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Making the finance function future ready

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By Nandakumar S Tirumalai, CFO, Tata Chemicals

When I began my professional finance career in 1994, the only part of digital that a finance person had exposure to was in creating spreadsheets on Lotus 1-2-3 and then moving to the Microsoft software – Excel, PPT, etc. The accounting software was custom-built system to suit each company. ERPs (Enterprise Resource Planning) were just getting implemented and were in their nascent stage. Once ERPs became a mainstay in the late 90s, in a way, the need to memorise accounting entries were done away with the implementation of ERPs and this was the first automation that led to zero mistakes in accounting statements at least as far as debit and credits were concerned and it removed the ultimate fear in any accountant that balance sheet is not tying up!

The past
As early as 1995, using programming in DOS-Prompt, a 25-point checklist was created which tried to check various aspects of the trial balance and give an error report if any of the critical things were not tying up. This was my earliest usage of digital for better bookkeeping and hygiene.

About 7-8 years ago, in Tata Power, we centralised all the payments, treasury back office, etc in Mumbai and along with that introduced digital workflows, used the various SAP features and created a true world class shared service centre. Over a point, this evolved and digital was fully leveraged for better efficiencies.

In Titan, we took on digital as a very important enabler, especially since there were different ways to receive money for goods sold in over 2000 stores in multiple businesses. With the help of experts and the inhouse IT team, RPAs (Bots) were launched, and the entire collection accounting of Titan Company was fully automated. Bank reconciliation statements were fully automated.

In Tata Chemicals, we had a 2-day “Automation Mela” wherein we involved all the finance staff, experts, SAP team and did a blue sky thinking on what we can automate and digitise in Finance and over 150 implementable ideas were identified and is being rolled out as we speak.

Further, we implemented touchless reporting in Tata Chemicals. With around 30 subsidiaries and operations in US, UK, Kenya and Singapore, the consolidation is done by around 5th. Once done, all the future reviews by the MD are done through Power BI without any mails being sent. The entire audit committee deck can now be taken out without the use of any power points. The information is sliced, and diced, compared with the budgets and all variances reported. This has improved the review mechanism as all the information is available straight from the source.

The finance function must be keeping pace with technologies. In this regard, the finance team is getting trained in various tools like Power BI, workshops on SAP, etc. This is done routinely, say every 6 months. Some of the super users are digital champions who in turn learn the next-generation technologies and then disseminate information to all.

In Tata Chemicals, we have something called “Friday Fundas” which is a weekly interaction of all the finance staff for an hour every Friday we have decided to dedicate this entire year (FY 24) to digitisation and automation and are calling experts speakers to speak to the finance fraternity in Tata Chemicals. This is helping in better digital adoption and awareness and making the finance function future-ready.

The present
Over the past 3 decades, the finance function has changed and is expected to take a new avatar soon and is at the cusp of a major transformation. Finance is seen at the forefront of all digital adoption and as a flag bearer for automation, etc.

As per a survey report that I read recently, over 70% of CFOs are considering implementation of digital technologies to improve efficiencies, processes, and the overall experience for the stakeholders. Over the years, the finance function has also transformed and now, you will find every finance professional has digital as a part of his repertoire of skill sets that he possesses. Today, the most successful CFOs embrace digital transformation and use it to drive business growth and competitiveness.

Today, data is available in different systems and unifying disparate data to provide meaningful information has become a key necessity. The output will revolve around as to how effectively Data planning and capture is done. A significant time and effort would go in this direction. It is the quality and the robustness of data that is going to reflect in every aspect of the finance function’s output namely, Reporting, Controlling, Auditing, Business Assurance, Risk Management, Statutory Compliance, Analytics, etc.

Further, automating finance processes using technology is becoming more and more relevant. I believe that 75% of the finance processes can be fully automated using Robotic Process Automation (RPA)/BOTS. Automating routine tasks frees the time of the finance staff and this time can be used to give insights with abundant human intelligence.

The future
The biggest challenge being faced by CFOs today concerns the disparate systems that are adjacent to the core ERP and the fear that this may not integrate well, leading to time getting wasted. The existence of manual processes on top of the ERP is also a challenge and driving digital adoption is a continuous task of the CFO.

Finance has an overarching role in cutting across various functions and businesses. The function is geared to in a way, become the custodian of performance. The influence of CFOs cuts across the organisation. CFOs need to go beyond their traditional role of bookkeeping, generating reports, etc. My view is that in 5-10 years, almost all the finance activities will be fully automated, end to end. There will be maximum use of Artificial intelligence to predict outcomes, advanced analytics, and predictive learning. TCS did a survey some time ago according to which the role of CFO would shift from being a “custodian” to being a “futurist”.

In the future, finance should be able to provide real-time sensitivity analysis and live forecasts and help the business in taking the right decisions based on data. Reporting will not be a month-end activity but real-time with the ability to generate financial statements and analytics at any point in time. Every finance person will have business and domain knowledge, and will be an important bridge between business and IT. Further, finance will move to adjacent areas of reporting like sustainability reporting, etc.

With digital adoption, CFOs should not take their eyes off data security. I read online that 3.4 billion phishing emails are being sent per day and countless cyber-attacks. An organisation should have robust cyber protection tools that protect the data which is both on-premises or Cloud. What a CFO fears are if the data gets into the hands of cyber attackers and the organisation is held to ransom. Let’s say, the business plan of the company is in a server and that is hacked, then imagine the pain that the CFO will go through to retreive the data. Hence, CFOs should partner with the CDIO (Chief Digital and Information Officer) in this journey and keep doing routine cyber checks.

How to use data in different forms (internal and external) to provide meaningful insights to other senior colleagues including CEO for decision-making and formulating strategies would be crucial for data-driven organisations and CFOs will play a dominant role in this endeavor.

In the future, CFOs will continue to evolve as technology and digitisation drive change. CFOs will play an important role in driving growth and competitiveness. The advent of big data, cloud computing, advanced analytics and reporting tools will create opportunities for CFOs to analyse vast amounts of data and provide necessary inputs for the growth of a business.

Digitalisation has reduced the distance between business, operations and accounting to an extent that one may “Count the Chickens while they hatch!”.

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