A few months ago, chatting with my friend, she mentioned that her company was already using robots working in Finance Share Center. The robots can work 7x24 hours per week, no complains, no overtime pays. It saved around 20 headcounts. Yes, we are living in the Big Data era. More and more people believe that Big Data will change our lives and works thoroughly within the next three years. Big Data delivers the potential to find value no one knew before, whether you are trying to maximize production, cut costs or boost efficiency. Data can be turned into dollars.
Internet of Things (IoT) is the basis of Big Data. It refers to network of physical devices, vehicles, buildings and other items which are embedded with electronics, software sensors, actuators & network connectivity that enable these objects to collect & exchange data. Anything that can be connected, will be connected. The internet is leveling the playing field. IoT is a game change technology. To be competitive in the future, companies will need to take action now.
• Real time operating data – Information for agile decision-making to improve the bottom line
• Advanced solutions – Cloud – enabled software that achieves greater connectivity, unifies systems, processes more data and finds more ways to use data to run a smarter operation.
Fully one-quarter of the world’s economy will be digital by 2020, forecasts a new report from Accenture. But that prediction doesn’t tell the whole story. Because increasingly, all business processes will be not only digitized – converted from analog to digital – but also digitalized – transformed in a way that blurs the physical and virtual.
• Reduced unplanned downtime - Data analytics identify patterns that reliably predict future events, giving companies the tools to detect and prevent abnormal situations.
Many organizations are struggling to respond. In fact, only five percent of companies say they’ve mastered digital transformation to the point of competitive differentiation, according to Forrester.
Under the environment of Big Data explosion and rapid growth of IoT, customers expect companies to provide faster, agile & flexible analytics and solutions. In order to better serve customers, not only high-tech companies, but also a lot of traditional companies are enhancing their strategy to grow software and data analytics capabilities.
The challenge is especially acute for manufacturers. From innovation to production to logistics, manufacturers are seeing their operations revolutionized by digital technologies.
Along with business transformation, finance also need to deploy transformation. Comparing to traditional finance structure, the major changes of future state came from:
That starts with research and development. Here are four key ways digitalization is transforming R&D:
• Commercial finance would be the primary partners of business. It would be embedded into the business as one core part of management theme to deliver P&L results, involve planning & forecasting, making investment decisions and cost management.
科技给予用户更多自由。如今用户已经拥有及时和稳定的信息，包括产品、质量和价格 – 无论是你还是你的竞争对手。过去，如果你已经是某个领域的领导者，竞争者处于劣势。今天，用户们知道你是如何在世界范围和对手们较量的，你过去的市场领导者地位变得无关紧要。
• In the meanwhile, finance operations would be centralized in corporate level to provide consistent high-value finance services to all businesses, such as management reporting & analysis, closing and booking reconciliation, collections & payments management, travel & expense management.
Technology has put consumers in the driver’s seat. Customers now have instant, constant access to information about products, quality, and pricing – for both you and your competitors. In the past, if you had established yourself as a leader in a region, the competition was at a disadvantage. Today, customers know how you stack up against rivals around the world, and your past market leadership is irrelevant. This isn’t just a problem for sales and marketing. It’s also a problem for R&D, which must respond – in as near to real time as possible – to changing customer demands. The good news is that technology is also the solution. For example, by designing smart products that leverage Internet of Things (IoT) sensors, R&D can capture usage data to understand customer desires and capture performance data to learn how to improve products rapidly.
The changes of finance operating model would help commercial finance to split from routine daily finance transactions so as to concentrate on driving business profitable growth. All business performance will be finally reflected by finance reports. Stakeholders would like commercial finance team to improve on below 3 aspects:
• Helping business to achieve growth target.
Information access is changing the way manufacturers interact both internally and with suppliers. This is true for every function, but especially for R&D.
As R&D creates more smart products, the skills it requires are changing. The automotive industry is a case in point. Fifteen years ago, cars began to incorporate electronics such as engine-control systems. Today, electronics are where most automotive R&D is happening, and within 10 years, electronics will allow cars to pretty much drive themselves.
That dramatically changes how cars are designed. In the past, mechanical engineers led design efforts, and electronics were merely an add-on. Today, software development – with its very different requirements and design cycles – is integral to the process. In the automotive industry and in virtually every other industry, product design will involve new stakeholders who must work together in new ways.
• Anticipating needs and requirements proactively
• Providing user friendly finance tools and reports.
In the past, product designers worked for companies that sold products. But increasingly, manufacturers will sell not products but services. That affects R&D in fundamental ways.
A good example is a midsize SAP client that makes industrial air compressors. Some years ago it realized customers wanted not air compressors but compressed air. So it began offering compressed air as a service. Before this time, it designed and manufactured air compressors and then sold them to customers. Now, it designs and manufactures air compressors, installs them at customer sites, and then charges for the compressed air customers consume.
That new business model changes how R&D develops products. First, it needs to design in IoT sensors to monitor the compressors in real time and enable predictive maintenance. Second, it needs to optimize longevity and ease of maintenance. One way the company achieves that is by having engineers regularly spend time with field service to see firsthand how equipment is performing.
To achieve the target from report-driven to analysis-driven and improve satisfaction of stakeholders, finance need to deploy a series of activities on business analytics transformation.
Common Process / System
In fact, 83% of executives believe digitalization is driving a shift from supply-side economies of scale to demand-side economies based on interconnection with customers and partners, according to the Accenture report.
Manufacturers will have to be more connected to customers, because new business models will demand it. Take the air compressor customer. It hasn’t invested in a capital-intensive air compressor; it’s simply contracted for compressed air. At the end of the contract, there’s little disincentive to switching to a more attractive contract. The same will be true for many products across many industries.
How does that change R&D? Design cycles will have to accelerate to maintain competitive differentiation. For example, most carmakers update a car’s electronics only if the customer happens to come in for service. Tesla has upped the ante by sending new features and functions directly to the consumer through regular software updates. Don’t be surprised if its competitors start to follow.
Ultimately, the digital economy begins and ends with the customer. Customers are more empowered, so companies need to become more customer-centric. And nowhere is that more true than in R&D.
For more insight on the new customer-centric digital economy, see Customer Relationship Status: It’s Complicated.
Multi-national companies normally organize several of Business Groups. Each business group has several of business units and each business units has several of line of business. Some legal entities are shared by several of business units. Some legal entities are standalone for exact business unit.
In addition to the complex legal entity structure, multi-national companies have the complicated business models as well, not only including comprehensive product basis business in different kinds of industries, but also long term project basis business which combined products, engineering delivery, service, software etc. to provide total solutions to customers. Furthermore, besides organic growth, multi-national companies always seek growth opportunities from merger and acquisitions. All these factors put together have increased the complexity on finance management dramatically.
Under this circumstance, Common Process / System is needed to cultivate one company culture. The vision is to deliver common best practice business processes with enabling systems and technologies to drive profitable growth and business transformation across corporation. The program is using global design model to connect commercial and Integrated Supply Chain (ISC) initiatives, deliver measurable business value, and best in class business processes.
Common process system not only provides more security and uniform environment, but also supplies better integration interfaces for merger & acquisitions.
Multi-national companies will take benefits through common process system deployment.
• Consistent approach into defining and agreeing the business scope.
• Early engagement of senior business leadership. The project management tools such as Business Readiness Scorecard and project plan provide better visibility on the progress of the project and business readiness.
• Focus on Business Engagement drives commitments and ownership into the business. Clarity of business readiness to implement the change.
• The structure, methods and phases gate outcomes drive the quality and consistency in the projects approach and outcomes. Business team prepared for successful operation from day one.
• A consistent focus on the measurement of Business Readiness ensures superior outcomes during project and post go live.
Although standardization deployment was an operational excellence initiative which initially designed to improve the capabilities of manufacturing sites, it has proven successful in functional areas as well. Processes optimization is fostering speed and entrepreneurialism among our global business enterprises while allowing us to leverage the scale and process strength of a large company.
Taking standardization deployment from plant to back office is one of development strategy for many famous companies. Standardization deployment will position finance organization for growth and improve business partnership through better process streamline across different business groups to increase efficiency and improve accuracy.
Finance standardization has not only the benefit to decrease the number of touch points so as to achieve fewer mistakes and quicker turnaround time, but also has the benefit to utilize existing personnel in higher impact activities, such as analytical tasks and greater professional growth. Finance transition will occur in the following aspects
• Implementation of leadership standard work: Listing activities of daily / weekly / quarterly / annually for each finance roles such as finance analyst, finance manager, finance director, controllership etc. Ensuring people focus on the right thing consistently.
How IoT Is Impacting 7 Key Industries Today
• Documentation of top three Standard Operating Procedures (SOPs) for each finance function: Reducing variability in process and approaches. It also help finance operation team to maintain high job quality even if challenged by high turnover rate.
There is no single way to describe the Internet of Things (IoT)—it varies by industry, both in types of systems and in use cases. IoT in one sector is different from IoT in another. To better understand just how IoT is impacting a variety of industries, Forbes Insights, in partnership with Intel, conducted a survey of 700 executives familiar with their organization's implementation of IoT programs.
• Implementation of tiered accountability: Engaging all in identifying, developing and implementing improvements for the business. Harnessing the many and not just relying on the few.
Growth in IoT systems has been most pronounced within the manufacturing and financial services sectors, with 47% and 42% of executives in these sectors, respectively, reporting growth in their networks exceeding 10% over the past three years.
• Visual management: Putting important documents in share folder and giving access to all team members. Making things simple, easy to understand and providing effective communication.
As the survey found, financial services, healthcare and manufacturing are leaders in IoT thinking, and in many cases, are connecting IoT capabilities with powerful advanced analytics or artificial intelligence. Close to six in 10 executives in the financial services sector, 58%, report having well-developed IoT initiatives, followed by healthcare organizations (55%). Growth in IoT systems has been most pronounced within the manufacturing and financial services sectors, with 47% and 42% of executives in these sectors, respectively, reporting growth in their networks exceeding 10% over the past three years.
• Rapid problem solving and value stream mapping: Involving functional experts on process design and streamline. Fixing issues quickly and finally, rather than letting them re-occur.
Keep reading to find out more about how executives in communications, energy, financial services, healthcare, manufacturing, retail and transportation are leveraging IoT.
Global Data Warehouse (GDW) Initiative
1.Communications: For telecommunications providers and other communications companies, the mobile revolution is underscoring the shift to IoT. About half of the communications companies represented in the survey, 53%, either have IoT embedded into their processes or have it in key business areas. In communications companies, the most prevalent IoT data sources include audio devices (45%), followed by mobile phones (42%). The most prevalent application is preventive maintenance (44%), followed by efforts to increase employee productivity (40%). In addition, more than one-third of communications providers are in the forefront of applying approaches with computer vision and analytics to better understand and predict customer behavior, as well as the viability of assets. In total, 38% report they have implemented visual analytics across parts of their enterprises.
Through common process system and standardization implementation, it provides a good basis for GDW initiative. With ERP, for example Oracle, SAP, Hyperion etc. and business intelligence technology, such as Tableau, Brio, Global Data Warehouse (GDW) tool provides platform for optimal business intelligence solutions.
2.Energy: Energy companies tend to have operations spread across remote locations such as oil and gas fields, which require continuous monitoring. Close to half of executives in the energy sector, 47%, indicate they either have implemented IoT across selected functions/business areas or have extensive IoT deployments. Leading data sources include machinery (49%) and robots (46%). Energy companies are turning to IoT to monitor asset performance (45%), enhance their customers’ experience (43%) and boost overall efficiency (40%). About one-third, 34%, report they have deployed visual analytics deeply within their enterprises. Camera-mounted drones, for instance, can help companies monitor the health and safety of production fields and facilities, spotting anomalies before they become a hazard.
Before GDW implementation, since most analysis and reporting are done offline using Excel, it directly leads to finance team spending most of their time on report maintenance rather than value-added activities for business. Furthermore, the manual reports have the following gaps:
3.Financial Services: Financial services organizations are highly security conscious, and therefore increasingly rely on networks of cameras and other visual sensors to ensure the viability of their facilities. As noted above, financial services leads the way in IoT deployment, with 58% of survey respondents having some degree of capabilities. Companies in this sector are also well ahead in terms of visual analytics adoption—51% report they have developed and implemented capabilities employing cameras and visual sensors connected to AI and analytics systems. Mobile phones are the leading endpoint choice for financial companies (cited by 51%), along with cameras and sensors (48%). While financial firms have multiple goals in their IoT efforts, most pronounced is the need to expand the connectivity of their networks (31%), along with employing IoT as vehicle for greater security (30%).
• Insufficient analytical capability (end-to-end, drilling, cross-functional analysis)
4.Healthcare: Within healthcare, there is concern about the experiences customers receive not only at bedsides, but also in waiting rooms, emergency rooms and business offices. Healthcare organizations are also leading the way with IoT, with 55% having fairly robust deployments in place. In healthcare, audio devices and mobile phones are the most essential devices in use, mentioned by 46% of respondents in the sector. Employee monitoring is the most prevalent use case (41%), along with monitoring facilities and enhancing customer experiences (each cited by 38%). The majority, 57%, also employ visual analytics to improve their levels of customer service and patient care.
• Inadequate visualization tools
5.Manufacturing: Manufacturers, more than companies in other industries, rely on heavy machinery to produce products and therefore have a deep interest in understanding the performance of these machines. Manufacturing organizations have a range of opportunities—through computer vision to manage and track the movement of goods, linked to artificial intelligence-enhanced systems that can predict, and even remediate, events before they happen.But there’s more to the story than managing machines. Overall, compared with other industry groups, manufacturers are seeing the greatest transitions from IoT. A majority of executives in manufacturing firms, 51%, “strongly agree” that IoT is opening up new lines of business for their organizations. In addition, 29% of manufacturing executives report their IoT efforts have enabled them to offer new products or services, along with 29% of those with communications companies. A majority of manufacturers, 51%, state either that selected business areas are supported by IoT or that they have deployed it extensively across their organizations. A majority, 52%, of manufacturers indicate they have visual analytics capabilities in place as well, enabling the real-time monitoring of assets and products. Mobile phones and computer systems are the main sources of IoT data for manufacturers (cited respectively by 48% and 47%), and the leading use cases in this sector are preventive maintenance (51%) and increasing productivity (49%).
• No mechanism for rapid integration of acquisition financial data
6.Retail: In retail, what happens on the sales floor doesn’t stay on the sales floor—customer behavior and reactions are studied, evaluated and evolved. Half of the retail executives in the survey, 51%, report having robust IoT efforts underway—either deployed across departments or extensively across their enterprises. A majority, 53%, also report employing visual analytics to some degree, enabling a greater understanding of customer preferences and behavior. The most prominent IoT data sources include computer systems (51%) and sensors (47%). For retail organizations, the main use cases are enabling business transformation (44%) and providing training enhanced by augmented virtual reality (43%).
• Lack of consolidated reporting across business unit
7.Transportation: Transportation is about movement and logistics, and IoT systems are playing a role in managing these capabilities. About half of the executives in the survey in transportation-related organizations, 47%, report having either departmental-level IoT efforts underway or implementations that reach across their enterprises. The most important use cases are increasing productivity (40%) as well as logistics monitoring and routing (40%). Close to half of transportation companies, 46%, have some level of visual analytics incorporated into their IoT efforts. Cameras and sensors, for example, may be placed along railroad tracks to monitor wear and tear on wheel assemblies or anomalies with freight cars.
• Human mistakes
As these examples demonstrate, every industry has the potential to reap the benefits from IoT. Yet it’s up to executives to recognize the potential of these technologies and determine how best to leverage them within their companies and respective industries. Those who do will certainly reap the rewards.
After GDW implementation, it helps company to gain below benefits:
• The tool is intuitive and easy to use. It provides real-time, actionable information, enabling faster, better decision making.
• Enable self-service reporting and analysis. It will involve business team to participate in dashboard design, facilitate the perception of elevated service while doing it yourself.
• Enable advanced analytics capabilities by data drilldown and visualization.
• Simplify and streamline development of dashboards, reports, and analytics. It provides forward-looking, predictive insights.
• Enable rapid integration of acquisition data
• Enable business unit integration data into business segment consolidated reporting.
• Enable commercial finance and operation finance employees to focus on analysis and business partnering activities
Refer to below chart for the Changes from Global Data Warehouse Initiative.
Once Global Data Warehouse project 100% implementation, finance will change from current state to focus on “what happened” and “why” to future state to focus on “what will happen” and “what should we do”. That is great changes on business analytics transformation.
It may spend millions of dollars and it may suffer a lot of pain points during the transformation. But from the long run, it is worthy of it. Analytics is changing the way we do business.
In the Big Data Era, in order to survive and achieve sustainable growth, the company needs to keep evolving to become even more global, more of a software company, and more nimble in a new era. In the meanwhile, as commercial finance, embracing analytics culture, we need to recognize data as an asset, link analysis to value and link analysis to action. We need to think about analytics all the time to ensure we are on the right track and taking the right approach on:
• Improving revenue growth, margin expansion, and free cash flow efficiency.
• Improving pricing decision
• Improving integrated supply chain productivity
Last but not least, I like the word “Data is the new oil and analytics are the new refinery”. It was quoted by many people recently although I don’t know where is the original. As long as you are a finance leader with wisdom, I trust big data era bring you more opportunities rather than challenges. Robots do the simple work and release us to do high value-added jobs.
"Internet of Things Global Standards Initiative". ITU. Retrieved 26 June 2015.
Note: Original. Welcome to repost but please give sources if citing another article or passage.