The term Industry 4.0 conjures up images of high-tech factories filled with connected robots performing work previously performed by people.
How Industry 4.0 Applies to You
The term Industry 4.0 conjures up images of high-tech factories filled with connected robots performing work previously performed by people. However, the technologies that are enabling this transformation are not just confined to the plant floor. They are being used throughout organizations to drive efficiency and improve operational performance. Their reach is even felt in the world or professional services. Some of the technologies impacting finance and accounting include:
Robotics - These aren’t the physical robots that one would see welding the body of a car or roaming around your house vacuuming your floor. The “bots” being used in accounting departments are software applications developed to automate many of the repetitive, manual back-office tasks required to keep a business operating. Businesses are already using bots to automate the entry of their customer and vendor invoices and payments.
Internet of Things - The increase in interconnectivity means that information that was previously stored in disparate systems or business units is now connected seamlessly.
Big Data - Enabled by the increase in the quality and quantity of data available within organizations, decision makers are able to mine the available data for more and better insights to run their businesses. In addition, the widespread availability of software applications capable of performing higher level data analytics will lower the barrier to entry for businesses.
Artificial Intelligence - Similar to the bots being used to automate manual processes, companies are able to utilize artificial intelligence to automate routine decision-making processes. One example of this is bots that recognize when repetitive tasks are being performed and then developing new bots to automate those tasks.
Similar to the manufacturing environment where many of these concepts originated, implementing these technologies into a company’s finance and accounting department comes with challenges.
Commitment to Change - First and foremost is commitment within the organization. Any new technology or system needs buy-in from all stakeholders to ensure successful implementation, and these technologies are no different. Since there will be bumps along the way, it is important to make sure your teams understand that these short-term challenges will result in improved operations in the future.
Understanding Your “Current State” - Robotic Process Automation is a powerful tool for improving the consistency and efficiency of a company’s finance and accounting function. However, a process can only be successfully automated if it is consistent and repeatable. In many organizations, individuals either follow their own process for completing tasks or have developed “work arounds” for processes they disagree with or find to be inefficient. These processes need to be defined—and ideally streamlined—prior to automating them.
Know Your Data - Big Data and data analytics are not a silver bullet. They are simply a tool that if used properly can help you better run your business. Used improperly they can result in poor decisions and wasted resources. Before embarking on a data analytics project, a company should consider two fundamental questions:
- What questions are we trying to answer?
- What data do we need to answer that question?
As mentioned above, Industry 4.0 technologies are unlocking a treasure trove of data, but much of that data was not intended for this level of analysis when initially created. Companies should evaluate their available data to make sure it is accurate and complete prior to analysis so that it can either be cleaned up or new data can be collected.
Assess Your Skill Gaps - Most finance and accounting professionals have little-to-no formal training with these technologies, and, as a result, companies will need to determine how to best address these skill gaps. Should you take some of your existing employees and train them in these technologies? Should you look outside your traditional recruiting pools to find individuals with the skills you need? The answer to these questions will depend on the company and the technology being implemented.
Cybersecurity – Thoughts on Industry 4.0 wouldn’t be complete without a reference to the cybersecurity implications. The increase in connectivity greatly increases the surface area that companies need to defend since an intrusion in one department or facility could provide hackers access to an entire company. In addition, hackers are aware that companies are investing in these technologies and looking for ways to exploit them. If, for example, a hacker could gain access to a company’s network and find their accounts payable bot they could then examine the function of this bot and exploit it to process fictitious transactions. Since the bot would still be functioning properly, it could take significant time before management becomes aware there is an issue.
As with any new technology, these risks and challenges shouldn’t prevent companies from pursuing them. They further underscore the need for careful and thorough planning before moving forward.