In our personal lives we experience smart machines every day. From driving directions on a smart phone to music playlists, personal fitness and more, the cognitive future has clearly arrived for consumers. Their application is growing in complexity at an ever increasing pace. It’s happening in business too. Manufacturing and Customer Engagement were early adopters, but it didn’t take long for other functions to climb on board. Pick any industry and you’ll likely find cognitive technology both augmenting and replacing human activity in hundreds of ways. The technology includes machine learning, neural networks, natural language processing, rules engines, robotic process automation, and countless combinations entering the territory of activities human activity can’t replicate. Unfortunately, many CFOs have remained on the sidelines, sceptical of the impact cognitive could have on boosting the performance of the finance function. In fact, in our latest quarterly survey, only 42 percent of surveyed CFOs said their teams are familiar with such emerging technologies For the function with a role that requires it to oversee the best allocation of resources across an organisation, the accurate representation of historical financial performance, and to ensure good governance and controls are in place, this is a scary statistic. Many CFOs, uncertain about the benefits, unsure how to start, and even questioning if it’s their role (over IT and the Business), have instead focused on more proven ways of improving cost efficiency and effectiveness, like continuing down the well-trodden path of optimising the use of shared service centres and outsourcing. Sadly, this means they hand over the value creation opportunities to third parties who are applying cognitive technologies and extracting the value largely for themselves. Caught up in the day-to-day challenges of Finance—data governance, fragmented systems, manual processes, and reconciliations – many CFOs have little time to envision the efficiencies a cognitive future could deliver. And yet, forward thinking finance innovators are exploring that future today by: Reconfiguring their teams with new capabilities (ensuring they have the people to build and scale these solutions), and then working with and leading a human/machine work force Starting at the ‘edges’ to create value for Finance’s customers (not improving the efficiency of how the invisible back of house Finance function operates) and then scaling proven solutions into the core. There are five cognitive tools that are ascendant in Finance, and we are seeing each used independently to begin with, and then into powerful combinations with others amplifying their combined impact. The main five are noted below (I will expand on how they are being applied in our next blog series): Machine Learning Robotic Cognitive Automation Natural Language Processing Natural Language Generation Speech Recognition Reconfiguring Finance Talent It’s understandable that many CFOs are concerned about the impact of cognitive technologies on people, and unsure of what skills they need to build, deploy and operationalise them. Automation in many shared service centres for example, is already driving headcount reductions, a trend that is likely to accelerate. More broadly, many finance organisations continue to seek efficiencies through greater use of cognitive tools. More transactions are being processed automatically and more reporting is being done by machines, with smart machines working alongside humans to make Finance more productive and effective. Many finance jobs will require experience both working (and leading) with cognitive technologies. What is now a ‘nice-to-have’ skillset will very quickly become a minimum requirement. As the nature of finance work evolves, different kinds of finance professionals are needed, including data scientists, engineers, service designers and communication experts who are great storytellers – turning insight into impactful communications. To stay ahead, some CFOs are using this opportunity to identify individuals who are looking to expand their skills and become true business-minded partners, while rapidly changing the background and experience of both lateral hires and graduates. Indeed some organisations have reduced their graduate intake of Finance/Accounting graduates to as low as 25%, building new capabilities through this channel. They’re also looking to identify the next generation of leaders who will drive these changes to reshape how finance work gets done. Thinking you can build and scale into this new world with existing skills is a sure path to failure. It will take a mixture of old and new skills and experience. Starting at the edges The first job of Finance is to get the numbers right and ensure good governance and control. That’s a given, and cognitive technologies don’t change that, in fact they help that outcome. In the relentless pursuit of improving efficiency and moving ‘insights to actions’ without sacrificing service and quality, cognitive is simply a new suite of technology tools you can put to work. As you look to continue your finance journey in the digital world, here are some steps to consider: Learn more: If you haven’t done so already, create a small cross-functional team to help your organisation understand what’s possible. Use weekly meetings to share cognitive stories with leadership. Invite in other organisations to share their stories. Don’t limit the exploration to Finance. Build waves: Create a wave of opportunities both within Finance and where Finance can help its internal customers with cognitive enhancements. The waves will grow over time as new opportunities emerge. Don’t forget to look at consumer applications for ideas. Identify pilot possibilities: Narrow the list and identify candidates for adoption. Keep the scope narrow, the team small, and the risk low, but where value realised will be impactful. If possible stay away from the core legacy solutions if they will bog you down and limit progress. Pilot a project on a really crunchy question: Focus on opportunities where time-to-value is short. Choose a specific use case that can be tackled without distracting the whole organisation, but creates value for someone other than Finance (i.e. Finance’s customer) Scale what works: Govern and track the impact of each pilot. Replicate what delivers results, and apply lessons learned to successive efforts. Here’s one more thought. Take the time to see some cognitive applications first- hand. Whether you do that by participating in Deloitte’s Finance in a Digital World™ lab or by visiting a finance organisation that’s ahead of the curve, nothing brings cognitive to life like seeing it in action. We’ll be glad to help make that happen. For more information on how cognitive technologies are being used in the Finance function, download Deloitte’s Crunch Time III report here.