Why technology and finance should go hand in hand in business

Blog Best practice November 14, 2018

Andreas Grundsell looks closer at the focus on technology as the way forward in business and explains why finance and technology should go hand in hand in every business relationship.

Technology as the way forward

Recently, I attended a seminar at Deloitte for finance professionals who discussed the impact of regulation and technology on their work. As I was listening, I was struck by how much emphasis they put on technology in moving their work forward.

The usual buzzwords of AI, cognitive learning, cloud computing, blockchain etc were hammered into us to such an extent that I almost felt I was in a more familiar context. The only difference to a seminar with supply chain engineers was that most of the audience was quite open and honest about the fact that they hardly knew what they were talking about!

Challenging work for finance professionals

It’s challenging work for professionals working in finance, especially in a firm doing global business. The work of the finance department affects every aspect of the company, from payment of the smallest invoice to hedging currency risks or setting up corporate structures to deliver the company’s global products and services locally at lowest possible transaction cost.

Compliance is key, and a missed step, no matter how unintentional, could result in heavy fines – and even jail, bad-will and, ultimately, future lost revenue streams.

“Technology is not the driver behind the transaction or the action in a business relationship.“

At the same time, inventiveness and the navigation of judicial rules and norms, as well as the laws of business, are key success factors for any company. As an engineer I’m awed by the complexity these professionals handle every day.

Applying technology to solve complex problems

My own professional competence has primarily come from years of operational experience, applying technology to solve equally complex problems, but particularly hands-on types of problems. Challenges such as moving components across the globe, producing them and assembling them into products, storing them and delivering them at an optimal capital cost and the highest possible service level and quality.

Even though these challenges are impossible to solve without the know-how of tax rules, accounting, customs and other factors with a strong impact on finance, they are almost always regarded as “bumps” or “something for finance to solve” rather than an intellectual challenge in the engineer’s mind.

Working with business applications that support operations, our focus is usually on technology and process efficiency rather than the financial prerequisites to turning ideas into operational reality.

In the back-end of the company’s decision-making

As the floor opened, I posed a few questions, and the answers were both interesting and revealing. The first question I asked was where they saw themselves in the “value chain” of the company they were working for. Almost everyone stated that they saw themselves as sitting in the “back-end” of the company’s decision-making.

If I had asked the same question of logistics professionals, I’m certain I would have received the same answer, but probably enveloped in self-confidence and attitude as the gender ratio between the two groups of professionals is still strikingly skewed.

Can technology really solve the challenges?

The second question I asked was why they were so focused on how technology would “solve” their challenges if they were so vague about what it really does?

“Engineers should first follow the money and then apply the technology we love!”

Apart from one or two voices representing the younger generation of professionals – a generation that takes it for granted that everything should be much simpler, intuitive and automated and is focused on the process rather than the philosophical aspect of my question – the audience fell silent as it dawned on them that they didn’t really know…

The cornerstone of all business transactions

So, I asked them another question – finance professionals, processes, rules and regulations all handle monetary flows. Money carries trust. Without trust – there’s no deal. No transport of goods across oceans to complete a transaction. The technology facilitates trust but isn’t a bearer of trust. Who or what is then?

And it dawned on them – they are! It’s the financial institutions, professionals, rules and regulations that create the trust that is the cornerstone of any business transaction.

Technology? Technology is great for lowering transaction costs by way of digitalisation or for optimising data to match supply and demand and the list goes on – but technology is not the driver behind the transaction or the action in a business relationship.

Technology vs monetary flows

I believe we have something important to learn here: economists should move up front from the back-seat in manufacturing companies by applying technology more quickly in the monetary flows they control.

And engineers should first follow the money and then apply the technology we love to create the operational efficiencies we strive for!

The obvious example to illuminate my point: it was only when services like PayPal and others emerged that B2C e-commerce really took off. Looking to do the same in B2B/B2G? Follow the money!