Organisations need to think carefully about how state-of-the-art technology tools contribute to the achievement of company goals before investing, says Cesar Bacani
This article was first published in the April 2019 China edition of Accounting and Business magazine.
Blockchain. Robotic process automation. Artificial intelligence. Chatbots. Machine learning. Virtual reality. Analytics. Business intelligence. The barrage of fancy technology terms and concepts is continuing in 2019. No doubt new terms and products will be coined and hyped in the coming months. How is the finance function supposed to make sense of a constantly moving target?
One answer from the panel and roundtable discussions I have moderated over the years: you don’t need to. What CFOs must do is be clear in their mind what the finance organisation’s tasks are in relation to the company’s goals – and then spend only on technology that directly contributes to achieving those goals.
That said, I think every firm needs to adopt digital invoicing, which allows entry to, and more efficient participation in, local and global supply chains. This makes it easier to then proceed to blockchain ledgers, which allow authorised users to record invoices and other transactions on a blockchain. These can be entered from different devices across geographies, but the chain is designed to constantly be verified and updated in real time, so there is only one single version of the truth.
When the blockchain ledgers are integrated with ERP, performance management and other systems, the finance function and other departments will be able to slice and dice all sorts of historical and real-time data for forecasting, analytics, business insights, compliance and other value-added tasks that can confer a competitive advantage.
The deluge of data can be too much for spreadsheets and human operators to handle, so it may make sense to deploy AI, machine learning, RPA and the like so finance professionals can analyse the data and recommend courses of action.
But for some CFOs, I would argue that blockchain ledgers and sophisticated analytics are not really must-haves. Single-geography organisations with relatively simple business models or those in stable, predictable industries should be able to get by with spreadsheets or a commercial accounting package with basic data visualisation and analytics features.
To my mind, the organisations that would benefit most from blockchain, AI and other sophisticated (and expensive) technologies include multinationals and large companies with a presence in two or more markets, companies in regulated industries such as banking, companies with complicated ownership structures and strict financial reporting requirements, and those in ultra-competitive industries such as retailing, e-commerce, technology and services.
Whatever the course of action, though, one technology that every company needs, in addition to digital invoicing, is a robust cybersecurity system. In the digital global economy, everyone is at risk from hackers and other dangerous actors. If CFOs have the budget for only one technology, cybersecurity is surely it.
Cesar Bacani is a freelance journalist. This is his final column for AB as he focuses on charity work in his native Philippines.
"Every firm needs to adopt digital invoicing, which allows entry to, and more efficient participation in, local and global supply chains"