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of this data-led evolution, those responsible for the function are oſten surprised when they take a closer look at the individual processes involved. Surely confusion around purchasing should be avoidable; don’t the processes always follow the same rules? Realistically,


It’s all in the process To


create more transparency around established processes


do not run according to specifications in many cases, deviating from how they were planned for several reasons. While this may initially appear to only have a marginal effect, this divergence from the norm can have a tremendous impact on a company’s efficiency. For example, if an order for materials is delayed and manufacturing comes to a standstill, customers will be waiting longer for their products. In some cases, maverick buying nullifies


negotiated special conditions, which at first glance, could be viewed as individual cases. However, when looking at the bigger picture, it quickly becomes clear that the small losses incurred can quickly add up to a tremendous sum and possibly also represent a compliance risk. Making successful changes in purchasing


comes down to having full visibility, particularly being aware of processes that do not conform to usual


requirements.


Given the impact that inefficient purchasing can have, there are significant benefits to improving the process, although these can only be made where there are tangible toe-holds. Making this happen requires one thing – transparency. Purchasing departments traditionally have sight of the delays to a process, but not the root cause.


finance, businesses must make better use of the digital traces leſt by individual processes. The technology used in cutting-edge solutions such as process mining uses the digital event logs in a company’s existing IT system to create a visual reconstruction of the business processes across an organisation. In the context of auditing, this allows the department to visualise and analyse aspects such as purchase-to-pay, order-to-cash, production and logistics, giving finance directors complete transparency into how these processes are working.


Financial directors shouldn’t be afraid to


move beyond traditional analytics to transform their strategy


From the perspective of purchasing,


‘mining’ these digital footprints makes all deviations from defined procedures visible, zooming in to the document level to monitor each step for unauthorised variants. Given that purchasing is a department subject to increasingly stringent compliance restrictions, more so than logistics, IT or manufacturing functions, this transparency is particularly important. Despite these benefits, there remains the significant challenge of interpreting the


findings correctly and pursuing the right path towards


improvement. To address


this, the next quantum leap within data analytics combines artificial intelligence, machine


learning and process mining


to present potential and actual recommendations for action. For example,


algorithms can guide an


auditor through the analysis and point out compliance issues and inefficiencies along the way. Simply put, the combination of analytics and AI acts like a personal MRI machine, providing unbiased visibility and diagnostics of an organisation’s processes. This level of advanced analytics can help benchmark process execution to set the right focus for an audit upfront. For example, a system containing a significant volume of un-approved purchase orders can cause real problems in the purchase-to-pay process. As the approval of purchase orders is key from a compliance perspective, visibility over them is vital for the finance department.


Creating a vision for finance Financial directors shouldn’t be afraid to move beyond traditional analytics to transform their strategy. Simplifying processes, automating routine and transforming operations are just


tasks, the


beginning. Examining processes under a microscope in this way can uncover hidden bottlenecks and reduce compliance costs, across a range of disciplines managed by the finance team. In particular, automation techniques that correlate millions of process-related data points are invaluable to the modern enterprise, enabling them to test solutions with a human touch, but based on a fully automated evaluation. This level of visibility can also help


leadership tackle broader business challenges, such as integrating multiple systems following a merger or acquisition. There’s no denying it – big data has transformed the way organisations operate, and finance cannot afford to fall behind as other teams innovate. With the ability to proactively monitor issues that could result in significant business risk, the finance team can use data-led techniques to position themselves as digital


leaders within their


organisations and become a key strategic partner to company leadership.


Visit www.celonis.com for more information on how to transform your financial processes


DOFONLINE.COM DIRECTOR OF FINANCE 13


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