In this episode, Sidetrade’s Director of Customer Success, Andrea Baker discusses the five finance transformation pitfalls that teams need to avoid in 2023 – from investments in RPA only to relying on historical data and associating technology with headcount reduction.
In this episode, Sidetrade’s Director of Customer Success, Andrea Baker discusses the five finance transformation pitfalls that teams need to avoid in 2023 – from investments in RPA only to relying on historical data and associating technology with headcount reduction.
Welcome to Finance to Futurist, a Sidetrade podcast series on how innovation data and AI are disrupting order-to-cash.
Natalie Silverman:Hi, this is Natalie Silverman for Sidetrade. Welcome to Finance to Futurist. On today's episode, we're discussing the five finance transformation pitfalls that teams need to avoid and 2023. From investments in RPA only to relying on historical data and associating technology with headcount reduction. Please welcome Sidetrade's Director of Customer Success, Andrea Baker. Good morning, Andrea and thanks for sitting down for Finance to Futurist.
Andrea Baker:Thank you for having me. It's lovely to be here again.
Natalie Silverman:I know I was gonna say you're now a regular guest. And every time you're back on the podcast, we're excited to have you. You know, maybe for those listeners that aren't as familiar with you, would you mind just giving us a quick tutorial on your background?
Andrea Baker:Of course, my pleasure. So I am the Director of Customer Success here at Siderade. But prior to that, I've had a long career in finance and finance transformation specializing in order-to-cash. I won't say how long, but more than 20 years less than 30. You can make up the number that you think is most relevant.
Natalie Silverman:Oh, that's great. Well, you know, we always love having you here because you bring that practitioner background. And I thought today, let's have some fun. It's the end of the year. I love doing prediction podcast, but let's talk about actually things to avoid. So I think that actually is a little bit of a different twist here. So I wanted to chat about the CFO, because as you know, the CFO and finance leaders, they're really no longer just a back office function. And as you said, even previously in other episodes, they're becoming strategic and business advisors, right. So, you know, I think for 2023, I'm seeing the trend lines that finance leaders really have to be prepared for the future. So why don't we break down the top five pitfalls that the finance team needs to avoid in 2023. And then you could let us know how they could avoid these pitfalls, and maybe some best practices. Sound OK?
Andrea Baker:Sounds great. Yeah, I do like it. I look forward. Everyone's usually really optimistic at this time of year. And I think sometimes you can overlook some of the sort of risks that come with that optimism.
Natalie Silverman:Absolutely. So I'd say let's just, you know, acknowledge the risks, and then we'll get to the best practice part. So number one, for me is keeping the status quo. What do you think?
Andrea Baker:Yeah, I think that is probably the biggest pitfall because particularly as you go through your year-end process, you've got an eye on this year, you've got an eye on next year. And it's really easy to fall into the sort of comfort zone of carrying on with the pace that you have today. And I think really what the biggest opportunity is and where the opportunity lies, is actually to start dialing up that transformation. Because most companies have got transformation expertise to greater or lesser extent, and with an eye on costs, you know, look to within your finance department looked within your CFO organization, because there's a lot of expertise there that can be tapped into and brought forward, particularly in the times of change. I don't want to talk about interest rates and inflation overly, but I think that gives us a mindset of risk avoidance. And actually, one way of addressing that is to utilize the talent you have and dial up those transformation products. Whether therefore, you know, the value streams, whether it's an entire order-to-cash project, or it's a specific area where you know, you can do better than I think that that status quo is a bit of a danger zone. You know, just because we've always done it that way is probably, you know, the place where nobody wants to be in 2023, because it's not really justifiable, the world's changed so much in the last year to 18 months, and it's gonna continue to change. If you stand still, you'll be going backwards.
Natalie Silverman:That's a great point. And you know, what change is hard. Change is hard for everybody. So sometimes, as you know, keeping the status quo is easier. It's less daunting. And as you said, maybe they think about the risk of change. But there's even a greater risk if you don't change.
Andrea Baker:Exactly. And the additional value that a finance team can add when we're all looking to do more with less. And you know, that expertise that can be tapped into is really valuable.
Natalie Silverman:All right, so let's go to number two. This is a pitfall that I think a lot of times I think it goes back to people not being as well-versed in some of these new technology trends. So let's talk about the number two pitfall of being investments in RPA only. And again, RPA is robotic process automation. I know it sounds fancy, but maybe you can uncover a little bit why people get stuck and maybe thinking RPA is the right approach versus maybe going beyond that simple automation.
Andrea Baker:Yeah, I think it's a great point really, because RPA is really a replacement for the old swivel chair interfaces, where you're taking information from one system and putting it into the other thing that is probably one of the most common process inefficiencies within a finance department. Whether it's billing or accounts payable across all of the finance department, there is historically an overuse of Excel and moving information from one platform to another and automating that using RPA, which is, you know, simply put a very, very expensive wizard that just does exactly the same thing. You ask it to do time and time again, that's really just a sticking plaster. Where you have that type of activity, you have to sort of look beyond that and think, well, why do I have that kind of activity? What is it that I'm missing? Because you're moving data from one place to another, but you're not necessarily learning from that data. And in the worst case, is you could actually be industrializing bad practice and inefficient processes. And just by putting a robot on it, and taking a person out of the equation doesn't mean the process more effective, it just means it's cheaper. And when things are cheaper, you tend to do more of it. And you could end up with downstream problems. So one of the things that I've certainly seen to be successful is to look beyond that process and look into the data behind it. And I think that very quickly takes you into the world of artificial intelligence. And that brought forward into the various value chains in finance is a real game changer. Because if you can see the data that you've got in your, in your ERP through the prism of an AI capability, you can drive many, many more insights and drive more revenue, drive more cash, drive more efficiency. Whereas if you put a bot to just move something from one place to another, you're missing a huge opportunity.
Natalie Silverman:I think that's a great point. And you know, I know some people might think AI and think, wow, this is too advanced. For us, this is beyond if we're using Excel today. Is AI, you know, kind of a world away and is it really for a futurist, right? Which again, we try to say, hey, being a futurist, isn't that scary. It's just thinking a little bit more around data and technology. But this actually segues nicely into I think a pitfall that associating technology with headcount reduction. Sometimes people think, oh, AI, again, too advanced, and guess what it's going to replace me, that's going to replace my job. And so people might be hesitant to even be thinking about that type of technology. So how do you avoid that pitfall of really just thinking AI equates to reduction?
Andrea Baker:Hmm, great question. I think we've got a perception sort of a science fiction perception of AI, which is thankfully reducing. If you think about today's teenagers and today's students, they live their lives with AI as standard. Even when we put a background on Zoom or Teams, the fact that it tracks our movements and tracks our faces is AI, it's everywhere. And I think generationally, if companies don't have AI as standard, then they're going to start to look a little bit analog. And when you're looking at increasing the call, or the requirement for new staff, if you're looking to attract innovative graduates, or in fact, anybody who's going to be interacting with your clients and your revenue, then you have to have some technology, which is up to date. So I think what we're looking at now won't have that science fiction element to it anymore. It will just be a standard, as you know, the iPhone in our hands is which is expected. When we look at using technology, we should look at it in terms of employee retention, and employee attraction, some of the jobs that technology will replace actually, it's finding it quite hard to get people to do those jobs anyway. Because the expectation is of more technology just because of our digital lives and the way that we live our lives with technology and AI, so maybe not the snappiest answer, but I think it's something where more senior people need to have that leadership shadow. If they're not worried about utilizing AI, then that will reflect on the teams and the staff as well. And it improves jobs and then improves the experience in the workforce, then that's all to the good.
Natalie Silverman:Alright, so number four, the pitfall that finance leaders should really avoid is the lack of a partnership sometimes between the finance team and the IT team or the transformation team. I know we talk about it's really important to collaborate and to communicate more, but I don't know for some reason, it seems like maybe again, everybody gets busy and starts to work in their own silos. But how do you avoid that pitfall?
Andrea Baker:That's another great one. I think in terms of collaboration between finance and it in two disciplines, which I think have converged and diverged over time. So I can remember a long time ago where the IT department actually came under finance. And then as it became more and more of a focus of companies it became it's more it's own discipline with a board member, etc. But I think we're back coming back round now towards the convergence of the disciplines, because the way that finance people plan and the way that it people plan are actually quite similar, you know, the budget processing is similar. So the opportunity to collaborate in terms of roadmap and budget, I think, is really the place where you'll get more bang for your buck, as it were. So when a CFO now wants to take on a piece of technology, because it's either the finance department or any other part of the company wants some technology, the two people they need to speak to the CFO and the CIO or CTO, depending on the configuration. And if you think about the way that software is now purchased, it's purchased on our pumps, rather than what the technology is. So the CFO can say I want to reduce my DSO and the IT department will have the expertise to know where their ERP is optimized, where there are gaps in their ERP process. And they've got the skills for the business analytics and management information to actually come together and construct a good solution going forward. So I think there's complementary skill sets, but a very similar way of looking at a budget cycle. And that, for me, is where I think the collaboration is the most powerful.
Natalie Silverman:All right, Andrea. So we're coming up at number five. So the biggest pitfall that I see most recently is relying on old and limited data. So how does the finance team avoid this big pitfall for 2023?
Andrea Baker:Yeah, we've all had those moments where we're looking back at huge, vast Excel spreadsheets, and macros and pivots and all sorts of things. And you think, oh, there's got to be something different out there. Because there's only so many ways that you can look at the same data and come up with a different idea. So I think the idea of looking at wider amounts of data which are relevant to your experience is going to be critical. If you do the same thing with the same data and you expect a different outcome, then you're going to be sorely disappointed if you have the ability to utilize technology with its data lake to benchmark data, because I get asked a lot is customer success. What does good look like? What is it that I'm aiming for? I can see that my customers over the last X amount of years have paid me on this many days. And this is the dispute types. But how do I know that that's the best I can do? You know, I've optimized what I can optimize? How do I know what I'm reaching for, and something like the data lake to benchmark that and to understand not just what's happening in your industry, but what's happening in the wider buyer communities is really the thing that's going to change the game. You know, if you look at the same spreadsheet, and it never moves, if you look at the same age debt, and the same customers are always the same degree late, then you're going to need something to inspire you to know what to do differently. And for me data is that inspiration.
Natalie Silverman:Thanks, Andrea, for your insights into the future of finance. For Sidetrade, this is Natalie Silverman.
Conclusion:This has been another episode of Finance to Futurist a Sidetrade podcast series. Make sure you catch every episode by subscribing to our podcast on Sidetrade.com or through your podcast platform of choice. Thanks so much for tuning in. This podcast is brought to you by Sidetrade, and is for general information purposes only. All rights reserved.