November 2019

How technology can facilitate business growth and social wellbeing 2

How can we rebuild confidence in the community

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Since digital transformation will look different for every company, it can be hard to pinpoint a definition that applies to all. However, in general terms, we define digital transformation as the integration of digital technology into all areas of a business resulting in fundamental changes to how businesses operate and how they deliver value to customers. Beyond that, it’s a cultural change that requires organizations to continually challenge the status quo, experiment often, and get comfortable with failure. Often it is interpreted in terms of process automation and investment in exciting emerging technologies such as artificial intelligence (AI), blockchain, data analytics and the Internet of Things (IoT).

For an organization to be successful and harness the full potential of technology, the people within the organization should understand its worth and value it. Technology can empower people to transform organizations and drive business growth which inturn help in generation of new ideas, by working in new ways with new partners.

Due to the ever growing industry boundaries and the rising geopolitical tensions which shape the environment that organizations operate in , digital transformation no longer remains within the context of a single organization.

Is technology a force for greater social good?

The introduction of new technologies is being challenged as people are questioning if this will increase bias against certain group of the population, and whether it will worsen social inequality if individuals without technical knowledge are excluded from the workforce, with technology being considered as a driver for business growth. ?Many individuals are not comfortable with the change in technology as they consider it to be a change in their environment- for example the rise of the online retailers has made life for many local and high street stores. And the main concern with the technology is related to the mental and physical well being and our interpersonal relationships.

How can organizations deploy technology as a force for both business growth and greater social good?

  1. Put your people at the center of your digital strategy.?Here people are given major importance as digital transformation is all about unlocking the human potential and making them more productive without replacing them with robots. We should be thinking of ways to utilize technology in a way to enable people instead of searching for their replacement, it should be focused on making people more productive by giving them sufficient opportunities and roles to lift up their career. Consider how the business can function effectively without the utilization of people in different strategy making? How can you create opportunities for your people to think, create, challenge, exercise judgment and partner with others?
  2. Remember the people who might be left behind.?Organization should cater to the ever increasing need of competition by investing in the training and development to upgrade human potential. They need to maintain privacy and see that the people?s personal data is protected with high ethical standards to be maintained. If this responsible approach is followed with digital transformation then organizations will build trust, which inturn will derive growth. ?For the technology to be truly accepted by the people, it needs to be deployed in a way that does not leave people behind.
  3. Collaborate with partners.?For a transformation to become a force for good, it cannot usually be achieved by one single organization alone, there should be the input and support of the entire ecosystem as a successful transformation delivers its benefits to the wide range of stakeholders, both to the internal and external. That?s why organizations collaborate with others to create product and solutions that are not only beneficial to your own organization but to the whole industry.

Different organization are partnering with each other to develop solution and to simplify and to create transparency in situations where different legal system hold and processes vast amount of data which help the organization to function in a more effective and efficient manner. As a result we are seeing great examples of ecosystem collaboration happening.

Technology should exist to serve a much higher purpose i.e. the human purpose, transformation should be made for the benefit of people by other people. There should not be a end to it. Ultimately, there is probably no such thing as a digital-only strategy at all ? only a human strategy that is enabled by digital technology.

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How can we rebuild confidence in the community

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The 2018 Financial Reporting Outlook conference focused on the theme of reconnecting businesses with their customers. Since the global financial crisis, there had been problems faced by much of the companies. Why does business still suffer a trust deficit? ?Whose interests should come first? Are boards aligned with the creation of long-term value? And, ultimately, what is business for? ?

Grasping the nettle

In today’s failures of corporate reporting and stewardship, Baroness Martha Lane-Fox, the co-founder of pioneering travel website lastminute.com and now (among other things) a non-executive director of Twitter and the head of technology advocacy shared her opinion that customer and stakeholder should be their utmost priority. ?Companies need to grasp the nettle of change,? she said. ?It is important to be open to criticism and challenge.?

As she worked with Doteveryone and elsewhere, Baroness Lane-Fox has pointed out the most arcane approaches in the run to improve technology and get more fair terms in recruitment, investment and the dealing of the employees.?

Technology is an amazing thing, but it has to remain conscious of the need to behave responsibly ? that would make a huge difference in restoring trust,? she said. It is, in turn, a message to mostly all the companies that without the trust and support of the stakeholders they cant grow and their future will be in danger. This may be because technology may be the most disruptive source yet it is overlapping some of the old tactics of the past businesses. ?

Considering gender diversity: 95% of the world?s software engineers are men, as are 90%?
?Companies need to face up to some of the structural issues that are holding them back. Consider gender diversity; 95% of the world?s software engineers are men, as are 90% of venture capitalists.?

Open engagement

Another speaker from the world of technology picked up on this theme. Lou Hughes, current director of Nokia, can look back on 24 years sitting on the board of directors of 13 companies in eight countries. He has more experience in audit committees than most of the people, and in his talk, he mentioned what successful people have in common.

?You need people of different backgrounds and skills,? said Hughes. ?While regulators want to see financial experts on the audit committee, a broad range of experience is critical. In fact, in my experience, a lot of the best contributions come from operational management.?

The audit committee has a key role to play in creating and reinforcing trust in the organization, and Hughes believes that in this regard, the need for open engagement from all sides ? boards, management, internal and external auditors ? is now greater than ever. In particular, he emphasized the need for the external auditor to act as an engaged partner.

?They are the most important part of the chain,? he said. ?The auditor has to understand the business virtually as well as the management does. It?s a collaborative role focused on solving problems, mitigating risk and taking the right action.?Companies need to face up to some of the structural issues that are holding them back.?

Adjusting to change

Sue Lloyd, Vice Chair of the International Accounting Standards Board (IASB), spoke on Baroness Lane-Fox?s findings that, mostly, a business must be seen to placing its house in the arrangement.

Lloyd was present to outline the IASB?s determination to focus on working as a partner with business. ?We are adjusting our work to adapt to the changing financial reporting environment, and to the feedback from companies,? she said. ?They want a period of calm, and they want us to stop generating new standards and focus on providing support for the standards we already have.?

Lastly, she made it clear that regulators and business must collaborate to make certain that the terms meet the need of both the players i.e. preparers ad the users of accounts. ?A number of things that we?re working on are taking us beyond our traditional debits and credits,? she said, citing the efforts to look at non-GAAP measures and to bring some of them into the audit process. As part of that, the IASB ?requires all the companies to show a note of their financial report displaying their performance and how they communicate with their investors.

While the board would prefer to see an IFRS-related measure, she said for deeper understanding alternatives could be prepared. At last again its the same question of what ways will the business explain what they are doing and why to have the trust of their shareholders.?

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How to make financial reports more responsive

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The speed of response is everything in this fast-changing corporate reporting world. In the present scenario, the volume and speed of data are increasing simultaneously. Financial reporters in every organization are asked to deliver high quality, reliable, data-driven, error-free and forward-looking financial insights to the decision makers within tight deadlines.

As data are present in bits and pieces, it is hard to gather and examine large data sets, while complex reporting process results in slow reaction times, posing a challenge in dexterity and speed in response reactions for many organizations.

The impression of fast-changing technology is emphasized in Capella?s research- How can delivering catch up with the high momentum of the world? Which was being formed by many organizations and their top management views. The major challenge that was being witnessed by major respondents were the change in technology. Thirty percent of the sample proposed that changes in technology were an ongoing issue, in contrast with 25% who viewed market developments, 23% who suggested regulatory issues and 23% who pondered on the need to satisfy national and international norms and quality.

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Compound Domain

Reporting teams are not just viewed as the attendants of providing data ? they are presumed to deeply look into the detailed information and take out information from the wide variety of ever-changing data sets. Simultaneously, the finance department must safeguard their data, as the regulatory and reputational cost of a breach is a notable risk.

Due to the advent and ever-increasing need of new technology and to harmonize, existing systems, all the firms want to have a competitive edge over the other and the finance members have to face and tackle with this dynamic environment. All the companies CFOs must be well equipped for to the current trend of automation and data exchange in manufacturing technologies and the effect that it brings.

The particular challenge that organizations face includes the lack of automation along with the generation of the technologies. Mainly this is due to high reporting requirements, as firms introduce physical work- around to tackle with freshly regulated wants.

According to our survey, to stand out in this corporate world the company must upgrade their IT and financial analytics tools, which was being collected from 44% respondents of which 33% identified the need to operate further efficiencies and 33% to meet faster and sharp information.

For 84% of the organizations to increase their expenses over the reporting technologies, simple and quick inventions and technologies will be their focus. The cloud, in particular, is catering to the need of the fast-changing organizations but then there are Artificial Intelligence, Blockchain etc to be given due considerations.

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Expertise at a Premium

As all the reporting works are being automated as compared to the traditional system, the need for full-time employees is disappearing. Reporting team can now focus on predictive analysis and managing stakeholders relationship as most of their work can be simplified by the robots.

Reporting leaders have to find people with high technological skills to drive reporting innovations, but as per our surveys, technology and data expertise are at a premium. IT skills are most in demand (36%) followed by financial data analytics (33%) and business analytics (27%). To address this issue, there must be a strategic look at the talent they need for striking a balance between bringing in fresh blood from outside and developing existing team members.

Finance leaders have broad opportunity to analyze how reporting is delivered. CFOs have been outsourcing to increase the functional scope of these arrangements by including corporate reporting. Operating model helps to clean out unwanted processes, curtail to only the critical jobs and achieve consistency globally. It should create a more quick and flexible reporting function.

It is evident that corporate reporting will face dynamic change in the future with all new innovative technologies to move forward at a faster pace and the CFOs can deliver required.

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Facilitate the move to cloud based accounting

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The driving force behind this technological push is the demand from the consumers for timely and accurate financial data along with the ability to analyze and understand this data so that we can know our businesses better. We can also significantly reduce the processing time as well as the paperwork involved.?

Businesses through management reporting can attain the ability to analyze the business as well as increase efficiency. This will be explained below:

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Billings/accounts receivable:

Using accounting software to send an invoice directly to an email address has many benefits that include:

  • Significant reduction in delay in delivery as well as removal of postage or headed paper cost.
  • Surety of delivery.
  • Quicker payment process as customers can use links in the email to pay with a debit/credit card or through other mediums.
  • Accounts receivable become real time as bank reconciliation is up to date, we can send financial statements with a single click.
  • Better access as we can use any gadget like a laptop, mobile phone to access the invoices.
  • Reduction in wastage of resources as we have a stock managing system.
  • Efficiency is increased as the project management/time management system is linked with the invoicing

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Expenses/accounts payable:

Using technology allows us to take photos or bulk-scan paper invoices and read the data on it. It means that we can manage all the information such as supplier details, invoice numbers and expense details without manually entering it. The advantages of this system include:

  • In organizations that have a huge number of suppliers, it can result in material time-saving.
  • Better storage- as invoices are stored electronically, it will be saved and available for 6 years on the cloud.
  • Easy and quick access- we can access any invoice from a supplier with the help of cloud-based computing.
  • The chances of error are significantly reduced as there is manual keying in of data.

Bank reconciliation/ transactions:

With the advent of cloud-based accounting, a bank can automatically feed our banking transaction history to our software. This will automatically read the data and matches the transaction. The sole job of the accounts department would be to verify all the transactions. The main benefits of this include:

  • Reduction in data entry time.
  • Errors that occur during keying can be eliminated.
  • All the creditors/debtors can keep a real-time check.
  • Real-time management of accounts.
  • The financial position of the organization can be given in a clearer and better view.

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How to carry out this change:

To carry out the process of this change effectively, we need to buy in from the senior management especially the finance director/controller. We need to create an environment that can adapt to the change. The change here would indicate the movement from a heavy data input driven function to a one driven by cleaner technology. Whenever we choose our core accounting package, we must keep in mind:

  • How easily we can transfer the data from the existing software.
  • Research about the large add-on marketplace for other software that may work with our accounting.
  • How much support is being provided to us by the software providers as most software providers conduct training on how to use their software.

It is recommended to carry out this move at the end of a financial year as the software would then have the complete data of the current year. But it?s not necessary as many organizations have done it in the middle of a financial year and have worked it out.