25/07/2017 | Written by: Katleen Aems
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Organizations face challenging times. Virtualization and technical innovation all play a role in increasing business risk and volatility. Needless to say, then, that the department of finance is in the eye of the storm. New competitors, changing business models and higher customer expectations put pressure on CFOs. If they really want to be up to the task, CFOs and finance professionals should actively embrace cognitive computing to make sense of the massive amount of data confronting them.
Cognitive systems are systems that can understand, reason and learn. Unlike in traditional computing, the systems are not programmed, but trained. Training the system means an exponential increase in the ability to process massive amounts of structured as well as unstructured data, and derive actionable insights from that data. Cognitive technology can help you keep up with that explosion of data. It can augment human understanding – as a matter of fact, ‘augmented intelligence’ would be a more fitting term than ‘artificial intelligence’.
However, not all organizations have been brought up to speed and already realize the full potential that cognitive technology can bring to their organization. In order to assess the views of C-Suite executives on cognitive technology, the IBM Institute for Business Value surveyed more than 6,000 C-suite and heads of functions worldwide — including 524 CFO respondents. Some interesting results came up. For instance, CEOs say finance is one of the top-five investment areas for cognitive computing. What’s striking, moreover, is that the outperforming companies in particular are aware of the potential of cognitive capabilities. 90% of surveyed outperforming organizations agree they are ready to adopt cognitive technologies. Three times more outperformers indicate they will implement cognitive computing in finance within two years.
There are many potential areas of application for cognitive technology. As far as operations improvement is concerned, CFOs especially see possibilities in the optimization of finance processes and in expense management. With regard to performance management, cognitive computing can also play a role – for most CFOs, that role is within management reporting and financial planning & budgeting in particular. And with regard to growth activities, revenue forecasting can benefit greatly from cognitive technologies. Cognitive exponentially increases the predictive capabilities of the finance department, turning it into a strategic powerhouse for the organization.
Although it is clear that the potential of cognitive technology on finance looks promising, it’s still a challenge to get everyone on board. The shift that is required is fundamental. Cognitive technology has implications not only on information elements and types, but also on the information time horizon (shifting e.g. from periodic reporting to real-time reporting). Moreover, it impacts the skill sets that are needed, and even the way how data is used. From a traditional explanatory attributive use of data, we’re evolving towards a cognitive use of data. Strategy development and adjustment, revenue growth and event anticipation can all be supported by harnessing cognitive technology in the right ways.
- Adopting a mindset that embraces the science of cognitive computing is a key step in the journey. Start by asking yourself some questions:
- Which areas within finance would benefit from cognitive computing?
- How can my organization collaborate to implement cognitive technologies?
- What new skills or competencies would be required to take advantage of cognitive computing?
Ready to embark on your journey towards adopting cognitive technologies? Don’t hesitate to read the research whitepaper “The Cognitive CFO”.