Technological innovations place finance leaders at the center of value creation, introducing opportunities to reposition investments, such as redirecting dollars from lower-value activities (e.g., transaction processing) to higher-value activities (e.g., strategic initiatives). Whether in the private or public sector, companies must assess the risks and opportunities associated with the changing technologies influencing their strategy, operations, and financial edge. No organization is immune to this rapidly evolving change. Those that successfully embrace change will create, improve, or sustain their competitive positioning, while those that stumble may quickly become irrelevant.
Among the key technological trends is robotic process automation (RPA). In simple terms, RPA is a more advanced and intelligent form of process automation leveraging software tools (or software robots) to effectively and efficiently perform tasks traditionally performed by humans. Designed properly, software robots can operate 24/7 at a lower cost than humans while delivering higher-quality and scalable output. This set of benefits can make an appealing value-creating business case. RPA initiatives are likely to target processes that are labor- and transaction-intensive, where people are performing recurring tasks that can be redesigned as rules-based activities performed by robots or software tools. The benefits of RPA initiatives may include, but aren’t limited to, the key measures in Table 1.
As financial professionals, management accountants recognize many of these metrics as vital to how we plan, manage, communicate, and influence performance across an organization. The ability to evaluate and recommend actions that lead to improved performance is a core attribute of an effective management accountant. When honed, this skill can propel management accountants into senior finance or business roles where their decision-making acumen and judgment are relied on to drive value creation. Embracing RPA expands the number of opportunities a finance leader has to create value.
WHERE TO BEGIN?
It’s critical to identify and successfully execute value-creation opportunities if organizations are to build and sustain their competitive edge. Technological innovations such as RPA allow organizations to brainstorm from a larger opportunity set. Those that limit their ideas to dated technologies are destined to fall behind their competition.
Technology is one of five key elements of the IMA® (Institute of Management Accountants) Management Accounting Competency Framework. Specifically, the Technology competency requires the management of technology and information systems that enable effective operations. Highly skilled management accountants help organizations lead the assessment of new technologies as they emerge, with improved operations being the goal. This has never been more critical as new technologies continue to emerge faster and in greater numbers.
WHAT CFOS ARE ASKING
Where do I begin? Which technologies? What processes? How do we match technological advancements with operational challenges we want fixed? Nearly all CFOs struggle with these same questions. The lack of perfect clarity in how RPA or other new technologies will reshape the future finance organization must not prevent leaders from taking advantage of these disruptive tools. So where to begin?
Again, RPA initiatives are likely to target processes that are labor- and transaction-intensive, where people are performing recurring tasks that can be redesigned as rules-based activities performed by robots or software tools. Many finance practitioners can immediately relate to labor-intensive operations, such as order-to-cash, purchase-to-pay, or record-to-report as potential RPA initiative candidates. Here are a few steps that can put some structure around your RPA brainstorming and selection process:
Step 1: Define Your RPA Opportunity Set. List those processes that are labor-intensive, consisting of very structured and repetitive activities. Activities that are highly complex, requiring a high degree of judgment, may not be ideal candidates for RPA. Process owners, subject-matter experts (SMEs), IT support staff, and others may have a bull’s-eye view into great RPA opportunities, so don’t limit input.
Step 2: Preliminary Opportunity Assessment/Goals. Assess the RPA opportunity set from Step 1 against a defined set of prioritization criteria such as strategic fit, degree of impact, ease of implementation, customer impact, cost, or others. This step will help weed out those opportunities that don’t align with Finance’s strategic goals, ensuring focus (effort and investment) on the targeted few.
Step 3: Validate the Prioritized RPA List. Prior to investing resources, validate that the defined benefits are achievable. This may involve a more robust process review to unearth any obstacles to achieving targeted levels of success.
Step 4: Start Small. Don’t try to implement all RPA opportunities at once. Select one or two RPA projects to start with. Getting a win under your belt will act as a tailwind for future projects. Selecting the right core RPA team is critical, so make sure it contains people who can act in functional and technical capacities as needed.
RPA is here to stay. It’s one of several technologies that empower the management accounting profession to proactively explore modern software tools for creating value across an enterprise. Successful CFOs and finance and accounting leaders will have to demonstrate their contributions in shifting the pendulum away from investment in lower-value activities and toward those recognized for having higher value. RPA is a catalyst for making this shift a reality, with management accountants uniquely positioned to contribute and benefit from it.
Despite the speed of technological change, it’s crucial that management accountants understand its implications for the finance profession and organizations more broadly. Traditional transactional process activities within finance, such as order-to-cash, purchase-to-pay, or record-to-report, should no longer be highly labor-intensive. Advances in technologies, process design, and data management can enable highly automated processes with human touchpoints relegated to exception processing. Clearly, this is an ideal because most organizations haven’t yet achieved an optimal level of automation. Management accountants should recognize these labor-intensive processes as areas that need to be explored so the shift in resource allocation from lower-value to higher-value activities can be advanced.