Moderator:
Good afternoon, everyone. We have been talking about a lot of things related to change management, digital transformation, the CFO office. So we’ll try to elaborate on some of those things today with our partners, key players in our ecosystem, Andrew from Deloitte, and Philip from EY. So let’s jump into this right. So one thing we know about EY and Deloitte, you guys have a good pulse on what’s going on in the CFO office. So Andrew, let me start with you. So what are some of the key trends going on? What keeps CFOs excited or up at night from a Deloitte perspective?
Andrew Naret:
Yeah? Well, COVID has definitely forced executives to address uncertainty and CFOs are no different from any other executives, right? Deloitte just came out with their fiscal year 2021 Q3 CFO report, and that report showed that most CFOs are concerned about uncertainty because of COVID, rising costs, inflation, and regulation. And then second, they’re concerned about talent strategy, right. And on top of that, they have increased savings targets that they need to hit, which they’re addressing by org design. And then also technology, right on the org design. I mean, I’m seeing a lot of projects around the centralization of transactional roles and activities, to low-cost locations. And then also the creation of Centers of Excellence is, and then on the technology side, they’re looking at leading-edge technology, not just for transactional processes now, but for some of the more complex processes. So for example, forecasting, planning, commentary in terms of management, reporting, etc. They’re also really excited about self-service tools. And not just the ability to bring up a standard report, get the information that you need at your fingertips, but also something with push notification capabilities, and then easy-to-understand visualizations to make sense of the complex data. Speaking of data to I mean, like, we all know, garbage in garbage out, you can have like the best technology and tools. However, if the data isn’t great, that’s not going to make any of the tools useful. So they’re focusing on getting the data, right, skill sets that they’re looking for around data, our analytics, and then predictive modeling is really hot right now, within finance organizations. And then finally, the implementation of the latest er p cloud platforms are, are keeping a lot of organization finance organizations busy. And then on the talent side, I mean, I think we’re all aware that many people are leaving the organization to find other opportunities right now. It’s just the way the job market is. So you know, they’re struggling to fill in roles, and then also ensure that the talented team that they have, has the skill sets needed to meet the modern finance moving forward in the future. So they’re trying to build those capabilities, and then also how the workplace is going to look like in the next couple of months, how they could be even more effective and efficient, as before being completely remote or a hybrid of both remote and office.
Moderator:
So Phillip EY has a CFO survey every year, so what is your EY’s perspective on what’s happening in the CFO?
Philip Lu:
Yeah, we’re seeing a lot of the same of similar things. But I would say first and foremost, CFOs, are being really asked to get control of costs. So cost is a huge component right now of every CFO’s agenda. And before where it was like targets, and goals and things like that, it’s really now the baseline expectation. And so it’s the expectation to get your AR processes and performance under control, and inventory and AP and what we’re seeing more and more of is that it’s not just about the cost itself, but how that actually impacts the customer experience. And so these are becoming more and more linked as far as saying, Hey, if you’re looking at the order to cash process, most people just think about, like the sales side of things where you internet, you initially just interact with the customer through the sales pipeline. But every single touch after the invoice is out there from an incorrect invoice or misapplied cash or disputes or things like that. It’s an additional touch for the actual customer itself. It’s an additional touch for the company. And it’s just ballooning all these costs. So a lot of these things are still in the mind as far as well. We need to maintain quality, we need to maintain service, but we need to decrease costs. And so they’ve been through these transformations as far as looking at the different policies and processes and using low-cost countries. And it’s gotten them so far, but there’s still more that they need to do. And this like 10% 5% cost reduction year over year is great and it’s hitting the goals but it’s no longer cutting it in order to maintain competition, competitive pricing, and things like that. And so this is really where the idea of like digitization, automation, and other tools pools to help them reduce the workload, reduce the amount of defects reduce the amount of touches that they have to do in order to do a clean invoice or power clean process is really coming more into light and more into focus. So a lot of the conversations I’ve been having recently is like, how can we take it to the next step? What tools can we have? What else can we think about? And how do we make our processes better? How do we make our customer experience better, as well as our own employees, experience better, in order to continuously drive high quality and reduce costs?
Moderator:
Alright, so this is in the general category of digital finance transformation. So I want to end this conversation on an optimistic note. So we’ll talk about pitfalls upfront. And then we’ll turn around and see the critical success factors. But, you know, Forbes recently conducted a survey and, you know, echoing what you guys said, 90% of the CFOs are going through or planning to go through some sort of finance transformation projects. But the flip side of that is an estimated 75-70% of them are supposed to are expected to fail. Right? So So let’s talk about some of the reasons why these transformation projects don’t achieve the intended results. Phillip, maybe you can start off.
Philip Lu:
Yeah, and I’m gonna say that number doesn’t surprise me at all. These types of transformation projects are hard, right? And at the end of the day, you’re asking people to change, you’re asking to do something that’s, that’s completely different from what people are used to you’re you might be impacting people’s jobs, right? So there’s, there’s a lot that’s going on as far as these transformations. And there’s a lot of resistance to actually getting these done. Right. So I would say that there are things that you want to consider as part of this as well. So some things to keep in mind potentially are just like being realistic with your expectations. Are you asking your team too much? Do they actually have the correct capabilities? Or is this something that they actually want to do? Right, there’s a whole process as far as making sure that people are aligned with what the vision is, and getting them to execute that. The other piece here is that not everyone really is interested in doing this, right? If you put together a business case, and it just says, if we do this, we achieve these cost savings? Well, that’s just a piece of the pie, right? What about the customer experience? What about your quality? What about all these other things that are interconnected as well. And the more successful adoptions and transformations that we see is not where it’s only just being presented in one side, it’s really where you bring the collective efforts together, as well as all of the different pieces that are impacting different people. So there’s, there’s a lot that goes into this. And it really benefits to make sure that you have a good understanding of what all these things are impacting. And not just looking at it from a financial perspective.
Moderator:
What have you seen as some of the reasons why these projects don’t achieve the intended results?
Andrew Naret:
Yeah, I agree with what, what Philip had said, I mean, I think, like four areas, why like transformations fail, because of change management. Number one, people just aren’t comfortable with the change. They’ve either had a bad experience with a transformation in the past, they’re dealing with too much change, they have changed fatigue. And then there’s no change management team as part of the transformation journey, right? So I mean, obviously, like getting people on board, if it’s a technology, demoing it, letting them get excited and understanding what’s in it for them. And I say it like it’s easy, right? But like changing the mindset of many people is extremely difficult. But that’s just something you have to do, right. And in terms of like, change fatigue, I mean, all of my projects I worked on, on the client-side, a lot of people are burnt out, they’re not only devoting time to my project but many others on top of their day jobs. And there’s only so much time, so much time during the day. So I mean, every organization has to step back, look at what initiatives they’re doing, prioritize, and then put it on a roadmap to understand what are the dependencies and if there’s enough bandwidth from the organization to support that. Otherwise, it just has to move to the right of the timeline. And then finally, there has to be a change management role within the finance transformation team or the transformation team. Right? I think a lot of teams think that they can do this on their own. But they can’t. I think this is a skill set that is very niche to people who have been working in this space to be able to understand what the readiness of the organization is, tailor the training, tailor the onboarding, and then track adoption to ensure that it’s going well and take any precautionary measures if it’s not going well, too. So, yeah, yeah, definitely having a change management, devoted role on a transformation project has is has been key to success.
Moderator:
I’d like to double-click on Change Management earlier. It was some acquisitions thrown at the advisory firms such as companies that come in and provide slide wear and walk away. And that is true to some extent, obviously, change management. We’ve all been involved in change management projects. Typically boils down to a stakeholder map, a communication plan, and a training plan. It is all different kinds of slides where again, so from your experience, what could be done differently to actually help clients and people change their adoption patterns to new technologies?
Andrew Naret:
Yeah. So we’re talking about this prior to this as well like change management just isn’t about doing a readiness assessment, or the deliverables that are usually associated with change management. But I think you have to take a step back, and ensure that the finance organization is in the right mindset of adopting technology and bracing innovation, right? You know, I think a lot of finance folks, finance and accounting, I, in my experience, don’t like change, right? Like we like to do things. The way we’ve done in the past, even if it’s significantly more painful, takes significantly more time, it gets us like what we got before and we’re comfortable with it, right. And also, like many individuals just don’t feel like they have the right skill sets to adopt that technology. Using my grandma, for example, like, my grandma doesn’t understand how computers work, she doesn’t want to, she doesn’t think she has the right skill sets. And I think that’s the same thing with any finance organization. So usually, from what I’ve seen, like organizations, finance organizations will have a dedicated HR or people person or talent person who works with them to hire the right skill sets. And in this case, it has to include technology and innovation, right? So that the organization is well rounded. A lot of organizations are also doing a build, borrow and buy model, where, you know, they’re not always looking outside of the organization. But looking at who has the right skill sets in the organization to bring into finance. A good example of that is storytelling. And I don’t mean storytelling, like fiction, like obviously, you should not make up things about data. That is wrong, no one should do that. But like the ability to take complex data and make it easy to understand for various levels of the organization, right? I mean, you can look at marketing or public relations, if someone has those skill sets, bring them into finance. Or if you’re looking for someone who needs to lead like a large automation project, like look at manufacturing, if they’ve done something similar to that nature, too, right. And then also, changing the mindset of what a career path looks like, within finance, so that they become more well rounded, and not just like closing the books and transactional. So I think like in the past, you may start off as an AP clerk, and then you ended up as an AP manager if you say within the company. Now, what I see companies doing is doing more for rotational around the firm. So you may start out as an AP clerk, go to it to get the technology experience, go to commercial to understand the business better, and see how it interacts with the back office, and then come back to finance, as you know, a trajectory to maybe be a CFO of like a business unit. Okay. And that provides like a more well-rounded skill set for people within finance, to adopt the new technology.
Moderator:
What’s your opinion on more effective change management?
Philip Lu:
Yeah. And I want to first address by saying if you hired a change management professional, and all you got out of it was just a set of slides in Excel with your stakeholder management. And that’s all that you got out of it. And that was probably another great engagement. At the end of the day, the way that we look at it, it’s very much so a partnership as far as the change management. So do you need additional communication support? Do you need additional ideation? As far as how do you approach this sort of change from a leadership level to an execution level are what have you, and it really should be this back and forth approach? It shouldn’t really be, hey, this is what you should go and do it should be how do we get there together with the capabilities of the firm and with the capabilities of like the clients as well. And as far as change management as well, it’s been interesting how change management has evolved over like the decades, 2030 years ago, when you first started doing these, these large transformations, change management was either an afterthought or something that you really, really had to like push to sell, right? So European implementations, we had to like tack that on. But all of these sorts of like large transformations now is that its part of the deal. Like you have to help us figure out how we get this change to happen within the organization. And I’ll give a couple of examples, and I’m oversimplifying this very, very much so but I boil it down to really two different groups that you need to really enact change or get people to understand that change is necessary. The first one is a leadership team, does the leadership team recognize that they as an organization has an opportunity to change and quite frankly, need to change? And I actually do quite a lot of OC assessments. And what I’ve been doing with the assessments recently is actually incorporating the voice of the customer. I can provide 100 slides or whatever about the data, your process issues like all of these things that are problems in opportunity. But the one slide that says more than anything else that I could ever say, is when the customer says, You suck. Like, we love you, we love the business that we do, but you suck. And I’ve had exact client experiences with this. So I’ll give one example, where I had a conversation with the voice of the customer type engagement, where they said that you know, you guys won the bid, like we want to do this business with you, but your back end processes are so shitty, that we’re not going to go with you. So they literally won the bid. And then they lost the contract because of their back-end processes. Right. And so that type of story for leaders is what really makes them want to change, right. So to truly understand that, and helping, helping the teams that we’re working with, to bring this to their sponsors and bring this to leadership is something that we have to partner and do in order to find out what that story is to really enact that change. So that’s, that’s more so on the leadership level. Now, if you look at another stakeholder group, you look at the operators, right, so the people that are actually executing the tasks and working on these things. And quite frankly, change is scary, and no one wants to change because like they don’t know if they’re going to be successful, they don’t know if their job is going to be there. And it’s something that you’re going to inherently want to resist because you don’t know what’s going to happen. And so I think there are two real main important pieces here is one is the communications, right? being open and outright and just honest with your employees as far as what to expect with the correct timing, right. So you don’t want to just overload them with information, you need to be artful as far as what you provide them. And when you provide them that sort of information. So it’s not that it’s this nebulous idea of something is going to change that I’m going to be asked to change, it’s very specific, as far as, hey, we want you to change in this direction, these are some of the expectations, and this is how you get there. So you have the tools that you need in order to actually achieve that change. And then the second piece of that really is how are they incentivized to change, right. So if you’re trying to get a behavior change, that you are looking more at margin, or something specific, as far as operations, like is their incentive only to capture additional revenue, then they’re probably gonna find a way to do that and, and screw all your processes and really not care about the change that you’re trying to implement here. And so a lot of it is really making sure that they understand what the expectation is, understand that there are going to be things that are uncomfortable and quite, quite frankly, there’s also going to be things that are beneficial to and align, aligning those incentives with what you want to actually happen is how you impact the change at the operations level.
Moderator:
Okay, so you’re almost at the end of the time. And as I promised, I want to end this on a more optimistic note. So we talked about AI and ML earlier on today, and we had Heidi’s tend to get a little geeky about random forest algorithms and whatnot. So from a technology perspective, where AI is being adopted to solve specific business problems in finance, what are some of the upsides, what is your vision as to how these technologies can better assist clients to achieve their objectives, maybe close out on that front.
Philip Lu:
So the technology is coming, right? It’s no longer like bells and whistles and something like cool to actually go in and adopt new technology, it’s now really changing the price, it’s really changing the game that you’re actually playing, it’s the price of admission to actually play this type of game now as well, right. So if you think about say, like collections, historically, you have this at the branch level and you can go down the street and collect and you had like your business people that are involved and have maybe 10 to 100 customers. Now as you centralize into shared service centers, you have a collector that’s on the other side of the world that now happens to chase 1000 different customers, and a lot of these that aren’t like big ones, they’re very tiny, like mom and pop shops. So these collectors don’t have time to actually go and analyze all the data and understand these payment patterns. And they really need a lot of technology artificial intelligence automation to showcase where they should be focusing their efforts on otherwise there’s no way that they can handle it and it’s just going to lead to poor quality ballooning costs to try and chase things are and just overall low customer satisfaction if you don’t have the proper tools and technologies in place in order to enable efficient use of their time.
Moderator:
Andrew
Andrew Naret:
Yeah I mean I think a lot of the problems that I’m helping at least my clients with is how they can be more reactive to what happens internally and externally within the market or within their company and that’s it’s very reactive, right getting like the data that they need to make a decision. AI and all these leading-edge technologies allow them to be proactive about anything that is about to happen in the market to reduce their risk I just also using the order to cash examples right? collections, usually agents will call customers once the payment is late, right? I mean, a solution just like HighRadius will allow the ability to see which customers may be defaulting or late in their payments so that you can be proactive and call them before those payments are actually due to get that payment. For disputes, me disputes are a big problem in many companies, because not many know how much is out there in terms of volume. And in terms of dollars, but they’re just hard to close. And the longer something is in dispute, the harder it is to get the money and you’re going to have to write it off. Well, the ability to see what is valid and not valid, right, and for the ones that are valid to automate that workflow to the appropriate people so that you’re able to close those disputes as fast as possible and get that money is also extremely helpful. And then, even on the credit assessment side, like many companies should be doing this on a periodic basis. But it’s also very manual. But the ability to have real-time information coming in from third parties of credit agencies like d&b, as well as anything that happens real-time within the system, reaching the credit limit or late payments, sending a notification to the sales team or finance folks so that they can take proactive measures with the customer before anything bad happens, you know, is a huge benefit, I think from all these like leading-edge technologies.
Moderator:
Okay. All right. So let’s switch gears and open it up to the audience. So there’s a poll question for the audience. And then we can open it up for q&a right after that poll question. If you can see in the app, it says, By when do you think AI will become normal commonplace within the finance organization, and there are multiple options out there, it’s already become a mainstay in the finance organization. Or I can’t read all the options from here, but you’ll have them on the app. So take a second to fill in this poll question. And if you have the mics, we can open the stage up for q&a.More answers before I share the results?
Audience Member 1:
Yeah, I’m just waiting for the poll results. But you can ask questions for Yeah, we can go back to the poll after.
Audience Member 2:
Hey, I’m Poppy. And we are in the process of implementing Hi, videos, cash apps, cloud apps for Xerox Corporation right now. Question on change management? actually do. We all know, change management is an art. It may surprise us as the slides represented how it helps us moving a roller coaster ride during the tiring journey. My question is that, structurally, we should change magazine replays, should I should it be with the service provider? Was implementing a tool like a hire radius? Or should be the organization that is adopting the tool? And when should the journey start? The other two questions haven’t changed management?
Moderator:
Any takers? Go ahead.
Philip Lu:
Like any good consulting answer, I would say it depends. So I’ve had clients where they have their entire like change network already stood up, and all they need is the training materials. And they’ll do their own, like train the trainer type approaches, incorporate those training into their web-based learnings and things like that. And so it’s very, very low touch, right. And then I’ve had clients that have like, no idea about what change management is, and have, they need the entire structure, they need all the different tools, and they need all the help that they can possibly get, in order to actually make an effective change. And so it really depends on where the client is at as far as if they need additional help, we can provide that we have that experience. But if they have all these in-house resources, then they should definitely leverage what they have, because they’re ultimately they’re going to be more intimate with the people that they need to impact change with, right, and we want to rely on that structure. So it really depends. And the the the analogy that I typically like to use for change management is that all these things that we do, like the training programs, or the stakeholder analysis, analysis, and the communications plans, are all colors of paints, right? And the change management agent really should be the artist as far as figuring out how much of each of these to apply in order to actually impact the change and actually make sure that you get the results that you want.
Andrew Naret:
And I agree on my project right now, the change management team is from the client because they have a change management group. But past projects that they don’t, we would supplement that with, you know, our change management team to I think the important part is like there has to be a change management role. And the project team just can’t take that on, on themselves.
Moderator:
Any opinion on whether the lead should come from the function finance function or it I move on to the champions.
Andrew Naret:
I think like are the champions I think it has to be on both sides, right like the lead for change management, I guess like it’s usually a separate group within the organization that leans in and provides I’d like to change management folks who specialize in finance. But I think in terms of like adoption, you need champions on both sides like finance and technology.
Philip Lu:
I’m gonna say it should be neither, like the change management in of itself is it’s on practice, right? And you can have people that are very, very strong in it, you can have people that are very, very strong in finance, and you can have people that are very, very strong in change management, you need to work collectively to pull all these pieces together. And kind of going back to my analogy, right, the change management professional knows kind of based upon what they need to change what the environment is, like, what the tools are, like to understand how much of each of these to apply. And they really should be drawing from like it or the finance people in order to figure out how best to communicate this in order to design the structure and this program. But I really do think that, one of the most critical pieces as far as successful change management is how experienced that change management leader is. And it really shouldn’t just be, I’m the finance guy, and also the change management guy, I should be the change management guy. And I have the experience, right? So I can also have a finance background, or I can also have it background. But if I’m not experienced in change management, then I’m not bringing the correct skill sets to make sure that the change happens successfully.
Moderator:
This one final question. Oh, please.
Audience Member 3:
because I think they were listening to you. Because the number one answer to why by when do you think AI will actually become a norm and finance is change management and training while driving digital transformation is the key was the majority of the answers to that number two was the acceptance depends on how people perceive it, followed by AI is real, but some of us choose to ignore it. But that does not change the fact. And then the last one AI is already present and is being used by major operations for their finance and operations that was only like 10% person. Yeah, so But yeah, we have time for one more question, please.
Audience Member 4:
Okay, yes, I opted for number one here is present, at least most of them claimed to have AI in their PowerPoint presentation, and some perhaps have a little bit of it. So it’s half true. So I’m just fast-forwarding five years from now, let’s say all the models get better and everything gets fine-tuned. What’s next? What does your crystal ball show? After five years? As the AI gets better models get better? What’s next for all of us? In the
AI can.
Moderator:
Did everyone get the question? The question here, if I can paraphrase is five years from now, ai kind of settles in the models improve? What do you see as the future? What does the crystal ball show? I don’t have one, but maybe our smart panelists do so. put you on the spot here, Andrew.
Andrew Naret:
I think for companies, so five years ago, like we thought blockchain was gonna be like, the biggest thing in like, 10 years, right. And I think it’s not being adopted as fast as we had hoped or had wanted. And a lot of companies right now are still looking at automation as leading-edge technologies to implement within their companies. You know, I think, over the next couple years, companies will still be adopting automation, not only for transactional, but for the complex processes, and then slowly also start to go into like the AI and the cognitive. I don’t know, I don’t think that like most CFOs and executive leaders are bought into the investment that they have to make for these leading-edge technologies yet, hopefully, they will soon, because obviously, it’s going to be it’s going to reap great results. But I think like the trajectory of what we were hoping in terms of automation, going to AI then go into blockchain is happening a little slower than we thought. So I think in five years, cognitive and AI will be kind of like what people are doing right now for automation. And it’s going to take maybe five years after that for like blockchain, to adapt to.
Moderator:
closing thoughts from you, Phillip on that.
Philip Lu:
yeah, and I think five years down the road, it’s, it’s still going to be evolving, it’s still gonna be changing, right. And we saw from the technology demonstrations earlier this morning, that there’s a lot of cool automation and intelligence that’s already happening. But you can also see that there’s still a lot of opportunities, right? There’s still right now, today, human interaction that’s needed. There are natural language processing that you can do outbound calls and actually get that information back that’s being developed, right? And so as the technology continues to mature and evolve, the number of capabilities it’s just going to keep on increasing, right. And it at the end of the day, I think it’s an arms race between the different companies, they’re competing as far as decreasing costs. They’re competing as far as increasing quality, and the better tools that you have to enable that that change is going to help you compete in the marketplace to increase customer service. Do you freeze your costs and decrease your prices to your customers. And it’s really going to it’s going to continue to change the game is going to continue to be a competitive advantage. If you can get these things under control and really leveraging technology out there to make your own processes better and cheaper.
Moderator:
And from a HighRadius perspective, we will see a lot more progress towards autonomous software. That’s a promise from our side for sure. So with that, thank you very much, everyone. Thank you, Andrew. Thank you, Philip, for sharing your expertise with us. Appreciate it.
