Tim Leger on the Finance Organization’s Digital Transformation

Tim LegerThe digital revolution is impacting every industry, affecting the way companies service customers, manage operations, engage with their workforce, and remain competitive. According to IDC analysts, within the next two years, two-thirds of Global 2000 enterprise CEOs will have a digital transformation at the center of their corporate strategy. This creates tremendous challenges and opportunities for every organization in the enterprise.

I was delighted to sit down recently with Sutherland’s Tim Leger, SVP Finance Transformation Practice, to discuss the impact a digital enterprise will have on the CFO, as well as the entire finance organization.

Tim has over 25 years’ experience in the Business Process Services (BPS) industry and is at the very forefront of transforming finance operations in this digital era.

Join us as we discuss the era of what he calls intelligent digital processes.

SC: Every business journal you read today talks about need for an enterprise to accelerate their digital transformation. In your discussions with CFOs, what importance do they place on becoming a digital enterprise, and what is the main benefit they are looking to achieve?

TL: Today, companies are at various stages in their digital journey. In my conversations with CFOs, they unanimously recognize that completing their digital transformation is fundamental to their growth, and even their survival. They see the pace of change accelerating, and they cannot afford to be left behind. Gartner predicts that firms that have not yet started a digital transformation will not perform in the top quartile for productivity and operating profit by 2020.

CFOs absolutely understand the importance of becoming a true digital enterprise. They view the finance organization playing a major role. More importantly, they see this as a catalyst to transform their enterprise business processes. However, the majority are struggling to sort through the hype vs reality in how to digitally disrupt the business without impacting operations that, for the most part, are still running on legacy platforms. There are a host of automation software and platforms available to support their journey, but many admit they are a bit overwhelmed and not sure where to start.

In answer to your question, on the primary benefit they are looking to achieve; in their own digital transformation they are looking for the ability to extract business intelligence out of the massive amount of data being collected. Every enterprise is flooded with information, and every second of the day, more and more data is created. It has been an ongoing struggle to monetize the mountain of unstructured data floating around. To CFOs data is the new currency.

The automation available in a digital enterprise will enable the finance organizations to create, what I call, Intelligent Digital Processes. These are automated business processes that capture structured and unstructured data, apply analytics and provide actionable business intelligence.

CFOs understand companies that achieve this first will have true competitive advantage.

SC: You mentioned automation to enable Intelligent Digital Processes. Can you talk about the automation currently available and where it is heading? Is it the game changer analysts are declaring it to be?  

TL: In short, automation is revolutionizing how transactional business tasks are executed. It is disrupting the service delivery models that have existed for decades.

We are seeing multiple waves of technology being introduced to automate enterprise business processes. In simple terms technology replaces a series of human actions. While automation tools have been around for some time, they are becoming more sophisticated.

The first wave of this automation was Robotic Process Automation (RPA). This is rule-based automation largely focused on transaction processing that uses structured data. While the RPA market is still maturing, it has already made a huge impact on finance organizations. It has dramatically improved process quality, efficiency, speed, compliance, and eliminated manual effort to deliver significant cost savings. In my view, it will take another 2 to 3 years for enterprises to realize the full benefit of RPA.

Having said that, the next wave of automation is already gathering pace. Intelligent software is being introduced which combines RPA with machine learning capabilities. Their intelligence comes from big data, pattern recognition, and natural language capabilities. This convergence of RPA and machine learning provides the power to automate more complex processes involving structured and unstructured data. It is still in early adoptions phase but gets us closer to the Holy Grail of extract business insight from unstructured data.

Looking ahead, Artificial Intelligence (AI) is the most promising disruptive technology. This is breakthrough technology that will greatly expand the potential to automate business processes. It introduces the possibility to do things humans have not been able to accomplish before.

This automation will create intelligent digital processes that utilize workflow, RPA, machine learning and AI to transform high-volume manual knowledge work into straight through processing.

SC: What impact will this automation have on the finance organization? How will it impact the current workforce?  

TL: We truly are at an inflection point, the innovative potential of automation is creating a fundamental change in the way we conduct business. At its core it is a transformation of occupations.

Automation will have a very profound impact on the workforce. Human labor will increasingly be replaced with digital labor. Over the next 2 to 3 years most industry analysts predict that 50% of a finance organization’s transactional work will be automated. We will increasingly see a loss of low-level, highly transactional roles. On the opposite side, we will see the emergence of the knowledge worker. There will be new higher-level careers created in areas such as data analytics and exception handling.

This combination of human and digital labor will create an intelligent workforce.

It will be more agile, responsive and effective. Finance organizations will allocate work to achieve best in class.

As I mentioned earlier, it will provide the CFO with the opportunity to do things their teams could not before and meet the increasing demands of the digital enterprise.

SC: You have been a part of the BPO industry pretty much from its infancy, and now are at the forefront in its evolution. I know through our conversations here at Sutherland that you see this new era of technology and digital workforce as a pivotal moment for the finance organization. Can you elaborate on this?

TL: Absolutely. The chase for cheap labor has come to an end. It’s no longer sustainable.

Back in the1990s the ERP and shared services concepts took hold. Finance organizations were able to cut cost by 10 to 15% by consolidating and standardizing operations.

This further evolved to offshoring, which created the labor arbitrage model. By moving operations to lower cost locations, 20 to 25% savings were achieved. Today the offshoring model has reached the saturation point. CFOs are looking for new ways to reduce cost and deliver business value in the increasingly demanding digital enterprise.

The answer for enterprise business processes is the automation I described earlier; RPA combined with machine learning with evolving AI capabilities. We are rapidly increasing the digital workforce. The long established model of labor arbitrage for cost reduction has been replaced with automation arbitrage. “Lift and shift” has been replaced with “auto and shift” This automation will generate 50% savings and up to 70% on a highly transactional segment of a process.

Once true cognitive automation is achieved the current view is that 70 to 90% savings is attainable. So to say that the new technology is a game-changer is an understatement.

Automation has absolutely become a competitive differentiator. You are starting to see RPA COEs being established in larger companies. I was recently at IRPA’s   Automation Innovation Conference and saw that several companies have introduced Chief Digital Officers and Heads of Digital Process Innovation. It is clear the entire C-suite is taking this very seriously.

SC: From your Finance Organization Transformation experience, what guidance would you offer CFOs? What are some key lessons learned?

TL: As I mentioned earlier, most CFOs are overwhelmed, and not sure where to start their digital process transformation journey, so let me focus on that.

First and foremost, you need to start with the goal, a challenge, or desired business outcome. The biggest mistake I see being made is what I describe as random acts of automation. They are done in isolation, do not have an end-to-end view of the process, and are not linked to a desired business result. To have a truly effective finance transformation you need to take holistic view of the process and keep the desired end in mind.

At Sutherland, we have inserted design thinking at the front of our finance transformation process. I have found this to be very effective at focusing and organizing finance teams as they start their digital journey. Design thinking is a solution-focused approach. It starts with a goal, a better future situation, instead of solving a specific problem.

Design thinking identifies and investigates known as well as ambiguous aspects of a situation to uncover alternative paths to achieve the stated goal. This differs from the traditional Lean Six Sigma to drive process improvement approach.

The key lessons learned on transforming a finance organization to support a digital enterprise are;

  • It is a business led by a CFO with a strong IT partnership, and does it involve Compliance, Control, and security resources early.
  • Avoid random acts of automations. Treat RPA as a series of automation that is part of an end-to-end change program.
  • Do not automate a broken process.
  • Start with a proof on concept and then expand.
  • Do not underestimate what happens after the process is automated.

A finance organization’s digital transformation is about creating intelligent business process that meet increasing demands of the digital enterprise.

SC: Thanks for chatting with me today, Tim.

TL: It’s been my pleasure.

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Scott Cutting (11 Posts)


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