FSN’s recent research, The Future of Automation in the Finance Function, was carried out during the height of the first wave of the COVID crisis in Europe and the US. It underlines the crucial importance that automation plays in building organizational resilience and agility in the face of disruption.
The research found that 9% of respondents who had fully transformed their finance processes before COVID struck—the automation leaders—outperformed their contemporaries by a significant margin. This was most notably across a wide range of measures, showing the ability to change processes on the fly and respond quickly to new and changing information requirements.
The Impact on Every F&A Organization
Interestingly, no organizations came through COVID unscathed. Even those in the least affected industries and with the strongest balance sheets found that their supply chains, customers, suppliers, and employees were significantly disrupted.
All of the core finance processes (Purchase-to-Pay, Order-to-Cash, Record-to-Report and Budgeting, Planning, and Forecasting) were impacted considerably, leading to more than 50% of CFOs saying that this had increased the urgency of investment in finance systems automation.
The need for investment is considerable. After years of neglect, spending on customer-facing systems is outpacing investment in finance systems by at least a factor of 2:1 (earlier FSN research suggests the figure could be as high as 4:1 in some businesses).
Furthermore, when it comes to a process such as Record-to-Report (R2R), the potential for automation is large: 47% of survey participants said they could “do more” to automate the process, and a further 37% conceded that they could do “a lot more.” Only 13% claimed to have fully exploited the potential of this process.
Best Practices from Automation Leaders
So, the crucial question is, how have automation leaders automated their way out of disruption?
The survey findings shine a light on the best practices of automation leaders. For starters, these CFOs regularly review opportunities for process improvement and automation at least annually. This is in marked contrast to the quarter of CFOs who only consider automation when a system comes up for replacement, or the 9% who only look at automation opportunities every three years.
Remarkably, a full 15% of finance functions never review automation possibilities at all.
When reviewing automation, 100% of automation leaders start from the position to standardize their processes before embarking on an automation initiative.
And when they consider process change, automation leaders ensure that this is conducted on an enterprise-wide basis (73%) rather than the more usual functional or silo-based approach.
So, it’s not surprising that automation leaders are far more likely to say their automation projects had met or exceeded their expectations. For those that grasp the nettle, the research shows that automation has very tangible rewards.
Automation Leads to Less Disruption
The COVID pandemic far less disrupted automation leaders. For example, compared to organizations that had not invested in automation before the pandemic, they could collaborate more easily across finance processes. They had less difficulty sharing documents, and they could more easily resolve queries.
Those working in the cloud were at a particular advantage, easily able to change processes and respond to new information requirements—all crucial characteristics of a well organized R2R process.
As we approach a new December year-end season, automation leaders will be well placed to close the books on time, produce their financial statements, and satisfy demanding audit requirements.
But they will also rest safe in the knowledge that their investment in automation will buffer them from the disruption in the future, and enable them to respond to ‘normal’ levels of uncertainty and business change.
Read FSN’s global report for the full survey results. You’ll learn actionable insights, including which finance processes were hit hardest by pandemic disruption and how F&A organizations can become better positioned to survive and thrive.