The damage cyberattacks cause organizations is on the rise, costing them millions. Although cybersecurity spending is projected to increase dramatically, CISOs must structure their cybersecurity budgets based on their organization’s needs, vulnerabilities, and swiftly evolving trends such as the shift towards remote/hybrid work and a growing reliance on cloud services. Read on to discover the key current factors driving cybersecurity budget prioritizations.
The rising cost of cybersecurity breaches
A report by the Identity Theft Research Centre noted that data breaches in 2021 exceeded that in 2020 with an estimated 281.5 million people affected. The cost of this is monumental, especially for businesses. The average cost of cybercrime amounts to $1.79 million per minute for businesses, highlighting the impact that cybersecurity has on an organization’s operations.
It is no surprise then that cybersecurity budgets are on the rise each year in line with this evolution. Approximately 44% of IT professionals cited improving cybersecurity as a justification for increased IT investments according to the ESG research report on its Technology Spending Intentions Survey in 2022.
In fact, cybersecurity spending is growing at a faster rate than overall IT spending, with 44% of security leaders expecting their budgets to increase in the next 12 months according to CSO’s 2021 Security Priorities Studies. This is in line with the findings reported in PwC’s 2022 Global Digital Trust Insights report stating that 69% of organizations predict a rise in their cyber spending for the year.
Additionally, tech research firm Gartner projected that spending on information security and risk management will top $172 billion in 2022, a $17 billion increase from 2021 and $35 billion more than in 2020.
In 2021, Microsoft announced a $20 billion cybersecurity budget over the next five years while Google CEO Sundar Pichai announced that the company is investing $10 billion in that same period.
Cybersecurity spending priorities
Though the projections for cybersecurity spending increase each year, it is still limited. As CISOs grapple with increased risk, they are also searching for ways to spend their funds most efficiently.
One way to do that is to understand the threat landscape and needs of the organization. In the last three years, Gartner predicted the top five areas to show security spending growth are application security, cloud security, data security, identity access management, and infrastructure protection.
Current developments will also affect budget priorities. In the two days following the start of the Russia-Ukraine war, suspected Russian-sourced cyberattacks were observed by US-based cybersecurity agencies, an increase of over 800%.
In March, the hacker group Anonymous warned that it would attack major corporations that have not pulled out of Russia since the war began. It was later reported that the group had hacked Nestle and leaked over 10GB of important data including client information, emails, and passwords. Other organizations that were targeted include Burger King, Subway, and cloud computing firm Citrix.
The US Department of Homeland Security, FBI, and others have issued warnings for organizations to be prepared for further threats.
Cloud Security is a key focus
The global pivot to remote work catalyzed by the COVID-19 pandemic has redefined many organizational structures and led to a growing reliance on cloud services and digital tools, leaving them vulnerable to different types of cyberattacks.
An IDC survey by Ermetic found that 79% of companies experienced at least one cloud data breach in the last 18 months. This is alarming given that 92% of an organization’s IT environment is cloud-based, making cloud security a key concern for CISOs and other C-level professionals.
Unsurprisingly, CISOs are prioritizing cloud security, which would drive budget priorities. According to ESG, 62% of the IT personnel surveyed said they are planning to increase spending on cloud application security while 56% said they are investing in cloud infrastructure security.
We have also found, as shown in our latest Cybersecurity Investments trend report, that 60% of CISOs and their C-level counterparts are focusing on cloud security, specifically third-party management and resilience or Zero-Trust Architecture. Many of the organizations interviewed also noted that they are looking to expand their cloud solutions and adopt a hybrid cloud, thus enabling them to secure their processing data on-site.
Employee Awareness can reduce security risks
Another area of focus for CISOs is employee awareness, with 58% of organizations citing it as a key focus of their cybersecurity strategies. A Ponemon Institute study showed that 68% of organizations have experienced at least one endpoint attack, compromising their IT infrastructure and data.
Similarly, IBM found that a staggering 95% of cybersecurity breaches were caused by human error.
As Mika Susi, former Executive Director of the Finnish Information Security Cluster said: “Many times, humans are said to be the weak link in cybersecurity. Recently, we have also seen many attacks using an organization´s supply chain and partners as weak spots to get access to their network.”
Eliminating that factor would mean that 19 out of 20 cybersecurity breaches may not have occurred at all. Though it would be impossible to solve human error completely, it is crucial to implement strong policies and training programs to equip employees with the right knowledge and tools to avoid potential cyber threats, which would decrease security-related risks by as much as 70%.
One of the challenges with improving employee awareness is that there hasn’t been enough of a focus on building a culture within organizations to identify risks.
“As I see it, organizations often put too much emphasis on having a formal three-part structure of control and reassurance, and far too little emphasis on building an actual culture that identifies and steers risk as part of its DNA. Of course, building a strong culture of security and implicitly, a risk culture – means including all employees, from the CEO to the bottom-rung shift worker, from the service partner to the short-term consultant. Including all the human risks and employees is key to making an actual risk-based culture,” says Magnus Solberg, VP & Head of Security Governance at Storebrand.
Implementing a bottom-up approach to training employees to think in and act in a risk-based manner is one way to mitigate the human factor, says Mr. Solberg. He also suggests arming employees with tools to perform more structured and documented assessments, both mental tools as well as stronger policies, guidelines, and software.
Cybersecurity resilience and readiness
At the same time, cybersecurity leaders are actively searching for new strategies to quickly detect and respond to cyber breaches.
In 2021, there was a major surge in cyberattacks compared to previous years. According to SonicWall’s Cyber Threat Report, there was a 105% increase in ransomware attacks that year from the previous year. Narrowing down, government institutions saw a 1,885% increase and the healthcare industry saw a 755% increase in such attacks. According to Sophos’ State of Ransomware 2021 report, retail, education, and business & services sectors were hit with the most ransomware attacks.
In July 2021, Swedish supermarket chain Coop was forced to shut down over 400 stores due to a major ransomware attack on its point-of-sale systems. This was part of the same ransomware attack which affected over 200 businesses, mainly in the US. More recently, several oil storage and transport companies across Europe were hit with ransomware attacks. Specifically, Oiltanking in Germany, SEA-Invest in Belgium, and Evos in the Netherlands were all forced to operate at limited capacity due to the attack.
Sophos’ report also revealed that, on average, it costs an organization a total of S$1.85 million to recover from a ransomware attack, up 143% from the previous year. The findings also showed that only 8% of organizations that fell victim to a ransomware attack were able to recover all their data after paying a ransom. Approximately 29% only managed to recover no more than half their data.
Beyond that, a recent survey found that 66% of respondents suffered a significant loss of revenue following a ransomware attack while 53% reported that their brand images were negatively affected. Alarmingly, 29% said ransomware attacks led to employee layoffs.
The cost of a ransomware attack or recovering from other forms of cyberattacks could set organizations back a major chunk of their budgets if they are not prepared in advance. In fact, the increased cost of ransomware attacks has also driven up premiums on cyber insurance policies, adding to the need for organizations to be financially prepared.
CISOs are constantly looking for ways to strengthen their organization’s ability to resist and recover from a multitude of threats, which in turn informs their cybersecurity investment priorities. What other factors should organizations consider when setting their cybersecurity budgets?
In banking and finance, the transformation strategy needs to have the customer experience in focus to build trust, which is crucial in today’s digital life with fewer physical customer meetings.
Banks must be agile in their business model to quickly create new applications that are required for an optimized user experience, says Ricardo Ferreira, Field CISO at Fortinet.
With DORA (Digital Operational Resilience Act), European financial institutions get new guidelines aimed at reducing the risk of cyber-attacks. Fortinet helps its customers comply with these regulatory requirements. – We can protect everything that has access to the network and banks should have a security architecture that includes multiple private and public cloud platforms. What makes Fortinet unique is that we can take a holistic approach to security in the financial institutions’ digital transformation journey, says Lars Berggren, Country Manager Fortinet Sweden.
An improved user experience with Bank 4.0
In the Nordics, cash handling has decreased significantly in recent years, while digital payment solutions have increased rapidly. Swedish banks, for example, were early in launching internet banks, but in recent years the focus has shifted to make sure they comply with the regulatory requirements. With new Fintech companies attracting customers, Swedish banks need to put more effort into their digital development to be competitive. Cyberattacks and threats are becoming more and more sophisticated. Fortinet provides support in the digital transformation and has crucial expertise in risks and threats
– Cloud-based platforms, both private and public cloud, are crucial for banks when developing solutions for a better, high-quality user experience. The transformation that banks need to go through, with new digital platforms and a more agile business model, is what we refer to as Bank 4.0. Today, you need to be fast and flexible to protect yourself and there must be a proactive security platform that supports the business and provides a holistic view, says Lars Berggren.
Secure the brand reputation of your bank
Digitalization brings many opportunities for the banks, such as increased sales, finding new business models and applications as well as refined customer offerings. Fortinet can help improve user-friendliness and at the same time secure the bank’s brand reputation by reducing the risk of cyber-attacks, says Ricardo Ferreira.
Read more about the driving forces in the market that are affecting banks right now, and how an improved infrastructure for cyber security can strengthen your competitiveness, in this e-book.
About Fortinet
According to Gartner, Fortinet is a leading provider of cybersecurity solutions and enables companies to build secure digital infrastructure and be at the forefront of their digitalization journey. The Fortinet Security Fabric platform provides broad, integrated, and automated protection for the entire digital attack surface, by securing critical devices, data, applications, and connections from the data center to the cloud as well as to the home office.
*This article was contributed by Lars Berggren of Fortinet.
The airline industry was hit the hardest during the pandemic as the number of global passengers drastically reduced to 1.76 billion compared to the 4.5 billion before COVID-19. As chief financial officer (CFO) of Brussels Airlines, Nina Oewerdieck was tasked with overseeing a crisis that saw the role of finance changing from one of support to strategy.
In this interview, we dive into and talk about how Oewerdieck approached the challenges as a finance leader in the airlines’ industry, how she managed and encouraged a “change” mindset, and the traits of a modern CFO in a post-pandemic world.
Weathering The Crisis and Challenging Legacy Habits
COVID-19 has pushed many financial executives beyond their traditional role as a support for an organization. To weather the crisis caused by the pandemic, the role and scope of the CFO function have expanded to include leadership roles and to act as an agent of change.
As CFO of Belgium’s largest airlines, it was a challenge for Oewerdieck to ensure that the company survived during the pandemic. However, focusing on flexibility and challenging legacy habits proved to be the key factor in Brussels Airlines’ survival.
How were you forced to change your role as a CFO for Brussels Airlines? What were your challenges and key focuses as a finance leader during the pandemic?
For us as an airline, it was the heaviest crisis we have ever seen. We were used to managing crises such as “9/11”, the bird flu, or the bomb attack in Brussels 2016. But this crisis was heavier and longer than expected and even caused that Brussels Airlines’ fleet to be grounded for several weeks in 2020. That means we were not able to operate any flights, and really, to come out of this crisis was a tremendous challenge for everybody.
Our priority was to save the company and we were in discussions with the Belgian state to get a loan to overcome these challenging times. It was a heavy challenge for everybody, not only on the personal side, to safeguard the future of this company and its employees.
We made it through the crisis with very strict cash management and changing our perspective from EBIT-driven and bottom-line to a cash focus. We switched to micro-management on a C-level and challenged every single expenditure, every flight that we were operating to make sure all our operations were cash-positive, meaning covering all variable costs. That was the change in our view.
How did you make the change from support to strategy from a finance position and grow the business? What were the initiatives you had to take and what can other businesses learn from this?
We are not yet in a position to talk about substantial growth. I would love to focus a little bit more on strategy because we are still in crisis mode. And we are tackling this very carefully. However, it was part of our business plan, which we also went through with the government, to do a very thorough restructuring of the company.
The focus was not to get the money to overcome this challenging period and go back to “normal”, as it was pre-COVID. It is our responsibility not only to lead the company through this crisis but also to do a restructuring to come even stronger out of this and to reach structural profitability.
What that meant was to challenge the setup of the company, the size of the company, and to question how we have done things before. The crisis allowed us to use the momentum to get rid of some legacy habits and issues.
As a CFO, we need to have a business focus. Not only just as the support role, to provide the data and the numbers, but to also understand the business and to see what the business needs are and then, to jointly find a solution on the financial side.
I think, we have to be able to play different roles: Our finance departments have to provide data, consultancy and support the business with all their knowledge to find the best way for the company. And at the same time we – as CFOs – have to take our C-level responsibility serious and sometimes have to act differently to what our departments recommend, e.g. when it comes to business cases that only foresee a low or negative contribution to the bottom line proposing an investment which will (only) safeguard our market position vs. competition. Usually, these business cases don’t come with a return rate, they are labeled as ‘strategic decisions’.
Pushing Change Through Communication and Commitment
The pandemic has shown that businesses that are willing to change and adapt will be the ones that survive through the major disruptions. Encouraging change and overcoming legacy operations were key factors for Brussels Airlines’ ability to withstand the COVID crisis.
For Oewerdieck, COVID-19 meant an opportunity to push for change in the processes and take steps towards digitalization. At the same time, overcoming the challenges that come from encouraging change in an industry that is set in its ways.
Change is always hard for any company. Was it an uphill battle for you to implement change during a crisis?
It was an uphill battle. The need for change was very visible in our situation, which provided good momentum for us to go through this restructuring. Everybody in our organization understands that we can’t go back to how it was before, after the crisis.
So the need for change was tangible and we were in this position to set up an organization with the right people in place and to define the right size. To go through such a crisis, to go through a restructuring, and to set up a state-of-the-art finance organization, you need to have the right people in place. People who are willing to change, who like change, and maybe also drive the business through change with new ideas and openness.
How do you encourage change within the workforce? What were the challenges and initiatives you had to push for?
It was a lot of communication work, people-driven communication work. We were very transparent and kept everyone informed throughout. We had to let them know that we were fighting for their jobs and to keep them in our company.
It was important for us to give them confidence, prove the commitment to the company, and let them know what the current status is so that they are always involved and to let them be part of the change.
We involved our people, encouraging them, and let them come up with ideas on how to make this “change” happen. One of the positive aspects of this current situation is that it allows you to foster talent.
Of course, we are still currently in crisis mode so there’s a lot of micro-management and usually, talents are not very positive on this, but that’s the challenge, to keep them on the right track and to show that there is some light at the end of the tunnel. And finally to find the right momentum and time to steer back and to give back ownership.
The Modern CFO and Bridging The Digital Gap
The CFO role in a post-pandemic landscape has gone beyond just being a financial executive. Finance leaders today need to take on the role of digital transformation bastions and as people leaders.
Throughout her time as CFO for Brussels Airlines during the pandemic, Oewerdieck realized and highlighted the fact that the traditional roles of a CFO have to be more than just the numbers and the path towards digitalization and growth starts from the top.
Digital transformation is top-of-mind for many businesses today. How should CFOs approach and encourage digitalization for their organization?
In my opinion, we have to reverse our approach and let change and digital transformation be pulled by our people. If you are just saying from the top of management “this is the way want to go” or figure out the next tool, that does not work because the strength of the organization will be too heavy to fight against that.
I had good experiences with implementing smaller lighthouse projects to make robotics, automation, or digitalization a little bit more tangible to the people so that people don’t have to fear it.
It shows that we want to foster and focus on their knowledge for higher quality work. A skill set of a financial expert can’t be used only to compile reports – we need their expertise, their knowledge to read a story out of numbers.
With lighthouse projects we can prove that there are benefits for the entire organization and also for our people, that will make acceptance easier and even let them pull new ideas.
In your point of view, what are the necessary traits for a modern finance leader? What is the duty of a CFO in a post-pandemic landscape?
From my point of view, CFOs nowadays do not have to be the best expert. Rather, you have to be a people leader, to encourage your people, to listen to your people, and to steer them through uncertainty, or even into profitability, and to reach growth and to let them grow.
We have to be very open to change, to new ideas, and to challenge our company and our people about which new ideas are out there, such as robotics, automation, or artificial intelligence.
I think that’s one of our major duties as CFOs. To steer the organization, to foster our talents, and let them rock in the end.
Finance among organizational functions is unique in the sense that it spans all areas of a business. However, a new digital economic infrastructure and the tools to accompany it are being built with advancing digital technologies such as Cloud Computing, Internet of Things, Blockchain, Artificial Intelligence, and Robotic Process Automation (RPA). What this means for financial innovation is that rapidly evolving technology and the full realization of the value of data are the current drivers developing the digital economy.
Consequently, finance leaders must adopt an all-inclusive view of their transformation across the organization. The effective finance leader needs to remain up to date by ensuring that they are conversant with the trends in technology and identify how they apply to create or support the company’s sustainable competitive advantage.
Trends and What It Means to Businesses and C-suite
Thinking about popular innovative leaders, one would be hard-pressed to remember or find a CFO on a shortlist, with most generally, seeing the CFO as the proverbial bad cop, with a bias for short term top and bottom line, depriving the creatives in the enterprise of oxygen, and subsequently killing innovation.
Fortunately, in the digital era, the CFO should maintain focus on the value equation: less cost, more revenues, and more margin. Thus, the caricature of the nay-saying bean counter does not apply to a holistic CFO. The digital CFO understands that the right type of innovation will, in the midterm, lead to all of that.
“Assuring innovation is tied to value thinking. Assuring creativity is not equal to Russian roulette. True innovation ultimately leads to superior financial performance is a mantra of the modern CFO.”
– John Brahim
“Digital” encompasses a set of trends and opportunities that belongs to the C-Suite. It thus should not be viewed as in contradiction of the long-term strategic focus on innovation and or delivering on the next reporting period. The CFO, as the guardian of value thinking, has a vital role to play. Such as Investment Allocation, Risk Mitigation, and Sharpening benefits cases.
How to Manage Innovation and Change
Change is inevitable, and just as the famous quote by Heraclitus, a Greek philosopher, “The only constant in life is change.” Change affects us all, and we deal with each new change differently. There can be no innovation without change and vice versa.
“Make it tangible. Sure, innovation is about soft things like culture and freedom; however, sooner rather than later, it should shape up in concrete Journeys. The CFO can lead the way by focusing on 3 levers for innovation: automating the enterprise round 3, embracing analytics day to day, being digital as a way of life.”
As technology progresses and new solutions become available, the needs of financially vulnerable individuals or businesses need to be kept in mind. Players from various sectors can propel innovation effectively when they partner across sectors and keep the needs of financially vulnerable people at the center.
Automating Enterprise Sequel 3
Firstly, the hard part of the back office was automated. Softer operational processes closely followed this. Where thanks to a combination of Cloud, AI, and Visualization technologies, the third automation wave will go beyond mere operations and transform the tactical layers, augmenting those that orchestrate the enterprise.
Embracing Analytics
The past saw financial functions providing curated historical data to the enterprise. However, current trends show people clamoring for real, actionable, and predictive insights. Fortunately, enterprises only require two components to achieve this: the right tools to capture and analyze Big Data and Artificial Intelligence (AI) to deliver more contextual and human answers.
Being Digital
Taking an enterprise digital requires a lot. For starters, the enterprise’s mission, value proposition, and business model will be affected. It will be a series of journeys requiring a dissimilar culture, new skills, different governance, and a new way of working. The mission and way of working have to transform for the CFO to assure financial health, allocate assets rightly, and mitigate risks amid novel volatility.
Remaining Relevant in the Eyes of Your Stakeholders
From a financial perspective, we can deduce that innovation requires proper budgets and timeframes. Smart financial constraints and deadlines do not impede but accelerate creativity by fostering a sense of urgency and focus. As the CFO, you play a vital role by operating with independence and critical empathy.
This translates to creating measured freedom from business-as-usual rules, especially when it relates to funding, contracting, hiring, and reporting. The company can expect significant breakthroughs provided the CFOs know how to exercise their levers to empower and encourage innovation by understanding which rules to relax and which to follow. In this sense, a holistic CFO can validate how ideas outside of the current business logic may be worth pursuing.
CFOs are often being asked by their CEOs to assist in enabling digital innovations in their companies. As the gatekeeper of a data-rooted, value-seeking business model, the opportunity for CFOs is not so much to play the role of a skeptic but rather to be the voice of reason. Similarly, because CFOs can logically relate innovation to key business drivers, they can also engage with the innovation teams as the individual guiding them to a “Yes.”
CFOs: learning from innovation-driven leadership
Brahim shares one of the first things that CFOs need to be inspired to formulate a digital mindset for their own basic processes. Going digital touches all classical financial processes, changing everything from core accounting and treasury management to fraud detection and KPI reporting.
Secondly, established CFOs should take cues from the new generation of digital leaders about more effective and efficient means of collaborating internally & externally. Understandably, changing one’s working style will significantly drag a leader out of their comfort zone than intellectually absorbing the intrinsic contents of the new digital journeys.
Thirdly, AI should pervade the entire enterprise. CFO’s who were not raised with this technology must be willing to get their hands dirty, learning how to apply AI in their daily play. On the positive side, this makes them a better role model whilst signaling to their team that nobody stays behind.
This is all easier said than done. Fortunately, Maistering’s platform, Master Collections, brings all of these together in an entirely new set of services. It offers a completely natural means for CFOs and other C-suite members to adopt a digital way of working. Unlike classical ERP applications, the platform adapts organically and does not require a heavy wall-to-wall implementation. Within weeks a CFO and her team will easily engage in digital or other innovative journeys using Master Collections.
The Immediate Future of Finance Function
The finance function is set to experience the biggest era of transformation. Requiring a balance of solid technical knowledge and data science, as well as a deep understanding of the business itself. Digital and AI innovation spread from the consumer to the enterprise world so that most experiments will start with sales and marketing functions.
However, there will be as many use cases in production, logistics, HR, and so on. Finance will be no exception, but like all others, will wrestle with its own strengths and weaknesses in culture, talent, practices, and assets. To a certain extent, the CFO will be catalyzed by her own ecosystem as the surrounding world of accounting, funding, collections, tax, and compliance is bracing for deep impact from AI themselves.
In the past, enterprises were shaped by processes. However, Brahim believes that the largest impact will undoubtedly originate from leader augmentation by the more practical AI and not the mythical deep stuff. Thus, our century will experience enterprises shaped by leader orchestrated journeys.
““Augmenting leaders in how they orchestrate Journeys, taps into a formidable business case. Imagine all those digital and other Journeys that a CFO or her peers in the C-suite undertake, becoming faster, richer, and more impactful. There is simply no better business case in modern enterprise than that. Surprisingly enough, Master Collections is a first mover when it comes to “augmenting masters”, as we call enterprise leaders, on their Journeys.”
– John Brahim
Ultimately Brahim believes that competent CFOs know how to co-shape journeys, create processes beneficial to the entire business, and make others successful. Master Collections as a new category platform offers CFOs the perfect toolset to engage in digital journeys and naturally fosters the synergies with the C-suite peers and others that require guidance and empowerment from the digital CFO. This is where the future lies for the new digital CFO.
The virus outbreak has pushed many companies to hasten the digitalization of their processes, especially with their back-office functions.
Facing challenges such as manual processes, paper-reliant procedures and limited operations visibility, C-suites are quickly realizing that their systems are in dire need of a digital overhaul.
Dany De Budt, Country Manager of the Benelux for Basware, shares how digitalization solutions help companies maintain continuous cash flow and business continuity even through the worst of times.
A SNIPPET OF BASWARE
A provider of cloud-based purchase-to-pay and e-invoicing software, Basware has helped to simplify invoicing and streamline procurement processes for clients in over 50 countries.
When it comes to digital transformation, many organizations tend to overlook the ‘back’ of their company, including finance and accounting.
With the emergence of the coronavirus and its effect on global trade, the digitalization of these essential operations are pushed even further down as companies shift their focus to business continuity tactics.
But why is digital acceleration so important? How does applied intelligence optimize business practices?
De Budt (picture left, from Computable) explains that digitalization helps firms to make strategic business decisions based on keen analytical insights from digital intelligence.
“Actionable intelligence has become a company’s most valuable asset. And while human intelligence is still important, it is not enough on its own.”
“A company needs to create a business intelligence framework that is based on human intelligence but paired with digital intelligence,” De Budt imparts. “Without digital intelligence, a company will be disrupted sooner or later.”
“With better availability and application of data and analytics, customers have been able to model and understand the ensuing impacts to their people and business faster and more accurately than before, resulting in reduced lead times from planning to execution to impact.”
He illustrates how digitalization, such as “transitioning from on-premise to cloud-based solutions”, helps reduce inefficiencies and costs, including physical overhead and human assets.
“It helps with an overall streamlining of systems, creating efficiencies that result in better visibility into your corporate operations.”
DEVELOPING DIGITAL TALENT
Although businesses across industries are adopting smart innovations and digitalization, a key issue most of them face is finding the right talents and training their existing workforce.
A trend survey by Management Events found that over 60% of business leaders named availability of key skills and talents as the biggest external impact to their business growth.
De Budt reinforces the finding, stating that digitalization has made the talent landscape more competitive.
“The skills needed for an evolving digital workforce – that has increasingly become remote – have become more critical.”
“Talent needs to adapt and embrace a flexible mindset and schedule,” he emphasizes, “They need to be self-disciplined, and much more organized, with excellent problem-solving capabilities. Digital transformation requires digital competence.”
De Budt names the Human Resources function as a critical part in an organization’s digital transformation.
“With each new digitization initiative, having highly-skilled, technology-savvy talent to deliver the best omnichannel customer experience will determine overall deliverable timeframes,” he remarks.
“It places HR in a crucial role since employee engagement, training and onboarding are its domain.”
TRANSPARENCY OF OPERATIONS
One of the prevalent issues that companies had during the lockdowns, and before the outbreak, was the visibility and accessibility of their finance and accounting processes.
“Many companies were caught off-guard by the COVID-19 pandemic,” De Budt relates. “While many firms have business continuity programs, most of those were templated, basic versions of how to handle temporary disruptions.”
In fact, a survey by Gartner discovered that only 12% of companies around the world are highly prepared for such crises. Other studies found that some organizations are ill-equipped with the right technology to remotely access and manage invoices, which are still heavily paper-reliant and locally stored.
“Transparency into operations is vital to a company so it can take a snapshot of its financial health at any time.”
De Budt points out that, “Investments into technology that improves processes, get a handle on spending, and create 360-degree visibility will be a significant factor in business continuity planning, allowing them to manage business risks and pivot during supply chain disruptions.”
“For Basware, we’re able to deliver those types of solutions because we’ve employed them ourselves.”
He further states that, “Using Artificial Intelligence, advanced data and predictive analytics, we provide automation with machine learning that results in increased transparency into a company’s finance, procurement, and supply chain operations.”
POST-COVID-19 SUPPLY CHAIN
The pandemic gave organizations a long, hard look into their progress of digital transformation, or lack thereof. While a majority of organizations were in the midst of digitalizing their business, most companies were not progressing far enough to face COVID-19 unscathed.
According to De Budt, one of the most impacted business aspects is the supply chain.
“Supply chain complexity has grown from simple domestic supply chains to more complex and global supply chains that are vulnerable to third party risks,” he reveals.
He also discloses that as firms address their business continuity issues, they realize there are supply chain blind spots that the outbreak exposed, particularly in the transparency of their supply chain.
“Suppliers from all over the globe are delivering to locations worldwide, exposing companies to risks created by an unmanaged supply chain and lack of visibility.”
“At Basware, we see Visible Commerce as the future.”
“Being able to have complete visibility across all the flows of money, goods, and services around the world is what we call Visible Commerce,” De Budt reveals. “It’s a state where transparency and data lead to more effective and ethical decision making – a better world economy for all.”
FINANCIAL IMPACTS OF THE SUPPLY CHAIN
The coronavirus impact on the supply chain consequently affects the financial flow of organizations.
De Budt comments that since companies lack visibility on their supply chain, they don’t have a full grasp on their finances.
“Companies that gain visibility into their supply chain are in a much better position to avoid or pivot when an issue comes up. Still, they won’t get there unless they invest in the advanced technology that’s available to them.”
“The challenge here, of course, is the risk of doing nothing.”
He proclaims, “For those that are unable or unwilling to adapt or change, they’ll suffer financially and increase their exposure to supply chain risk, with potentially catastrophic results. Inaction is not an option.”
To give companies a clear view on their financial operations, Basware offers a Financial Impact Analysis. Highlighting their current stand on finance, values and savings, the solution allows businesses to make informed decisions using actual real-time data.
USABILITY AT THE FOREFRONT
However, technology advancement is not the only focus of Basware’s services. From the accounts payable and accounts receivable solutions to their source-to-pay AP Automation and e-Procurement, usability remains one of their core focus.
“The role of digital capabilities is to make everything – everything – easier for our user clients,” De Budy stresses.
“Just like friction in a supply chain can wreak havoc, so can user friction when navigating an application. An intuitive user interface, coupled with automation and machine learning, makes for exceptional user experience, increasing user adoption and productivity.”
LEADING THE DIGITAL CHANGE
Digitalization, or any big corporate change, are usually expected to begin from the top management, but De Budt begs to differ.
“While it’s important for leaders to lead by examples,” he conveys, “expecting change from ‘the top’ is unlikely to occur in this current COVID-19 environment.”
“Change more likely needs to be driven from the bottom up.”
He continues to explain that the planning and vision for digital transformation start at the top, but the change itself begins from the bottom, to be built piece by piece, ensuring the strongest foundation possible.
Digital acceleration is indeed crucial to ensure continued business growth and competitive advantage, but it needs to be, as Forbes put it, “guided by the broader business strategy”.
“A leader’s decisions shouldn’t be made off instinct or gut feelings alone,” De Budt cautions. “A leader may have the final say, but their decision should be based on reliable insights from trend analyses using big data to reveal patterns to better future-proof their businesses.”
“Data and analytics gathered by intelligent technology can be used to inform business decisions and bring further efficiencies, transparency, and scalability to a company’s operations.”
De Budt deeply believes that digital advancement is a vital, and necessary, contributor to business development.
“Collaboration between customers, partners – and even with competitors to an extent – are key to success,” De Budt imparts. “But technology will lead the evolution to a better state of business. One that allows for increased transparency, automation, and remote working capabilities.”
RPA, or robotic process automation, in recent years has become somewhat of a synonym to the automation software category. Its application in finance, though, is restricted to the rules-based, consistent, and template-driven tasks, which are recurring and foreseeable.
But how do we go beyond automating isolated tasks to automating entire processes? How do we address the automation of highly manual ad-hoc and non-linear activities, which are at the core of financial close process and more broadly speaking record-to-report (R2R) area?
“Substantial effort related to the R2R process focuses on recording data, correcting errors, reconciling accounts, and performing month-end closing tasks to provide accurate and timely financial reporting.
Supporting business with faster and better insights based on accurate financial reporting is the modern-day challenge of the finance function. Overcoming it with automation while keeping function costs down is what we do for our customers,” says Clive Jefferies, product manager at Aico, The Financial Close Automation Platform.
A Holistic Vision Of Finance Automation
For an enterprise-level organisation, the core problem of improving finance function efficiency is beyond simply automating a set of specific tasks. The reality is far more complex and cannot be significantly improved without addressing the entire processes.
In a holistic vision of finance automation, one action should impact the entire process in one seamless workflow. For example, in R2R, it would mean the ability to:
Automatically link closing tasks and related journal entries.
Automatically create new journals directly from closing tasks.
Reconcile accounts by linking them back to the journals, which have related supporting evidence and approvals.
Follow and optimise R2R activities in real-time from a dashboard on an individual, team, legal entity or whole group level.
Validate journal data in real-time and make postings directly to General Ledger within seconds.
From an IT point of view, all of this efficiency comes down to the size of your company’s system architecture, in other words, how many different systems your company uses for R2R management. Fewer tools with live inter-connectivity is the ultimate goal here from an IT perspective.
Your Organization DNA At The Core Of Automation Solution
A lot of variables like your unique organizational processes, local tax regulations and currencies, your group company network and ERP systems, are directly going to affect how you choose to automate and optimize your finance function. It is therefore critical that the automation solution you choose supports your unique finance function DNA.
But perhaps the single most crucial ability is to have real-time access to your ERP system master data to support you at every step of the process. For example, a live connection to your ERP systems allows you to make adjustments or fix errors instantly from one financial close platform user interface.
About Aico
Aico is a Finnish software company. Our product is an intelligent financial close automation platform, which covers vital functions of R2R – close task management, journal entries, account reconciliation and financial requests like manual payments.
Our product’s unique real-time ERP system integration ability sets us apart from conventional R2R and financial close automation solutions.
Over the last ten years, we have been helping enterprise-level organisations across the Nordics to automate complex manual processes, implement smart workflows, enforce custom compliance guidelines and reduce ERP system integration complexities.
In 2020, we have successfully delivered our product to our first enterprise-level customers in the Netherlands and are continually introducing our product throughout Europe.
For more information about Aico, please visit aico.ai or view some of our resources below:
This translates to creating measured freedom from business-as-usual rules, especially when it relates to funding, contracting, hiring, and reporting. The company can expect significant breakthroughs provided the CFOs know how to exercise their levers to empower and encourage innovation by understanding which rules to relax and which to follow. In this sense, a holistic CFO can validate how ideas outside of the current business logic may be worth pursuing.
