Good morning,
The use of tech software in everyday finance tasks is growing. So, how will it advance this year?
Christina Melas-Kyriazi is a partner at Bain Capital Ventures investing in early-stage fintech, commerce, and application software companies. I had a chat with Melas-Kyriazi who has insight into tech trends.
“It's a pretty dynamic time for CFOs right now,” she says. “There are three areas in the software enablement space of CFO toolings where we've seen a lot of innovation.”
1. “Right now, cash management is king,” Melas-Kyriazi says. “And the real-time visibility on cash and operating metrics is becoming more critical. I'm seeing CFOs being increasingly focused on that.” With “macro shocks,” it’s no longer enough to operate on a quarterly planning cycle, she says.
2. "FP&A [financial planning and analysis] tools are getting an upgrade,” Melas-Kyriazi says. “We're excited about a lot of tools that sit on top of the ERP [enterprise resource planning] and can allow for companies to just have an easier time understanding their revenue expenses.” Often, Excel doesn’t meet the needs of finance teams, Melas-Kyriazi says. “There’s a next-gen of companies that are saying, ‘We're just going to rebuild a better Excel.’ Or companies that are building on top of Excel,” she says. These tools are often more collaborative, she says.
In addition, “I expect to see more companies leveraging A.I. and machine learning to help forecast better and more accurately,” Melas-Kyriazi explains. “I would say that of the companies I talk to, very few are using it fully today. But it's definitely an increasing trend over time.”
Regarding FP&A, professionals in this area increasingly play a big role in how the CFO’s office executes strategy. During a Controllers Council’s virtual panel discussion late last year, CFOs discussed the struggle to attract and retain FP&A and accounting talent. Barbara Salazar, CFO at E2 Consulting Engineers, a provider of environmentally focused services, said she’s aiming to build a pipeline for promotions that includes career advancement for FP&A talent. “You have to do this for your key employees,” Salazar said.
3. “We’re seeing much more automation in accounting and tax,” she says. It’s driven by the need for compliance, accuracy, and efficiency, Melas-Kyriazi explains. That includes automating manual tasks like the monthly close. With the talent crunch many companies are needing to “do more with less,” she says. “And that’s something that everyone is going to try to do over the next few years.”
Prudential Financial EVP and CFO Ken Tanji recently talked with me about the company’s enterprise-wide transformation that included automation and A.I. For finance employees, the expense management platform, forecasting and analytics, and scenario planning have had a tech upgrade. The transformation included a cost savings program that allowed the company to simplify and automate, Tanji said. Prudential exceeded $750 million in cost savings one year ahead of schedule, he said.
“One of the key trends that I've seen over the last 10 years with CFOs is that they're becoming more strategic,” Melas-Kyriazi says. “They need better tools to do so.” And that includes more software to have “better visibility into the rest of the organizations,” she says.
Have a good weekend. See you on Monday.
Sheryl Estrada
sheryl.estrada@fortune.com
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