Digital transformation is an established phenomenon that has taken over every industry that we know of. With the advent of data explosion and new age technologies, CFO (chief financial officer) of an organization plays an important role in leveraging the same to help a company grow. In an interview with DataQuest, Mr. Ajay Kumar, Senior Director, ERP & EPM, sheds light on the role played by CFOs in digital transformation, ERP and its importance and much more.
Role of ERP in Digital Transformation
ERP is something that all of us probably understand very well. It has been around for past 30-35 years and there are some big companies in the market selling and implementing ERP solutions for customers. Over the last few years, innovation has become the buzzword, and no one really can afford to continue to run the business in the traditional way. No business can afford to remain immune from disruption. Every business today in any industry is truly being run as a technology business.
Companies like Uber and Airbnb have changed the scenario completely. The way things are changing, businesses need to be very agile. It is no longer about keeping record of your transactions; it is about taking decisions quickly. Forecasting is being transformed into nowcasting. Digital disruption is about making sure that all the CXOs, more importantly CFOs, receive insights from this constant flow of data in real time, to be able to make quick decisions.
Possibility of Digital Disruption having had Negative Impact on Industries
As I mentioned earlier, no business can remain immune from digital disruption. However, one needs to do a lot of planning before embarking on this transformational journey. Every organization is different and has different challenges. So, every transformational journey is different, although they may appear similar on the surface. Without proper planning, all these efforts may backfire.
Organisations need to understand their realities, strengths, weaknesses and their ability to absorb risks. A well thought out planning for digital transformation backed by proper understanding of business and industry always provides positive result. One of our customers in electrical manufacturing was clear about what they wanted. They were happy with their back-office operations, through digital means they wanted to enable their customers in Tier 3 or even smaller cities to reach out to them. They have just launched a digital platform and now they are directly connected with their multitude of customers. So every time a digital transformation journey is embarked upon keeping the organization's current realities in mind, it has been a success.
Role of a CFO in Digital Transformation of an Organization
At Oracle, we interact with several finance leaders from around the world. From that intelligence, we have shortlisted top-three priorities for any finance leader irrespective of their industry and even country. The top most priority is receiving information on a real time basis. The office of CFO is the converging point of information from every function of any organization be it HR, marketing, procurement, or production. So, the CFO is best placed to understand the functioning of the whole organization holistically and thus is best suited to become the focal point of the nodal agency from where the digital disruption or transformation of the organization begins.
The other priorities of finance leaders are efficiency of the processes, risk management and compliance issues. What we are trying to do is to ensure that we bring in tools and technology to help finance leaders in all these aspects. Let’s talk about efficiency a bit; we brought in the elements of artificial intelligence into transaction processing, where the system gets continuously trained on how each transaction is processed and can continue to improve itself to do it more efficiently.
The second piece is risk management. Every organization defines a set of policies, which are based on the organization's own philosophy and ethical stand on business, and as per the law of the land. A mix of these two becomes the organization's policy for every kind of business transaction. With the help of Oracle solutions, organisations can key-in all these regulations in the system, and then the system can check if the transactions are being done according to the compliance mandate. The exceptions can be dealt with differently; however, for the next time, the system will learn about the organization’s policy to deal with similar situations.
The last piece of this jigsaw is making sense of the data, which is about converting data into information. To expedite this process, we have added intelligence into the data layer itself. We have transformed our ERP system completely with embedded layer of business intelligence into it. This means that every transaction is automated, compliant and is contributing to business intelligence reporting. So, our digital transformation strategy for finance office is clear, bringing in as much as automation as possible to the transaction processes and remove manual work to ensure that the risk in compliance becomes an integral part of the transaction processes itself, which organization and regulatory policies can be adhered to. And thirdly, all this results in actionable information that the finance leaders can use to take intelligent on the spot decisions.
Latest Developments on the ERP Cloud Segment Front
During Oracle OpenWorld in October we announced artificial intelligence and automation within the ERP application itself. We also ensured that things like Internet of Things are embedded into it. We have brought machine learning, robotic process automation, and blockchain to the business application. What we are now coming up with is intelligent blockchain in terms of tracking; so track and trace of material is something that we are bringing in through blockchain as a new business capability. About the concerns of security, every single activity within Oracle datacenter is fully compliant with all global standards or most of the global standards, and some very stringent standards defined by Oracle, which exceed a lot of global standards.
Blockchain Technology Development in 2019
In our mind, technologies like blockchain, machine learning, artificial intelligence, Internet of Things, and robotic process automation are not future technologies, but current technologies. These are technologies that are already being leveraged by organizations in a standalone way. They are just trying to give it more structure. In the coming years, people would figure out how exactly to use these technologies. What we have done is brought these technologies to the business applications; so when you are running a business application, you can naturally extend it to IoT or blockchain. So, for us these technologies are not futuristic but current technologies. In future, these technologies will become stronger and will find use in many other applications.
As an organization we are trying to do three things: first is we are enabling innovation not just for the CFOs, but we are bringing in tools and technologies based on SaaS models and cloud models that make it easier for the whole organization to adopt. The second thing is that we are drastically bringing down the cost of executing IT transformation. The third and the last is we are bringing in scalability not only for going up but scaling down as well. It ensures that smaller startup organizations can use technology right from day one without making a huge investment.