By Paul Saunders, SAP
Dear Finance Community,
We hope this letter finds you well, amidst the ever-busy world of vlookups, circular references, and the occasional forgotten password or coffee spill on a keyboard.
Now before you say ‘no’ please hear us out.
Companies, for the most part, only care about three things: Revenue, Cost and Risk. As the keepers of the company coffers, you are more than aware of this. That is why when something new comes along that costs money, and brings risk, you want to know how this will increase revenue. And over time we have learned the hard way that our ‘soft’ business cases don’t always impress.
To address the proverbial elephant in the room, IT and Finance haven’t always been the best of friends. We (IT) have a reputation to over-promise and under-deliver, and you, our finance friends, have a tendency to always…well….. say ‘no’. (and occasionally ‘fix my printer’).
We want to make amends. As information technologists we would like to say:
- We’re sorry for keeping you on Windows XP for so long. Minesweeper isn’t available on Windows 10, and we know how much you love it.
- We’re sorry for giving you a Blackberry long after the iPhone came out. We still think BES was great. (no, not the guy from Happy Mondays – though he is too)
- We’re sorry for the whole ‘have you tried turning it off and on-again thing’, but in our defence, it normally does fix things.
- We’re sorry for saying your office looks like an episode of Severance without the Melon Bar.
- We’re sorry for the Metaverse…. actually, no we’re not. We didn’t think that was a good idea either.
So given all of that, let’s talk about AI in terms of revenue, cost and risk.
AI has incredible potential, but let’s be sensible and realise that as of now it isn’t more important than fire and electricity.
The nice folks at SAP Insights commissioned research that identifies 14 macro trends affecting finance organizations. One of the primary goals of this research was to gain a deeper understanding of AI’s impact on the transformation of businesses, including how it affects people’s roles and responsibilities.
Here are some of the findings from the research:
Revenue:
- AI can analyse vast disparate data sets. Users can engage with extensive data in natural language conversations to simplify the extraction of meaningful insights. As an example, FP&A could ask SAP Joule “show me which of our product lines will have the highest growth over the next 24 months?”
- Although not generating revenue, AR can leverage AI to improve cash flow accuracy. AI can help with accurate reconciliations help identify discrepancies, prevent fraud, and ensure that the reported cash flow is a true reflection of the company’s financial position. This accuracy is crucial for effective cash flow management, as it impacts decisions related to investing, financing, and operating activities.
- In many cases, we’re using AI tools for more mundane tasks (we’re not saying you are mundane AR), which frees up people to perform the next-level analysis on those transactions and reports, and then to make strategic decisions. AI systems can streamline invoice management by extracting and integrating relevant data directly into ERP systems, minimizing manual entry errors.
- AI systems can gauge market sentiment by analysing vast amounts of data from news, social media, and other sources, and gauge public opinion about finance and adjust communications accordingly.
- Customer service representatives can use AI to provide immediate, accurate responses to client inquiries. This approach combines AI data retrieval capabilities with human problem-solving skills, resulting in better service. Customer service reps can upsell and cross-sell to select customers based on AI recommendations.
Cost:
- AI can help with accurate calculations and reporting and provide personalised communications on key areas such as gross profit and net income.
- AI-driven advisors can help strategize and propose action and decisions. Predictive capabilities improve strategic planning and resilience in business operations.
- Users can engage with extensive data in natural language conversations to simplify the extraction of meaningful insights. For example, a Financial Analyst could leverage SAP Joule to create deeper insight into cost structure, leading to increased confidence with pricing strategies in a very dynamic market.
Risk:
- AI can automate the monitoring and enforcement of internal policy and regulatory standards.
- Businesses can anticipate and adapt to regulatory changes.
- This can decrease risk and speed up resolution of errors, and overall reduce the labor on audit while focusing on outliers and concentration on higher value initiatives.
And now the main reason for our email: For us to be successful we have to work together.
SAP CEO Christian Klein has called us “transformers of the business,” which we loved even after we found out he didn’t mean Bumblebee and Optimus Prime. He also said that businesses “need the necessary technology for this, but above all they also need the will to change.”
On Microsoft’s recent earnings call, CEO Satya Nadella cautioned that the “rate limiter” for AI adoption will be “culture change inside of organizations.”
“At the end of the day,” Nadella said, “companies will have to take a process, simplify the process, automate the process and apply these solutions. And so that requires not just technology but in fact companies to go do the hard work of culturally changing how they adopt technology.”
For more information you can find the full findings of the SAP Insights research here. Anything else please open a help desk ticket and we’ll bat it back and forth between our teams for a few weeks before randomly closing it and sending you a survey.
Oh, and one more thing. Your printer is simply out of paper.
Thanks for your time.
Sincerely,
Paul
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