The CFO office – inconsistent tech innovation

mail paper drownI did a couple of (un-enjoyable) years to start my career at Price Waterhouse. I audited accounting processes at several companies and government agencies. 3 decades later I am still surprised how inconsistently many of those processes have evolved.

Accounts Payable

In 1990, Michael Hammer wrote his seminal article “Don’t automate, obliterate” where he described how Mazda needed only 5 AP employees while Ford needed 400. He described what is called “Evaluated Receipts Settlement” – pay upon receipt of goods, tackle inaccuracies later in cycle. Today with scanning and matching technology, it is surprising how paper intensive the process still is. Instead of using Big Data based forensics most companies still have petty AP policies. So what if the IRS says no receipts needed under $ 75, our suppliers better document every single dime they charge us. BTW talking about receipts, the travel world has become almost completely digitized (see my note on a recent cashless trip to NYC which in past required raiding the ATM machine) but the T&E process at many companies is still awfully paper intensive/

Budgeting

One of my first research notes at Gartner in 1995 was titled “Budgeting: The painful ritual”. 20 years later most companies still use spreadsheets and make basic adjustments to previous actual and estimates. It is still a hugely political process to agree on budgets. Even the large forecast misses during the last recession have not done much to shake this ritual. Even the ability to develop econometric models using newer analytics has not reshaped the process much.

Assets

On the flip side, I have been impressed to see many asset intensive industries use sensors and tags to allow for better predictive maintenance and asset tracking. Of course for many, it is still about glorified depreciation accounting.

Billing and Receivables

While billing has become more complex with an explosion on SKUs, assortments, configurations, and as tax calculations and shipping options proliferate, you can see the warts as they struggle to adjust to subscription revenues, tax holidays, currency conversations  and other adjustments. With many government agencies and utilities it is painful to see how poorly their receivables are handled as they struggle to accept recurring credit card charges, as they accept disputes etc

A growing number of companies are looking at cloud based financial options. This is healthy, especially if they can get away from the economic burden of their legacy ERP provided accounting,  but that automation needs to be supplemented with the obliteration part. Ironically, their auditors are often the barrier – they worry about cloud based security, controls, SLAs – without benchmarking against the status quo which is pretty bad.

And talking about auditors it is surprising how little sampling and forensics have evolved in that profession since I was a young pup. I am just glad I did not have to continue auditing accounting processes beyond the initial required couple of years I had to endure.

(Cross-posted @ DealArchitect Full)

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CEO of Deal Architect, a top advisory boutique recognized in The Black Book of Outsourcing, author of a widely praised book on technology enabled innovation, The New Polymath, prolific blogger, writing about technology-enabled innovation at New Florence, New Renaissance and about waste in technology at Deal Architect.  Previously Analyst  at Gartner, Partner with PwC Consulting. Keynoted at many business and technology conferences and has been quoted in the Wall Street Journal, BusinessWeek, The Financial Times, CIO Magazine, and other executive and technology publications.

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