Is The Future G ÔfYf[] F]o Technology Or F]o H]ghd]7

7L ] mlmj] g lYp eYfY ]e]fl2 eYfY af \YlY Yk Y kljYl] a[ Ykk]lIn their efforts to meet the increasing compliance demandsof tax authorities, tax teams already consume and distributesignificant amounts of data. But in some countries, taxauthorities now expect that data in real time — anexpectation that is likely to become more common as taxadministration around the world becomes increasinglysophisticated. Many organizations are not ready for thischange. In particular, organizations that continue to rely onmanual spreadsheets, which can be inefficient and raise therisk of tax statement errors and potential reputationaldamage, will find it difficult to comply.For Simon Kelly, former CFO and COO at Australian mediacompany Nine Entertainment Co., this means historical datais losing some of its importance. “While historical informationis important for areas such as reporting and tax, it doesn’tadd a great deal of value beyond that,” he says. “Value-addis in the real-time data about how things are trending in ourbusiness right now.”“In the future, the investment is going to need to be inreal-time data and in generating insights so businesses canrespond to changing consumer preferences without waitingfor accountants to pull together historical financials. Thehistorical transactional part of finance is really a commodity,not a competitive advantage,” said Kelly.For Vincent dell’Anno, EY Executive Director, PerformanceImprovement, Ernst & Young LLP, part of the investmentCFOs should be making is in real-time data, and the otherpart is in real-time analytics. “For example, there aresensors that are required to act in real-time or as close tothat as possible,” he says. “That means you want to facilitateanalytics as close to the source of data as possible, you wantto be able to drive streaming analytics where possible andrelevant to the business problem.”This is also reflected by our survey, in which “improvingdata and analytics capabilities to transform forecasting,risk management and understanding of value drivers” wasthe priority most cited by finance leaders as number one fortheir finance function (see Figure 1).According to Carolyn Bailey, Americas Digital GovernmentTax Transformation Leader at EY, tax teams need to radicallystreamline the collection of data through informationmanagement systems. “The data they collect should bealigned with a global data management strategy thataddresses tax requirements across multiple jurisdictions,”she said. “Once collected, the data should be analyzed toidentify the value it contains for the organization, thenassessed for sensitivity and various audit risks before beingshared with tax authorities around the world. By establishingrobust data management and analysis processes for taxinformation, CFOs can help make this possible.”J]Y[ af qgmj YfYdqla[k hgl]flaYdMany organizations find it difficult to introduce thetechnology needed to generate forward-looking insights.For example, they are often impeded by multiple ERPsystems, legacy applications and non-integrated architecture.In the future finance function, however, inflexible and costlyIT infrastructure will be replaced by scalable and innovativeIT. Many CFOs are already incorporating new advances intotheir ERP systems, such as: In-memory computing Cloud and hybrid cloud deployments (see p.10) Better and more mobile user experiences RPA to federate data from different systems.Choosing the right tools to capture and mobilize data andenable the insight-driven enterprise is a complex challenge,particularly given the rapid pace of technological innovation.But CFOs also need to focus on the “consumption” side.Finance leaders need to think about, for example, wheretechnological innovations such as those cited might comeup against the brick wall of organizational resistance, orwhat incentives systems are needed to encourage adoption.Change management will be essential to address this critical“people” dimension. a mj] )2 Priorities for the future finance functionImprove big data and analytics capabilities to transform forecasting, risk management and understanding of value drivers23%*Meet the need for new skills by transforming how finance talent is recruited, retained and developed22%*Make significant changes to the finance function skill set17%*Reduce finance function costs through new technologies such as robotics and process automation14%*Refine risk management capability, including cyber13%*Drive efficiency improvements through offshoring, shared services and outsourcing12%** % of finance leaders that chose this priority as number oneey.com/dnaofthecfo

8 Ak l ] mlmj] g ÕfYf[] f]o l][ fgdg q gj f]o h]ghd]7 Hj]hYjaf gj l ] mlmj] ÕfYf[] mf[lagfCFO storiesMavinakere RanganathCFO, Infosys“Technology is changing the way businessesare run. But if you look at most of the largecompanies, their internal financial systemsare lagging the technology trend. It isimportant that internal financial processesadopt the latest technology like mobility, AIand digital experience, to ensure straightthrough processing, predictive controlsand analytics for timely decision making.CFOs need to be aware of the technologicalchanges that are happening and understandhow they can leverage them for their owninternal financial processes.”

1*& JgZgla[ hjg[]kk YmlgeYlagfL ] nYdm] lg l ] afYf[] mf[lagf Reduce costs significantly by automating key processes Improve consistency, control and traceability Improve quality through reduction in error rates Overcome systems fragmentation by consolidating data from disparate systems;mjj]fl eYjc]l lYc]%mhDeveloping — organizations are growing their understanding of the technology and itsbenefits. Take-up poised for significant growthImagine a team member in tomorrow’s finance function who: Keeps a perfect audit trailFor EY’s Tony Klimas, automation offers the opportunity todrive the next evolution in how finance is delivered. “Thetraditional offshore model is starting to fall apart,” he explains.“Many popular offshore locations are becoming moreprosperous, and what used to be ‘cheap’ isn’t so ‘cheap’anymore. People are looking for alternatives and they’relooking to leverage technology advances, from robotics toartificial intelligence.”In the future finance function, RPA technology will play animportant role. 65% of respondents worldwide said that“standardizing and automating processes and building agilityand quality into processes” is a significant priority for thefinance function. And while it is a particular priority for costfocused CFOs, it is also important for those focused on growth(see Chart 1).This point of view is echoed in our research: 58% ofrespondents worldwide said that “combining state-of-the-arttechnology with process improvement” is a significantpriority. And it is a particular focus for large and complexglobal organizations, whose CFOs must often seek to cutwaste, standardize approaches and combatbureaucracy and inflexibility. Represents no significant overhead Works much faster than their colleagues Completes huge volumes of repetitive tasks without evermaking an error; Yjl )2 Automation a priority for tomorrow’sfinance functionPercentage of respondents who say that standardizing and automatingprocesses and building agility and quality into processes is a significant priority68% janaf [gkl ] Õ[a]f[q ak eq fmeZ]j gf] g[mk gn]j f]pl Õn] q]Yjk60% janaf jgol ak eq fmeZ]j gf] g[mk gn]j f]pl Õn] q]YjkClaude Changarnier, Vice President of International Finance atMicrosoft International, believes that automation plays a keyrole in helping the finance function strike a balance betweenadding value and effective control. “The approach we havetaken over the past years and that we are continuing to taketoday is trying to automate, centralize and/or outsourcetransaction-based activities,” he says. “This is so that we canfree up time for people to be able to do two things. One, to addvalue to the business by providing business insight. Two, to putin place a very strong controls and compliance environment inthe different subsidiaries that we are operating in the world.”; Yjl *2 Tech-enabled process improvement criticalfor large organizationsPercentage of respondents who believe that combining state-of-the-arttechnology with process improvement is a critical/significant priority fortomorrow’s finance operating model69%CFO at largeorganizations( US 5b annual revenue)53%59%CFO at medium-sizedorganizations( US 500m-US 5b)CFO at smallorganizations(US 100m–US 500m)The shift to RPA can help improve organization performance ina number of ways by enabling CFOs to: 9mlgeYl] c]q afYf[] hjg[]kk]k jge \YlY j]hgjlaf lg hYqe]flkFor example, improving corporate reporting by using RPA toaccess and present data from multiple systems. Target system inefficienciesRPA can bridge the gaps between different ERP systems incases where organizations have not yet achieved a singleintegrated system. They can also act as an interface betweenan ERP and critical legacy systems. Aehjgn] l ] imYdalq Yf\ kh]]\ g afYf[] hjg[]kk]kRPA provides a clear audit trail record, which can makecompliance with regulatory requirements easier to manage.ey.com/dnaofthecfo

)( t Ak l ] mlmj] g ÕfYf[] f]o l][ fgdg q gj f]o h]ghd]7 Hj]hYjaf gj l ] mlmj] ÕfYf[] mf[lagfAk l ] mlmj] g afYf[] jgZgla[7For EY’s Chris Lamberton, Robotics and Process AutomationGlobal Center of Excellence Leader, successful financefunctions in the future will be those that find the right balancebetween robotics and people, with each doing what they dobest. “Ultimately, what you want to establish is the rightcombination of people and robots,” he says.“Quite often it’snot just a cost play.”It’s also about how you improve your service or createnew services.“The best way to think about robots is as the ultimatecompanion to humans. Let robots do the grunt work, andfree up people to do things they’re really good at, which isanalyzing all the data that robots can pull together,”says Lamberton.3. Cloud and SaaSL ] nYdm] lg l ] afYf[] Reduce costs, as organizations only pay for what they use mf[lagf Provide greater flexibility, in terms of adopting new technologies and flexing to changes indemand Improve disaster recovery, as back-up solutions and capacity can be accessed from anywhere,taking into account different circumstances, such as loss of power;mjj]fl eYjc]l lYc]%mhDeploying — widespread adoption by organizations across the world is growing fastAlthough a company’s financial management system is criticalto its success, many organizations have outdated andfragmented systems. Cloud and SaaS solutions now offeropportunities to transform system functionality and drivestandardization in a faster, smarter way. Cloud-basedinfrastructure and cloud-based SaaS applications can: Klj]Yedaf] gh]jYlagfkCloud-based ERP, for example, can allow disparate teams tocreate and access the same data, which can enable quickerdecision-making. Reduce costsBecause organizations can quickly increase or decrease thenumber of applications they use, they only pay for what theyneed, rather than what they thought they would need sixmonths ago. Maintenance costs can also be cut becausesystems upgrades can happen automatically. Cloud andSaaS solutions may also avoid the need for costly andcomplex rationalizations of on-premise ERP. Hjgna\] j]Yl]j d]paZadalqSaaS can help organizations keep pace with rapiddevelopments in technology, such as new analytics tools,and help the function respond to fluctuations in demand.While these tools can provide significant opportunities toimprove performance, they will need to be weighed againsttwo key concerns.1. SecurityCFOs will need to proactively manage the associated risksof these tools, particularly in relation to data security andcompliance with different regulatory regimes.*& ]n]dghaf l ] kcaddk lg eYc] Z]kl mk] g l][ fgdg a]kIn our research, 55% of respondents said that “improvingdigital technology skills in areas such as mobility, the cloudand SaaS” would be a significant people and skills priorityfor the future finance function. This improvement in digitaltechnology skills is important across many industries,but it is a particularly high priority in the media andentertainment sector, where companies need a scalableinfrastructure to manage and monetize all the digitalcontent they produce.; Yjl 2 Building cloud and SaaS skillsPercentage of respondents by sector who believe that improving digitaltechnology skills in areas such as mobility, cloud and SaaS will be a significantpriority over the next five years67%Media and entertainment65%Automotive and transportation64% an]jkaÕ]\ Yf\ af\mkljaYd hjg\m[lk60%:Yfcaf Yf\ [YhalYd eYjc]lk58%;gfkme]j hjg\m[lk56%Da ] k[a]f[]k55%AfkmjYf[]Hgo]j Yf\ mladala]k53%L][ fgdg q51%;d]Yfl][ 51%

114. Artificial intelligenceL ] nYdm] lg l ] afYf[] mf[lagf Improve strategic insight by analyzing unstructured data and helping business analysts find signals andpatterns in large data sets Improve risk management by identifying patterns in large data sets that are indicative of fraud or otherconcerns;mj]fl eYjc]l lYc]%mhDeveloping — leading organizations are making early investments and developing practical applicationsAI systems are capable of ingesting information andinstructions, learning from interactions with human beings andresponding to new situations and questions in a human-likeway. In addition, AI complements technologies such as RPA, asit involves systems that do not just follow rules, but canrecognize patterns, learn and adapt to new situations. Forexample, rules-based automation approaches often run upagainst exceptions to the defined process, and AI can be usedto target those exceptions.With these attributes, AI could be used to transform howtomorrow’s finance function provides key services. AI systemscould be trained to ingest tax regulations that are relevant to abusiness, and also to absorb new regulations as they comeonline, proactively advise the relevant person of the changes,and answer questions that he or she may have about theirnature and implications.Loren Williams, Chief Data Scientist at EY Global AnalyticsCenter of Excellence, believes that although AI will play anincreasingly important role, it will not do away with the needfor human financial experience and insight. “There are manycases where an AI system will augment the intelligence,knowledge and awareness of an expert like a financeexecutive,” he says. “With routine transactions, the AI systemcould have the authority to declare something out of boundsor to respond in a particular way to something that’s unusual.But with big, important and complex decisions, you may see AIsystems providing advice or recommendations to help thehuman decision-maker, and back up those recommendationsbased on its ability to gather, ingest and make sense of vastamounts of structured and unstructured data.”5. BlockchainL ] nYdm] lg l ] afYf[] mf[lagf Streamline finance processes, such as contract enforcement, by integrating delivery and payment intothe contract itself Increase IT security, utilizing the unprecedented protection that blockchain offers againstfraud and hacking Improve transparency by accessing accurate transaction data from across your company’s extendedvalue chain;mjj]fl eYjc]l lYc]%mhExploratory — organizations are researching, assessing potential use and value, and discussing withinexecutive teamBlockchain has the power to challenge many of the acceptedprinciples and norms of global trade, global financing andglobal supply chain management. It reinvents that basicbuilding block of commerce, the ledger, for a digital,connected age.A blockchain is a digital ledger — a distributed database thatcan be shared across a network of computers based indifferent sites and geographies. An identical copy of the ledgeris held by all of the people participating in a blockchainnetwork. Any changes to the ledger are reflected in justminutes or even seconds, thus providing all involved with realtime information and the capacity to track trends.The security of the information in the ledger, and its accuracy,are protected cryptographically, with the participants in thenetwork agreeing who can do what within the ledger.With Bitcoin, for example, individuals within the network(called “miners”) had permission to validate an aggregatedgroup of transactions (a “block”), with these miners rewardedfor their efforts with 25 Bitcoins. Once validated, the blockwas placed in the “chain.” Instead of a central authoritylike a bank validating transactions, validation for Bitcoinis essentially crowdsourced.While blockchain emerged as a technology for Bitcoin, itsattraction is more the algorithmic technologies that underpinit. This technology makes it possible to transform the ability ofa ledger to record, enable and secure a huge number oftransactions, and could be used in multiple sectors, fromfinancial services to tax collection in the public sector.ey.com/dnaofthecfo

12 Ak l ] mlmj] g ÕfYf[] f]o l][ fgdg q gj f]o h]ghd]7 Hj]hYjaf gj l ] mlmj] ÕfYf[] mf[lagfCFO storiesFrank H. LutzCFO and Member of the ManagementBoard, Labor Director, Covestro AG“I think wherever we can be supported bytechnology, we should try to do that. I thinkthat financial engineering will become moreand more important, which means lookingfor better ways to take out risk, for example,by hedging, by insurance policies and also bymarkets. Turning data into information willbecome more and more crucial too. If youhave a situation where the data is availablewithin the company, there is, for sure, aperson who knows the answer to a questionthat the CFO has.”

13In the future finance function, CFOs will use blockchains to: Increase IT securityBlockchains are considered by commentators to be tamperproof, providing unprecedented protection against fraud andhacking. There have been incidents where users haveentrusted their private keys to exchange operators and theoperators have had their security broken, but the blockchainsecurity itself has not been breached. Manage extended value chainsInstead of having to reconcile the internal system of recordwith information from suppliers and partners, CFOs will beable to pull data from multiple blockchains to create theirsystem of record. Streamline contract enforcementA smart contract feature means that the delivery andpayment relating to a transaction can be integrated into thecontract itself. With blockchains, the ledger is programmableand contains logic, so you can have a rule that makes apayment on the completion of a service.Paul Brody, EY Americas Technology Strategy Leader,outlines how smart contracts could transform internationaltrade, saying:“Imagine a container s

9fl gfq KlY Ô]ja CFO, Rogers Communications Inc. Robin Stalker CFO, adidas Group Francesco Tanzi CFO, Pirelli & C. S.p.A Jacques Tierny CFO, Gemalto Zlatko Todorcevski CFO, Brambles Kmc]lm Kmcq! MhY\ qYq Executive Vice President and CFO, Endo International plc H]l]j N]ckdmf\ Executive Vice Pr