
Take the paper invoice as an example. Converting paper invoices to digital is a critical component for me and my finance team in increasing our efficiency and effectiveness. Every day, businesses waste time and energy manually checking invoices received from an increasingly complex supply chain. Later in the accounts payable process, a mass of unanalysed procurement data lies stagnant in these paper invoices. Turn this process digital and technology rejects incorrect invoices before they even arrive. We also gain fantastic insight to understand spending trends and inform our procurement decisions.
Besides removing friction, automation has enabled us to cut costs. Again, using the example of e-invoicing, calculations using data from the Billentis report indicate a business that processes 10,000 invoices a year could save £95,200 a year. To process that number manually would cost £149,600, including costs to receive each invoice, enter the relevant codification, validate and match the details, manage any dispute and finalise payment. With an automated, digital process it would cost £54,400. Tungsten has realised those savings, and more.
The CFO of the future
As the people in pole position when it comes to making decisions on how and when to switch to digital, CFOs shouldn’t be afraid to strike out and think big.
The most important thing to remember is that going digital is a marathon not a sprint. Yes, some may be dashing off ahead with revolutionary ideas and big budgets, but the purpose of digitisation isn’t to make a splash or grab a headline. The digital revolution is ultimately about improving the day-to-day running of a business, by taking manual processes and making them better. It’s about greater speed and accuracy and a reduction in cost. Given this, it’s not about when you embrace digital automation, it’s about how you do it.
The role of the CFO has in recent years become more strategic than ever before, and that trend is only going to accelerate. So, what skills does a CFO need? A deep understanding of financial systems and drivers as well as strong roots in governance and compliance are a given. But, to stay the course, a wider skillset is going to be vital.
Take a coding course. Look into big data. Embrace block chain. As well as surrounding yourself with the best minds in your business, make sure you understand the nuts and bolts of how the digital economy is being built from the ground up. This will allow you to lead with confidence when big decisions come your way – and trust me, they will. Whether it’s switching to e-invoicing or launching an e-commerce platform, the digital revolution brings with it a fundamental shift that cannot be ignored.
David Williams is CFO of Tungsten Network.
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