Ep. 168: Mark Marmon and Janis Parthun - Transformation through Emerging Technologies

Mark Marmon, VP, Finance Transformation at RGP, and Janis Parthun, VP, Advisory & Project Services at RGP, join Count Me In to talk about transformation through emerging technologies and the audit considerations and regulations to be aware of. RGP is global consulting company that serves over 2,400 clients, which includes 3/4th of the Fortune 500 companies. Mark is a Vice President within RGP’s Global Finance Transformation Practice focused on process efficiency and improving automation in the finance and accounting functions and Janis is a Vice President within RGP’s Advisory & Project Services team, leading cross functional initiatives in finance, accounting, and risk and compliance. She brings over 20 years of experience and expertise in finance and technology process design, risk management and driving continuous improvement for companies. RGP enables rapid business outcomes by bringing together the right people who together create transformative change. In this episode they look through the lens of a CFO and explain the top trends and priorities for finance leaders. Download and listen now!
Contact Mark Marmon: https://www.linkedin.com/in/mark-marmon-3255414/
Contact Janis Parthun: https://www.linkedin.com/in/janisparthun/

IMA's Transforming the Finance Function with RPA: https://www.imanet.org/insights-and-trends/technology-enablement/transforming-the-finance-function-with-rpa

McKinsey's Bots, Algorithms, and the Future of the Finance Function: https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/bots-algorithms-and-the-future-of-the-finance-function

FULL EPISODE TRANSCRIPT:
Mitch: (00:05)
 Welcome back to Count Me In, IMA's podcast about all things affecting the accounting and finance world. This is your host Mitch Roshong, and today I will be previewing episode 168 of our series. Before I introduce our speakers we will first set the stage for the topic. The global pandemic in 2020 and 2021 has shifted how finance and accounting professionals work in a virtual environment. And this change has also triggered opportunities for the finance organization to evaluate and introduce emerging technologies. Companies want to find ways to deliver financial results faster, amid grow complexities and regulations, as well as improved financial transparency for business partners. To discuss these trends from the CFO perspective, we were fortunate to be joined by Mark Marmon and Janis Parthun. Mark is the VP of Finance Transformation at RGP, and Janis is the VP of Advisory and Project Services at RGP. They joined my co-host Adam to provide insights on what they are observing from the marketplace and their clients. So to hear about how to best manage the complexities relating to transformation through emerging technologies, keep listening as we head over to their conversation now.
 
 Adam: (01:27)
 Janis and Mark, thank you so much for coming on the podcast today. And as we looking into 2022, I wanted to start off by asking you both, what are some of the top trends and priorities for financial leaders as we look into this new year?
 
 Janis: (01:43)
 Adam, that's a great question and this is Janis, by the way. You know, CFOs are really playing a crucial role to drive change and to be value creators. So according to a 2021 Gartner survey on the CFO perspective, there's really a shift from a value protection to value creation and prioritization, of digital initiatives and investments, and from a value creation perspective, it's really, focusing on a strong forecasting process. And this is especially critical time for CFOs of companies who may be carrying inventory to have a strong forecasting process, to avoid inventory supply chain issues and, just overwhelming sales teams and processes. And then from a digital investment perspective, over 80% of CFOs have suggested to increase their investments. And emerging technology was one of the CFOs top five strategic business priorities for 2021 and also a significant increase from 2020.
 
 Janis: (02:50)
 So it, you know, it really says a lot about the importance of having to take a look at emerging technologies, and how that can impact the CFO's role. And, you know, by the way, IMA also has a great resource on the transformation of the finance function and association with RPA. And interesting enough, the research had discussed in terms of how it's possible to have over 70 percent of general accounting operation activities that can be automated using demonstrated technologies. So I found that that was really interesting to read through, in one of the resources, from IMA.
 
 Janis: (03:35)
 And so going back to the discussion on the value creation and digital investments, what does this mean? So this is stemming from the need to automate core processes and having to transition to generate more data insights and future outlook. And so according to another Gartner source in 2021, it was the top priorities for finance leaders, CFOs, controllers, and FP&A leaders now all expect to focus on digital initiatives and the top priorities that are expected to be taking more time to implement. And these top priorities mentioned included advanced data analytics, technologies, and tools and finance, and there's a wealth of data that can provide insight to make operational decisions. And it's also knowing how to use it. Another one is the robotic process automation and other workflow automation technologies. RPAs deliver speed, efficiency, and cost optimization for repeatable processes. But then if you add extendable platforms that incorporate hooks into machine learning and artificial intelligence, it really becomes more important as leaders to look beyond the simple rule based workflows.
 
 Janis: (04:55)
 And I would say, thirdly is the human element, which is accelerating digital skills and that's hiring an upscaling talent to accelerate adoption of digital technologies. So now the deployment could be difficult at times and having to spend time significantly with employee engagement and retention, as well as hiring and growing digital skills, but it be beneficial to have the ability to design flexible processes and then enable aspects of self-service reporting for users. So I would say the good news is that the new generation of the workforce entrance are digital natives. So not only do they embrace the technologies, but they also expect from their employers, those are some of the key highlights that I wanted to at least talk through in terms of trends.
 
 Adam: (05:50)
 Well, Janis, thanks so much for showing that. I mean, those are some great top trends and priorities that, financial leaders need to look at. One topic that I have heard that I didn't hear you bring up was financial close optimization. You know, this is one way that companies drive results faster, are able to, do budgeting. How does this change the game? And maybe Mark, we can have you start on this one.
 
 Mark: (06:12)
 Yeah. Thanks Adam. So first let's define, we're talking about when we talk about, close process optimization, we're really looking at eliminating some of the activities that are really not all that critical to the close cycle. So in many cases, you know, many folks out there listening probably know that there are reports generated that really aren't read and, evaluated by anybody in the organization. There's a sequencing of efforts across the accounting team with redundancies and bottlenecks. And the whole idea of close optimization is you want to take those bottlenecks out and you want to reduce those redundancies. So traditionally, when we looked at close optimization with companies that we serve, we were really focused on taking the cost out of the process, you know, the fewer FTE's that you needed to actually perform all these manual repetitive tasks, resulted in a little bit of cost savings.
 
 Mark: (07:13)
 So today, as we look at what's happening in the financial flows and looking at the close cycle, significant increase in demand for efficiency around the close cycle, the CFO is asking the accounting function to invest their time into providing analysis and really predictive analysis into what's going on for the key stakeholders of financial and, you know, financial of that financial information. So when we look at executives and investors and they want insight into the business, they want to know how those financial results compare to expectations. So it's causing a shift and that shift is taking out the routine repetitive work that we've traditionally done with spreadsheets and moving it to a more automated approach. And since frankly, the spreadsheets are somewhat unstable and they're kind of ineffective as evidence for your external audit, then a better performing automation becomes pretty critical as part of the accounting close.
 
 Mark: (08:22)
 So the question becomes what types of automation are most effective. So clearly when we look at the ERP systems that are out there, they're recognizing there's an increased need for more tools as part of the close cycle to support it. And they're building in new modules, they're building new Bolton applications that can help increase the efficiency of the close process. One interesting aspect is we're seeing a number of these large ERPs start to partner up with purpose-built solutions and actually use purpose-built solutions to come in and do certain types of modules or certain types of activities like account reconciliations or transaction matching. So those purpose-built platforms that we're seeing, they're evolving because over the years, they're years ahead of the ERPs and they are much more effective at actually providing some of these key transaction based initiatives. And they're already kind of on the front end of the advanced transformation and automation life cycle.
 
 Mark: (09:30)
 So they're continuing to add their capabilities based on their customer's experiences, and they're frankly, more stable and more dependable than the traditional Multilink spreadsheet. So the next iteration that's going to support those purpose-built platforms and a good example of a purpose-built platform would be BlackLine. Many of the folks out listening may be familiar with BlackLine. The next iteration is the use of robotic process automation, which Janis mentioned. The use of bots to come in and actually accelerate the speed of repetitive routine transactions. And then linking that back into a purpose built solution allows the entire close process to become streamlined and much more effective. And then frankly, the whole financial close process moving into new emerging technologies has a pretty dramatic impact on the workflow or the workforce out there, which Janis, you may want to share some thoughts on the impact on the workforce with the digital skills required.
 
 Janis: (10:40)
 Yes, that's right, Mark. It's also important to be thinking about your people and the talent and having to attract and retain people with a digital skillset. Now in our current workforce, millennials and gen Z employees tend to gravitate towards firms that are embracing technology for really two reasons. They're comfortable with, or they're accustomed to the technology and as they've grown up with the technology or essentially digital natives,. And two, research shows that they're motivated by having interesting work in which they can see their contributions and using technology to provide insight and driving the organizational improvements are motivating to them. I would also say that you would want to take into consideration other stakeholders in participation outside of accounting when it comes to around people, and having to, incorporate emerging technologies. This may be CTOs and CISO's and having to take that into consideration. And also having to assess and think about the digital workforce, especially, at this current, stage and time as well, and scaling the use of the systems and tools across the regions and countries, and be able to collaborate with automation tools that's in the norm to be successful.
 
 Adam: (12:03)
 So what about any emerging technologies for FP&A, we've talked about that a little bit. What does the CFO now have at their fingertips?
 
 Mark: (12:10)
 Well, Adam, similar to the accounting close process, FP&A has also been historically really heavily dependent on spreadsheets. Whether we're talking about building budgets, looking at forecasts, multiple financial scenarios, the spreadsheet has been the tool of choice. And when you think about the CFOs, really asking for these days, they want greater insight into the business, they want alignment between the budgets and the business planning, they want greater accuracy and more timely forecasts. And, you know, you think about the volume of transaction activity over the past few years in the M&A space. And you realize that capital planning is more crucial than ever. And frankly, spreadsheets are really difficult to make all of this work. We also are seeing a heavy investment in private equity, into growth companies this past year. We're finding that those that work in companies are part of a PE portfolio, know that those firms create a lot of data and a lot of insights.
 
 Mark: (13:16)
 And they ask for that information in real time. And frankly, they often asked for that information yesterday. So as the key investors are constantly strategizing on how they want to grow the business or add to the business or carve out of the business, or simply monetizing in real time. They want constant modeling. So as businesses are taking a look at how they can meet those needs, and then you put in the additional challenge that's come through from the pandemic over the past couple years of a change in the demand for goods and services and the ensuing, impacts of a global supply chain crisis. We're finding that companies are constantly forecasting and in many cases re forecasting, you know, maybe 2, 3, 4 times during the course of a period. So the FNA function in order to add business, or in order to add its business value, it means they can't spend days and days developing these types of spreadsheets.
 
 Mark: (14:22)
 And they've got to start moving and pivoting to a more effective way for scenario planning, where they can give consideration to multiple futures, predictive analytics, seeing that information in real time, providing service reporting to the executive team and with all of these challenges, you've got to also consider where the data comes from and a CFO is looking for consistency. And we're finding that with the significant number of sources of data in an organization that oftentimes they're not getting one version of the truth. They're getting information from different source data that comes out and gives them different answers, which makes it difficult for their business decisions. So what the companies are starting to evolve into is more of an enterprise performance management concept. Now, EPM is a concept that really derives to a holistic approach to looking at financial data across an entire organization.
 
 Mark: (15:28)
 You want the business to be using the same data that's being used by the accounting function for their external reporting. And you want the decisions to be coming off of the same types of data. And so purpose-built platforms that are really designed around performance management are becoming more of the norm. And one, for example, that is extremely strong in that space is One Stream. It's an opportunity to take a look at everything from the close process at the front end source all the way through to the back end business reporting with KPIs and dashboards. So looking at consistency, looking at the planning functionality, making sure you can do multiple scenarios and all of your planning in minutes, as opposed to days or weeks on a spreadsheet. That's what the beauty of all of this automation is bringing. The other part that's really impressive about some of these, platforms that are starting to become more mainstream is that the CFO can access that information very quickly. It's accurate. And the cost of this is actually being driven down. So while these new platforms are extremely robust, they are user friendly. And we're finding that the implementation is actually becoming much more cost effective and to top it all off what we're also, seeing which Janis said a couple of times, is that the workforce of the future is digitally enabled and they expect to have access to these technologies as they grow in their careers.
 
 Adam: (17:03)
 For sure accuracy, accurate data is so important, especially now, in a digital world. And even when you're talking about accuracy of data it does make me think of the auditor who is trying to audit all of your books and all of those things. And so going into the next question, what impact to the auditor and regulators will all the things, different things we have spoken about today have now on the folks in that community, but also looking forward. And, Janis, I'll give that question to you.
 
 Janis: (17:33)
 Great, thanks Adam. I'm happy to answer. As you've heard from Mark and the trends I've mentioned earlier, the shifts to focus on value creation and digital prioritization really leads to automation of core processes and the finance transformation, but this shift also impacts the auditor and the regulator community and the need to stay current with emerging technologies. So if you think about technologies within a scope of a financial audit, there's been an increasing trend of companies incorporating the cloud environment, the software platforms, either ERP or purpose-built, and other solutions such as in-house platforms, internet of things, and connectors just to improve the workflow. And as the accounting and the compliance profession continues to evolve, so are the auditing approach such as the technologies to improve the audit process, RPAs, bots and data analytics tools, and as according to ISACA study in 2021 serving, over 4,500 members on emerging technologies, it was interesting to see that 59% cloud related technologies weren't used in terms of top emerging technologies.
 
 Janis: (18:55)
 And then what came second was 34% in artificial intelligence and 27% in the internet of things. So it's interesting, as you can see in terms of the trends and the perspectives, that's also evolving with the auditor and the regulator community. Now, typically from an auditor perspective, you'll want to consider, the objective or the business rules, or the materiality of the function or transactions process. And this could include having the change in the policy process to trigger a review of an existing rule set and essentially preventing introductions of inaccuracies or missteps in the activities. But now there are additional elements that you need to consider as more emerging technologies are incorporated into the daily financial transactions process. And this could be in terms of the full understanding of the system environment. As now, there are multiple layers associated, in incorporating emerging technologies and also having to have considerations in terms of the testing approach.
 
 Janis: (20:05)
 So this can involve the change management process having to make sure it's inclusive of the systems and use having to consider appropriate, secure design and the user access and the rights, protocol in place to monitor and the alert of errors that occur and just be consistent. And these are only a few mentioned, but definitely there's a multitude of elements to consider as more complexities are, introduced. Now, examples of emerging technologies that are relevant for financial audits may include bots and RPA, as well as machine learning and artificial intelligence. For bots and RPAs, a good example would be automation of accounts receivable, reconciliation that's based on specific requirements defined to run on a recurring basis. For machine learning and AI, it could be examples, related to credit and collection management with customers. I'd say a good example of this, we had mentioned earlier in terms of, BlackLine, but there's a good example, in terms of the BlackLine AR intelligence, where they offer AI to be able to analyze customer payment behavior, to identify trends, and then to understand the payment behavior to help manage the cash management.
 
 Janis: (21:30)
 So, FP&A technologies might be less material to financial audits in terms of more focusing on supporting forecasting, as well as operational functions, but you can never necessarily rule things out because it just depends on what is being leveraged and, used for in that. So having to share multiple perspectives from CFOs and controllers, to auditors and regulators, what continues to be relevant for all parties is to really just to stay current and seize opportunity for change and finance transformation. And this includes earlier, we talked about the financial close and FP&A technologies, as well as technologies utilized to improve the financial audit process. And one thing you know, let's not forget that organizations also need to embrace emerging technologies, and that includes upscaling the current talent in the workforce training and on the job experience, as well as hiring talent with the needed digital skillset. So organizations that don't embrace technologies will be unable to attract the top Millennial and Gen Z talent who may expect this.
 
 Closing: (22:49)
 This has been Count Me In IMA's podcast, providing you with the latest perspectives of thought leaders from the accounting and finance profession. If you like what you heard, and you'd like to be counted in for more relevant accounting and finance education, visit IMA's website at www.imanet.org.

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