AI is on the horizon for finance, but what about here and now?

Intelligent applications, machine learning, and most other AI-related buzzwords are on the “peak of inflated expectations,” according to Gartner’s Hype Cycle for Artificial Intelligence, 2018. Most finance leaders will readily agree with the report’s opening line:

AI is almost a definition of hype.

While many companies point to the future potential of AI, it does little to help finance today. The reality is that it may not be materially beneficial to our daily workloads, at least not for a few years. But that doesn’t mean finance should sit back and wait for AI capabilities. Technology has made financial planning and analysis faster, easier, and less error-prone, even as business data continues to overwhelm traditional tools.

Companies are already collecting the data needed to fuel better business decisions, which is allowing finance to take a more strategic approach to their business. Modern organizations are taking advantage of data today by using enterprise performance management tools to help them get a head start on the future of finance. They aren’t waiting for AI or other advancements in technology.

The time to modernize your tools and technologies is now so you can make the most of your data today.

Technology doesn’t age well

The venerable spreadsheet is pushing 40 years old. There have been many advances since VisiCalc first appeared in the early 80s. But the general idea remains unchanged, as do the limitations. Spreadsheets can only handle roughly one million rows of data. Formulas have to be manually entered and quickly become complex and difficult to decipher. References between tabs and files increase the complexity. Simple errors in formulas or cells can have enormous consequences for both finance and the business.

The list of spreadsheet drawbacks goes on and on yet companies still rely on spreadsheets to make critical financial decisions. Many of our customers have experienced negative business impact based on spreadsheet reliance. For Host customer the Boston Red Sox, spreadsheets were error prone and the cause of misstated financial results. Spreadsheets didn’t allow them to interpret the data quick enough for senior management. Ryan Scafidi, Senior Director of FP&A says:

We would spend an exorbitant amount of hours making sure every little number ticked and tied to each other. We were starting to get questions from ownership and senior management on a more frequent basis about how we thought our budget would be impacted by changes going on in the organization. We knew it was not feasible to be able to forecast with that process.

Spreadsheets are also slow. PS Logistics, one of the largest flatbed trucking firms in the US, transformed its financial and management reporting away from spreadsheets and into the cloud. The company’s monthly close used to take four weeks, soaking up all their resources, says Dwight Lloyd, Financial Controller at PS Logistics:

We really had no time left for analytics.

Modernization cut that down to just five days. Once that time was freed up for more strategic work, PS Logistics was able to find previously hidden insights. In one example, the company identified $2.4 million in annual savings after discovering issues with its fuel surcharge model.

AI will eventually be able to help finance make decisions faster but for now, examples like this show that the data is already available to finance teams, you just need a better way to evaluate and leverage it. Finance is evolving beyond spreadsheets, which is allowing finance to become more strategic.

New skills are required

Companies are increasingly becoming more data-driven. As finance moves to becoming the strategic center of the business, data can be used to make better decisions. But only if you’re using tools that can handle it.

Spreadsheets aren’t data warehouses, so companies who are using spreadsheets must export, alter, summarize, format, and import data. This process increases the possibility of errors, not to mention the loss of fidelity from the original data.

Finance needs insights and answers from data today if you want to evolve into a more strategic team. Reducing errors, eliminating tedious data imports, parsing massive mountains of data, streamlining systems integration, and easing analyses is where modern technology can help finance right now.

Furnishings retailer Room & Board is a very data-driven company. Its planning process required finance to pull data from multiple systems and manually copy-and-paste it into a consolidated format. It took weeks to complete the process.

Once the process was modernized, budgeting and planning took mere minutes. With a near elimination of tedious manual work, finance was able to focus on collaborating with the business and becoming a strategic partner.

Finance needs answers today

As mentioned in my last post, the skills needed to run finance are evolving as well as the technologies. Being able to crunch numbers and generate reports isn’t enough. Finance needs to understand the systems involved, recognize the opportunities in the data, in order to make better strategic decisions.

As the evolution of finance continues, AI absolutely is on the horizon. But the pressure is on finance today, and you need to focus on improving, streamlining, and accelerating existing processes. The desired result has to be more efficiency, and the best path begins with using the data you already have to fuel better business decisions. Finance can then become that ‘single source of truth’ for the entire business. It makes it easier for finance to do its job, but also to have a broader and deeper view into business performance.

AI is coming and the promise is huge, but you cannot wait for it. Modern finance platforms are cloud-based, user friendly, and integrate easily with existing tools and systems. Best of all, they’re available today.