Digital Finance in 2017: Annual Budgets Cease as AI and Machine Learning Take Center Stage

In the last year, we saw a rapid evolution take place in corporate finance. Companies across the globe spent much of 2016 addressing the impact of economic volatility, encouraged by oil prices, unexpected political developments and shifting currency and regulatory implications. This economic uncertainty has driven an increasing demand for real-time, detailed visibility into the finance function, and advanced technologies that can better enable this to introduce new business models.

As we look forward to 2017, I sat down with a few of my colleagues at SAP, as well as finance executives from our partner organizations to talk about the trends rising to the forefront of the finance industry. A few themes emerged as a key focus for corporations going into the new year: the potential of advanced technologies such as artificial intelligence (AI) and machine learning, retiring routine budget cycles, and the talent focus created by industry transformation.

Finance and IT will grow even closer as automation technologies drive digital disruption and become mainstream in the market.

The digital economy has increasingly linked the roles of finance executives to the CIO and IT. According to Deloitte this trend will continue to transform the finance function in the year to come. "Finance stands at a crossroads where new technology offers the chance to dramatically improve automation and efficiency, allowing Finance to step forward as the analytic engine for companies," Miles Ewing, Principal Deloitte Consulting, LLP.

Robotic and automation technology will play a large role in fueling the shift towards making Finance more agile and intelligent. As Alex Bennell, SAP Finance Transformation Specialist at Capgemini UK, 2017 will see "the rise of the bot." He continued to note that the ability of automation and bots to undertake straightforward and repetitive tasks will be realized, but machine learning also poses an opportunity to widen automated responsibilities to include more complex activities, such as reconciliation, collections and even report writing and analysis.

Rodger Howell, Principal, PwC's Strategy&, continued on this topic, noting that "Finance is rethinking their approach to automate reporting." According to Howell, companies are increasingly looking past software solutions, and instead looking to robotics to automate existing processes and approach, resulting in increased speed in processing information, improved quality and minimized human errors and ultimately, reduced cost.

Machine learning and artificial intelligence have become big industry buzzwords in the latter half of 2016, but as we move into 2017, these advanced technologies will evolve from ideation to reality. "These technologies are accelerating the pace of change and will eventually become the 'new normal'," according to Tony Klimas, Principal, Global PI Finance Leader at EY Advisory Services.

As AI and machine learning become adopted into the mainstream, we will start to see finance become more predictive. My colleague, Martin Narashewski, Vice President of Line of Business Finance Solutions at SAP, noted that "2017 will be the year for machine learning and predictive methods to make their way into Finance."

The annual budget cycle will become a relic of Finance's past as dynamic planning processes become the new norm

In looking at the potential of advanced technologies and their ability to make Finance more predictive, a second theme emerged: the death of the annual budget cycle.

"Accounting is becoming a continuous exercise," commented Henner Schliebs, Vice President of Global Marketing, Finance Audiences at SAP. As technologies continue to empower finance to be nimble and predictive, planning and reporting become in the moment and forward looking.

CFOs and finance executives are increasingly expected to bring real-time insight to board meetings, and provide strategic counsel to the CEO. With this growing responsibility, outdated finance models that rely on annual, quarterly or even monthly budget systems become instantly outdated. Instead, automation and robotic processing will enable the finance function to provide detailed, and in some cases, predictive analysis that will inform company strategy and ultimately drive business results in 2017 and beyond.

As Klimas noted, "It's an exciting time and one in which traditional business operating models that have been with us for the last century are going to look quite different in the near future."

There will be a renewed focus on the next generation of "finance" talent

With traditional finance systems getting an overhaul, talent is another factor that will be top of mind in 2017, especially given the impact that AI will have in replacing some of the repetitive roles and tasks within the finance function.

This opens the door for a new generation of millennial talent - who have come to expect technology to pave the way for their career paths in a way yet to be seen. "Most CFOs today began their journey to the top spot in lower level management accounting or analyst roles. Having these roles replaced by machines will have a dramatic impact to career paths and the way we think about the various jobs in finance," commented Klimas. We have already started to see this focus be realized, with three of the top 10 companies slated to hire the most 2016 college graduates according to LinkedIn Research falling into the accounting and consulting space.

Furthermore, a basic IT skillset is becoming more critical to finance success than ever before. As Eliseo Belmonte, MD, Accenture Technology, SAP Finance Transformation, commented "digital technologies elevate Finance to a new role in business that is disrupting traditional ways of working, demanding a change in talent and a differentiation through insights." Belmonte continued by noting that 2017 needs to be the year for 'raising new Finance talent' in order to meet this industry shift.

As we look ahead to 2017, it is clear that the transformation of Finance has only just begun. Advanced technologies like AI and machine learning will continue to drive the industry forward as the need for companies to be agile in their finance reporting and planning becomes paramount to business ROI. And as traditional business models are thrown out the window, the need for fresh finance talent will be critical to realizing success in the digital economy.

To view more finance predictions for 2017, visit the Digitalist.