Over the years, the general role of the CFO has changed with the evolution of technology. And CFOs within the distribution industry are no exception. In a 2019 episode of the Inside the Strategy Room podcast, Kapil Chandra, a Senior Partner in McKinsey and Company’s London office, spoke to the shift of the CFO saying, “…CFOs can enable digital and analytics transformations within their organizations, whether they do it through thinking differently about budgeting, capital projects, or investment appraisal committees. There are pivotal processes within an organization for which the CFO can set the tone, which then drive the digital analytics agenda.”
For Kristen Covey, CFO at Caterpillar Financial Services Corporation, becoming a better business partner means becoming more efficient through the use of new technology. “By better organizing data with the right tools, insights and actionable points more readily jump off the page. This has allowed our team to spend less time doing manual work and more time being a trusted partner to the business.” Using this approach, Covey and her team have seen success. “We have a lot more work to do but we are confident we are on the right path and will continue to build more advanced capabilities”, Covey added.
Along with the advancements to financial systems, comes the addition of automation and artificial intelligence (AI) to aid in financial reporting to handle financial processes and make strategic decisions. Automation for financial reporting removes the risk of human errors and allows for real-time updates, meaning reports are always up to date, and completes tasks in a matter of minutes that previously required hours or days.
Automation
While automation helps to streamline data collection and analysis, “AI algorithms can analyze large volumes of financial data, identify trends, and uncover valuable insights that would be challenging for humans to detect.” With tools like AI that examine customer data and financial behavior, distributors can provide more personalized financial recommendations for a customer’s goals. But among CFOs in the distribution sector, there are some concerns.
AI’s involvement in financial processes is still in the early days, but Evangeline Andersen, CFO at Edison Energy, sees “tremendous promise” with the technology, but her concern remains in the security of the financial data at hand. Due to the financial data being stored and transmitted electronically, there are concerns over data breaches. Covey expressed similar apprehension, stating that she believes there will always be a human element with decision making. “I think automation is much safer than the AI part of it, “Covey said. “Some companies are prohibiting the use of tools such as ChatGPT for business purposes due to concerns over confidentiality and lack of accuracy.”
While different organizations are in various stages of implementing technology for financials, CFOs in the industry have made it clear that upgrades are necessary to keep up. New technology, such as automation and artificial intelligence are crucial for distributors to drive down costs and take full advantage of the data available. “There are always challenges when integrating tech, “Andersen said. “The number one thing – if you have a strong leadership group around you the impact is so much greater than a single voice.”
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