ISCA Digitalization Forum: Technology’s Role in Accounting ... · ISCA Digitalization Forum: Technology’s Role in Accounting’s Future (and Everyone Else!) Jon Krause ... Systems

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ISCA Digitalization Forum:Technology’s Role in Accounting’s Future (and Everyone Else!)

Jon Krause

VP (SE Asia)

Gartner Executive Programs

26 May 2016

1 CONFIDENTIAL AND PROPRIETARY I © 2016 Gartner, Inc. and/or its affiliates. All rights reserved.

1

What digital business means to CEOs

Gartner CEO & senior business exec. survey 2014. Large Cos, WW, n=111.

What do you mean when you think about “digital

business” in the context of your business & industry?


What is Digital

Business and How is

it Different?


Digital Business

The creation of new

business designs

by blurring the digital

and physical worlds


We're in the Midst of a Digital Revolution

2013 Imagine

2014 Drive

2015 Build

2020 Beyond

Digital Business

BimodalBusiness Algorithmic

Business

Nexus of Forces


Going Digital Requires New Thinking Tools

Technology "Hype"

Systems of record

Systems of differentiation

Systems of innovation

Pace-layered approach

Maturity

How to prioritize? To filter?

How to put these ideas into motion?

How to manage hype and expectations?


Digital Business Creates Risks

Risk of doing Risk of inaction

Enterprise

Impact

• You invest too early

• You take on more

brand/political risk due to

security, privacy, and

ethical issues

• Your investments are tied up

in the wrong things

• You miss out on benefits

that lead to shareholder or

citizen value

Customer

Impact

• Customers are not ready or

don't follow

• Customers have increased

privacy/security concerns

• Digital technology and

trends change customer

demands and you cannot

meet them

Competitive

Impact

• Competitors let you spend

money to test models and,

educate customers on

behalf of the whole industry

• You give up first mover

advantage

• Competitors hire digital

talent first

• You are unprepared for new

digital entrants


Build the Dual Capability to Exploit and Explore

Refactor to Industrialize

Unlock for Innovation


Expose Three Types Of Investment

8

FEAR FACT FAITH

Extending

Within the

Known

Keeping the

Business in

Business

Transforming

Beyond the

Known

ROIRisk Cost

Quality

Experiments

Platforms


Break Investment Down Into the Parts Boards Do and Do Not Care About

Competitive Differentiators

Investment Principle:

"Invest to Grow and

ROI"

Capability A

Commodities & Operations


"Best Price and Good Enough"

Capability B

Infrastructure & Compliance


"Risk Assess and

Manage"

Capability C

Innovation & Game Change


"Experiment and Write

Off"

Capability D


The Next Two Decades: Post-Nexus "SMART" Technologies

Sensor Networks and the Internet of Things

Thinking Machines

Augmentation

Robotics

Maker Machines


Stay in the Game

Pursue Vigorously

Change the Game

Wait and See

Develop Blockchain Use CasesSome Ideas

Data Management:

• Crypto Notary

• Leasing

• Collateral Mgt.

• Risk Mgt. and Fraud

• Name Mapping

• File Storage

Supply Chain:

• Bills of Lading and Documentary Credits

• Working Capital Financing

• Asset Tagging/Ownership

Financial Management:

• Micro-lending

• Micro-payments

• Wealth Mgt.

• Trading/Hedging

• Gambling

Disruptive Ideas

Execution

Disruption Workshop

Matrix


Every Business Has Three Parts

1

HEAD OFFICE/

Enterprise Direction/

Strategy Perspective

BACK OFFICE

Internal Operations/

Process Perspective

FRONT OFFICE

Customers and Products

Experience Perspective


The World Is Moving Toward Platforms

Business as a Platform

MomentsProducts

Services

Markets

Business as a System

Products and Services


Platforms Are Powerful

Multidisciplinary by Design

Dynamically Connected and Reconfigurable

Semiporous Boundaries

Continually Sensing, Learning and Reconfiguring

PLATFORM ECONOMICS

NETWORK EFFECTS


From Outside Your Industry the "Tech" Players Are Becoming Your Competitors

Not only edging into your markets, but also redefining your customer's expectations

Apple


The CEO Perspective

2016


[Ranked by

Summary Top 3

Mentions]

Growth

54% Customer

31%Workforce

27%IT-Related

24%

Financial

10%

Cost Management

13%

Profit Improvement

16%

Product Improvement

11%

Efficiency & Productivity

9%

Quality Improvement

10%

Corporate

24%

Operations Improvement

9%

Top Business for Priorities 2016/17

n = 396, CEOs and senior business executivesImage: Mark Raskino, Gartner

"What are your organization's top 5 strategic business priorities for the next 2 years (2016/2017)?"


People-Centric Issues Have Risen Quickly Within This Year's High Priority Categories

Training and Development

27%

Retention, Benefits,

Engagement24%

Talent Improvement

17%

Relationship and Satisfaction

37%

Service31%

Business Strategy

18%

Culture Change

15%

Competitive Performance

15%

Business Partnerships

9%

Customer Workforce Corporate

Image: Mark Raskino, Gartner Specific priority mentions within each business issue area. n = 294, 206, 179; left to right.


"Digital technology and business model innovations are leading some industries to change, and others to blend into each other.To what extent do you expect your industry to change in 5 years?"

n = 396 CEOs and senior

business executives

Industry Transformation by 2020

Little industry transformation —it will be very similar to today

7%

Moderate industry transformation

43%

Substantial industry

transformation41%

We will operate in a "new" industry —almost unrecognizable

compared to today

9%


Digital46%

Expected in 2019

Digital30% Today

(2015)

"Approximately what proportion of the customer-perceived value of your products and services is digital?"

Wireless connectivity

Media Integration

AutonomousDrivingSelf-Parking

Heads-Up Display

Digital Dashboard

Digital InsuranceServices

n = 396, CEOs and senior business executives

Average proportion of customer-perceived value that is digital

Deepening Digitalization of Products and Services


Cybersecurity

57%

45%

51%

43%

55%

49%

Pioneersn = 140

Followersn = 157

Mainstreamn = 74

Primarily a business management issue

Primarily a technology management issue

Image: Mark Raskino, Gartner

Business Management

51%

Technology Management

49%

n = 371, CEOs and

senior business

executives

We Must No Longer Permit the Belief That IT Alone Will Protect Us.

"Do you believe that cybersecurity is primarily a business management issue or a technology management issue?"


Job Title Leading Digital Strategic Changes

n = 396, CEOs and senior business executives

CMO 2%

General manager 2%

Vice president 2%

Multiple business leaders 2%

Chief Digital Officer (CDO) 2%

Chief Strategy Officer 2%

Other senior digital title 1%

CIO with other Sr. business leader 1%

Staff 1%

Business Unit mention 1%

Chief Data Analyst or other data title 1%

Chief Innovation Officer/Head of Innovation 1%

Other 2%

Less than 3%:

CEO

CIO

CFO

IT Manager

COO

BU Heads/

Managing Directors

Director

CTO

President/owner

Title mention leading digital

satrategic changes

75%

No digital change

25%

"Which member of your

executive leadership team

has primary responsibility for

leading digital strategic

changes to your business?"

= 1%


Impact on

Performance

Management


Strategic Methodologies

Gartner's Business Performance Framework

Balanced Scorecard Economic Value Added Managing for Value

DemandManagement

SupplyManagement

Support Services

MarketResponsiveness

Customer Responsiveness

Human Resources Responsiveness

SalesEffectiveness

SupplierEffectiveness

ITResponsiveness

Product Development Effectiveness

OperationalEfficiency

Finance and Regulatory Responsiveness

Gartner's Business Performance Framework

Catalog of Measures Analytic Measures Six Sigma

Business-specific Measures


How Does Office-of-Finance CPM Differ From Strategic CPM?

Office-of-finance CPM improves efficiency and compliance in finance:

Financial consolidation and close management

Financial reporting and disclosure

Budgeting

Financial planning and forecasting

Costing

Strategic CPM aligns the enterprise to common goals and objectives:

Strategy management:

– Strategic planning

– Initiative/goal management

– Scorecards and strategy maps

– Dashboards

Profitability management and optimization


Mapping Analytics Capabilities to Performance Management

Past Future

Whathappened?

Why didit happen?

Metrics &Reports

Transaction Analysis

What ishappening?

Why isit happening?

Real-time Exception Alerts

Root Cause Analysis

What islikely to happen?

What should I do about it?

Scenario Modeling, Predictive Analytics

Planning & Forecasting

"Traditional" BIPerformance Management


Emerging Trends Will Impact PM

TOTAL Jan Feb Mar Apr May Jun

$ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000

92,338 7,695 7,695 7,695 7,695 7,695 7,695

271,245 22,604 22,604 22,604 22,604 22,604 22,604

Total revenues 363,583 30,299 30,299 30,299 30,299 30,299 30,299

15,948 1,329 1,329 1,329 1,329 1,329 1,329

136,299 11,358 11,358 11,358 11,358 11,358 11,358

Total Cost of Revenues 152,247 12,687 12,687 12,687 12,687 12,687 12,687

211,336 17,611 17,611 17,611 17,611 17,611 17,611

64,888 5,407 5,407 5,407 5,407 5,407 5,407

93,138 7,762 7,762 7,762 7,762 7,762 7,762

37,721 3,143 3,143 3,143 3,143 3,143 3,143

5,100 425 425 425 425 425 425

2,210 184 184 184 184 184 184

1,274 106 106 106 106 106 106

Total operating expenses 204,331 17,028 17,028 17,028 17,028 17,028 17,028

7,005 584 584 584 584 584 584Operating income (loss)

General and administrative

Other general expenses

Amortization of acquired intangibles

Gross profit

Operating expenses:

Sales and marketing

Research and development

Cost of Revenues:

Cost of License Fees

Cost of Services

Restructuring charges

Region: North

Revenues:

Services

License fees

Social

NetworkingAll

Information

People,

Network

Decision

Tools

Collaboration

Collaborative

Decision-making

Environment

Social

Business Modeling & Simulation

Variety Complexity

Velocity Volume

MDM

"Big Data," In Memory

Business needs to look beyond

current requirements

Mobile


Interactive Visualization

Source: Advizor Solutions


Complex Event Processing

Business Process Management

Business Rules & Decision Management

IntelligentDecision Automation

Intelligent Business

Intelligence?

Transactional Data

Docs VideoTextAudioImagesIT/OT

The Machines Take Control of Decisions

CollaborativeDecision Making

Human Oversight/Intervention


Collaborate – digital business success is a

team sport & creativity lies at the intersections

of disciplines

Learn (& lead) – “what got you here won’t get

you there”. Adopt new ways of thinking and

operating + reimagine your business

Externalise – ‘outside in’ thinking from

customer and ecosystem

Automate – process, transactions and

decisions

Risk revisited – avoid risk vs manage risk

The Future of Accounting is CLEAR


"If the rate of change on the outside exceeds the rate of change on the inside, the

end is near."JACK WELCH

Former CEO, GE


Recommended Gartner Research

Ten CEO Information and Technology Resolutions for 2016

Mark Raskino (G00296108)

Mastermind Interview: CEOs and CIOs Can Learn From Jeffrey Immelt's

Drive to Make GE a Digital Industrial Company

Mark Raskino (G00293559)

Digital to the Core

Mark Raskino and Graham Waller (2015)

For more information, stop by Gartner Research Zone.

http://www.gartner.com/document/3192217

http://www.gartner.com/document/3186720


Recommended Gartner Research

Gartner's Business Analytics Framework

Neil Chandler and others (G00219420)

Applying Gartner's Pace Layer Model to Business Analytics

Neil Chandler (G00226265)

Strategic Road Map for Analytics

Gareth Herschel (G00219005)

Advanced Analytics: Predictive, Collaborative and Pervasive

Rita Sallam and David Cearley (G00230321)

A Business Analytics Framework for Finance Business and Decision

Processes

Nigel Rayner (G00234579)

For more information, stop by Experience Gartner Research Zone.


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Documents

ISCA Digitalization Forum: Technology’s Role in Accounting ... · ISCA Digitalization Forum: Technology’s Role in Accounting’s Future (and Everyone Else!) Jon Krause ... Systems