entrepreneurial and financial decision-making situations are massively characterized by uncertainty these days. Customs duties and trade restrictions, political uncertainty, the negative interest environment, but also factors such as growing climate awareness have become the determining framework conditions for decision-makers in Treasury as well.
Developments influence business models
Against this background, speed and situational adaptability are more important than ever. Decisions made today and strategies implemented can already prove to be no longer adequate and advantageous tomorrow.
After all, who knows today how technological and economic developments such as electromobility or production using 3D printing will affect the business models of companies?
And what pressure do they put on the Treasury department’s future strategy for managing market and liquidity risks?
Incidentally, the current Covid-19 crisis is relentlessly showing the weaknesses of existing processes and systems. The lesson is therefore to implement digitization in treasury even faster and more consistently.
Treasury departments are now faced with the challenge of putting long-established routines and methods, as well as the data, processes, and systems required for their execution, to the test with a view to the resulting new requirements.
In recent years, every treasury decision-maker must have realized that the relevant solution approaches are essentially based on the integration and use of data, commonly referred to as the digitization of treasury.
Digitization is not a revolution, but describes the constant optimization and thus continuous change, taking into account the still existing primary goal – ensuring solvency at all times. And so with digitization, the basic commercial rules are not overridden,
Requirements for Treasury 4.0
In the last two to three years, many treasury departments have pushed the availability and use of data as well as the standardization and automation of processes and methods.
For example, treasury databases and reporting systems were implemented in order to create a uniform treasury database and thus real transparency regarding financial risks.
Or manual processes were transferred to systems and – where appropriate – automated with the help of software robots (especially in cash management).
However, it turns out that the added value added by Treasury through these activities is modest. Investments in new technologies therefore only make sense if the possibilities of the treasury management systems are already available and additional technologies have been exhausted.
Rather, the initiatives mentioned are homework that the Treasury departments have to do as a basic requirement for Treasury 4.0.
Treasury 4.1 is here and implements the main goal of digitization: improving decision-making based on data.
Currently, however, the digitization of treasury is on the threshold of the next stage of development. Treasury 4.1 is here and implements the main goal of digitization: improving decision-making based on data.
With ready-to-implement solutions such as decision support through the use of forecast systems (e.g. predictive cash flow forecasting), cognitive assistance systems (e.g. system-supported implementation of complex hedging strategies), the use of self-service reporting solutions, or With the use of AI-supported analysis systems to detect irregularities, for example in the area of payment transactions, treasury transformation reaches the next evolutionary stage.
Treasury decision-makers are making great strides towards the goal of ensuring speed and situational adaptability in their strategic and operational measures.
And these approaches will significantly increase the value proposition of the treasury department.
Benefits of Treasury Transformation
But even today it is not foreseeable what the further transformation of the Treasury will bring. Will technologies like blockchain also have a disruptive effect on the treasury?
Will the treasurer contract financial instruments such as bonds, ABS, and financial derivatives autonomously on the basis of AI systems and process them as smart contracts in a few years? Or process your in-house bank accounts securely and transparently using tokens?
Or will we see that the further development of classic technologies such as instant payments will mean that conventional concepts such as cash pooling will become superfluous and thus forestall blockchain disruption, or that intercompany clearing concepts such as netting using high-performance in-memory databases will become obsolete?
Business process review for improved process flow
Many analogies describe the smooth running of a company’s activities, including “like clockwork” or “like a well-oiled machine.”
One of the primary goals of modernizing operations is to create an efficient business, but technology improvements often don’t yield the desired results. Why?
Technological changes are not always integrated with business process improvements. So they don’t add value because they don’t take into account the people and processes involved and can’t work efficiently like the cogs in a clock or the gears in a machine.
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The challenges of implementing new technologies and the interaction of processes
By digging deeper into this reasoning, we can analyze some of the reasons why new technology implementations fail to deliver the expected value or return on investment originally intended.
When things go wrong,
When companies engage in modernization and improvement, their primary goals typically are to increase automation of operations for increased efficiency, gain flexibility, reduce costs, and meet the ever-changing demands of the market and customers.
Technology by itself is usually not the panacea for solving all of these challenges. A concerted technology-process-people approach is necessary. Without focused efforts on these three axes, projects generally fail to achieve the desired results.
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How do explain these failures?
Here are some plausible reasons:
- minimal or no understanding of current business processes;
- limited indicators to measure adherence to processes by end-users;
- A gap in the standardization of processes
- A budget for new technology projects that do not include an amount dedicated to processing review and improvement.
- The impact of functional and operational requirements on business processes is not assessed;
- Engineered technology solutions are not reviewed with process owners and end users to assess their impact on functionality, capability, and process flow quality.
- Process changes are not treated as critically as technology changes.
- Process changes are handled using a “Big Bang” approach instead of a step-by-step approach.
How can I avoid these pitfalls?
Examine existing process flows with a new way of thinking and an open mind. Make sure your business is spending its time and money wisely. Do we really understand our objectives and have we well-defined indicators to evaluate our success that is more precise than the success of technology implementation and the number of unresolved defects?”
If your company has opted for centralization, is it the right way? If you have a new FSM solution in place, is that solution being used correctly and in a way that your business is achieving its goals? Does your business already have everything it needs, but poor process flow is the cause of inefficiencies and higher operational costs?
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Specifically, here are steps you can take immediately:
- Have a discussion with process owners and trusted end users.
- Explain to them the objectives and technology related to the project and ask them to explain to you what could change in their current operations. What should change?
- Even if this discussion does not solve the problem, it will give you a glimpse of what to expect.
- Audit your dashboards, scorecards, etc. to see what indicators the company currently uses to measure compliance with the processes.
- You may find that most of your metrics measure process outcomes (usage, cost per truck, repeat activity) and not process compliance. There is a difference between knowing what to do and taking action.
- Ask for copies of business processes, recent training materials, etc. to multiple end users.
- The lack of ready availability of this material may indicate that processes have ceased to be standardized for various reasons (eg regional regulations, demographics, etc.). The result will help determine the level of process compliance and standardization.
- Perform a process impact analysis if a project’s budget is uncertain.
- It can be done internally or externally, with a moderate level of effort. It can also provide valuable data to clearly demonstrate a project’s impact on operations in order to secure an adequate budget and operational commitment.
- Incorporate a process impact analysis into all discussions of project functional and operational requirements.
- This can be as simple as creating certain “incremental changes” columns on a spreadsheet that ask users to identify the process and the effects of the change on that process. This will help define the relevance of the project by demonstrating that the business process is important and should be implemented.
- Empower business process owners to assess the effectiveness and impact on current and future process flows as IT teams deliver solutions (agile development or “waterfall”).
- Track all process improvements and modifications unique to the project.
- This aspect is often represented by a simple row in a Gantt chart (process development) or a milestone (work process completed) on a project plan. All technology projects have analysis, design, development, and testing phases to change business processes as well as features and milestones unique to each business.
- Examine agile process improvement techniques.
- Trying to launch all new processes in one step is associated with a higher failure rate. Several process changes can be made before implementing the technology to minimize the impact.
Never assume that with the implementation of technological improvements, everything will run smoothly and efficiently in your business.
The business process flow is a determining factor that will influence the integration of these improvements, and therefore its optimization has a great influence on the productivity of the staff and the success of the business.
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The 5 technological trends that will change our lives
The pandemic continues to affect the economy and our society. But it does not seem to have slowed down technological advances, which, on the contrary, have intensified.
Today we are witnessing the era of digital transformation: every day new solutions and improvements are appearing that are accelerating the processes of digitization and automation.
A Deloitte survey revealed that, in 2020, there was a 58% increase in smart automation projects compared to 2019 and, to date, the figures continue to rise.
The market for artificial intelligence (AI) software is also growing rapidly: it is expected to reach a value of $ 126 billion by 2025, with an increase of $ 15 billion in 2025.
So, regardless of the pace of the pandemic, there is no doubt that the next few years will be marked by strong and rapid innovations.
We have selected 5 of the main technology trends that will change our lives in 2022 and beyond, analyzing the impact of automation and digitalization processes in all aspects of our societies.
Sustainability is not just a trend of the current historical moment. The urgent need for low environmental impact solutions that respect our planet has facilitated the rise of “cleantech”.
Cleantech includes various methodologies and technologies that aim to improve environmental sustainability. These include not only the use of renewable energy sources, innovations in waste recycling techniques, or solutions that improve energy efficiency, but any practice that can help reduce the impact of man on the environment.
From 2022, the value of the cleantech market is destined to rise and, thanks to the investments of multi-billion dollar entrepreneurs, it will be increasingly part of our daily lives.
Over the past decade, smart homes, or solutions that make non-digitized homes smarter, have allowed us to have a safer, more comfortable, and more sustainable life.
The growing pervasiveness of these technologies allows us to understand that our life will be increasingly digital and automated. Smart locks, home robots, and voice assistants will, over time, become more present in daily life.
So home maintenance and care will also be automated and digitized.
Artificial intelligence (AI) and machine learning
There is no doubt that AI is one of the most fascinating technologies in the world and the one with the fastest evolution. Its potential knows no bounds.
In 2022, and beyond, AI will continue to transform most sectors, including healthcare, construction, security, finance, aviation, agriculture, and many more.
The ability to analyze huge amounts of data will remain its most important strength. This will allow companies, innovators, and governments to have more information to be able to develop new strategies and solutions.
The Metaverse is a virtual world that offers a highly immersive experience. Combine the features of social media with those of AR (augmented reality) and VR (virtual reality) games. Users can interact with the Metaverse through cryptocurrencies.
The Metaverse was in the spotlight recently when Facebook CEO Mark Zuckerberg renamed the company “Meta”, describing it as a “social technology company.”
The impact of this virtual world on our society is impossible to predict. Futurologists hope it can bring people closer, reduce environmental impact, and provide economic, social, educational, and professional benefits to its users.
After years of uncertainty, blockchain has finally been recognized as a possible solution to many of the technological challenges that arise in everyday life
Industry spending on blockchain is projected to exceed $ 11.7 billion by 2022.
But blockchain has already disrupted some key industries—such as finance, governance, transportation, supply chain, healthcare, philanthropy, and many more—and will continue to do so.
Its rise will ensure a future of safer, more reliable, and more transparent transactions.
“ You can’t connect the dots looking forward, you can only connect them looking backward. So, you have to trust that somehow, in the future, the dots will come together, ”Steve Jobs said in a speech to Stanford University students in 2005.
All the technologies reported here already existed before 2022 and will not reach full maturity even in this new year. However, there is no doubt that they will continue to evolve, advance, and disrupt our lives in ways we cannot yet imagine. They will help us to connect all the dots.