Survey Finds Only 11% of Organizations Are Ready for Digital Disruption

According to an AFP MindShift survey, a poll of 279 finance and treasury professionals found that just 11% believe their organization is “fully prepared” or “very prepared” for these new technologies like artificial intelligence, blockchain and robotic process automation.

“The benefits of new technology for finance and treasury are clear: increased productivity, reduced costs and better decision-making,” says Jim Kaitz, president and CEO of the Association for Financial Professionals. “However, the challenges are just as clear: lack of control over technology, cybersecurity, company-wide consistency, maintaining employee skills and the potential loss of jobs.”

In addition to the on-site survey, AFP MindShift released a whitepaper, “Emerging Technologies and the Finance Function: Prepare for Disruption.”

“When finance and treasury roles consider applying emerging technologies, such as robotics process automation and AI, to their processes, there are a number of attractive capabilities that can potentially transform the way they operate and enable their business to be more competitive,” says Leslie Chacko, director, Marsh & McLennan Companies Global Risk Center. “However, there are serious challenges and considerations in governance, talent strategy, cyber risk, and more that have to be very carefully considered. That said, ignoring these technologies isn’t an option.”

Deloitte Survey: Cognitive Adoption Resulting in Economic Benefits

The report, “Bullish on the Business Value of Cognitive: 2017 Deloitte State of Cognitive Survey,” released by Deloitte shows that early adopters of artificial intelligence and cognitive technologies are reporting strong opportunities for economic gains and job creation.

“There is a concern that ‘the rise of the machines’ will replace human workers, but we should look at how people and machines can work in collaboration as co-bots,” says Deloitte CEO Cathy Engelbert. “The ability to leverage new technologies to retool our workforce will ultimately lead to new opportunities to build high value skills for our workers.”

Contrary to public sentiment, 69% of respondents expect minimal to no job loss within the next three years.

“Organizations today that want to create a cognitive advantage should reimagine when, why and how humans and machines work together to achieve better outcomes,” says Ryan Renner, principal, Deloitte Consulting, and Deloitte’s cognitive advantage leader. “Cognitive technologies are disrupting how organizations conduct tasks, make decisions and complete interactions internally; and with their customers. The true value is created by knowing how to apply the technologies most effectively within the context of your business, marketplace, corporate culture and industry.”

Eighty-three percent of respondents report moderate to substantial economic benefits from AI and cognitive technologies. According to the report, organizations that claimed the greatest economic benefits feel that cognitive should be used for transformational change versus incremental improvements.

More than 1 in 3 (37%) companies have invested $5 million or more in AI and cognitive technologies.

  • 73% are exploring mature cognitive technologies such as robotic process automation
  • 70% explore statistical machine learning
  • 49% employ deep learning neural networks

“Cognitive technologies are still maturing, but our study shows that early adopters are experiencing benefits, especially those that have jumped in with both feet,” says Jeff Loucks, executive director Deloitte services, Deloitte center for technology, media and telecommunications. “The more experienced companies are, the more likely they are to see gains. That should provide an incentive for others to get started.”

View the full survey report here.

Cybersecurity Tips from ‘Shark Tank’

The Association of International Certified Professional Accountants held a webcast with Robert Herjavec, a leading star of ABC’s ‘Shark Tank’ and founder and CEO of the Herjavec Group, a global information security company.

In the recorded webcast, found here, Herjavec gave some tips for cybersecurity for all businesses.

Focus on detection and response. “If you look at some of the recent, large-scale breaches, the blame from consumers and regulators isn’t so much on the fact that you got breached,” Herjavec says. “The blame is, did you have the right systems and controls in place to mitigate that risk and that loss.”

Guard against malware and phishing attacks. It’s common for hackers to impersonate banks in an email and ask for account numbers and personal identification numbers (PINs). “A bank or financial institution will never ask you for your PIN … via email,” Herjavec says. “But if you look at the modern phishing attacks, they look like your bank statements.”

The cloud can provide some protection. Herjavec said the cloud can provide some important security infrastructure. “It doesn’t absolve you of the risk of that data,” says Herjavec. When using the cloud, small businesses still need to understand their own data issues and how to safely connect with their suppliers. Asking cloud providers where and how data will be stored, whether data will be encrypted, whether data you delete will be removed entirely from the cloud, and what the provider’s security procedures entail can lead to a more secure scenario in the cloud.

Protect the core functions. At its core, every business provides some value, whether it’s dry cleaning, whether it’s dog grooming, that core value has to continue to function no matter what the risk is.

View the full webcast here.

Communication is Key for Managing Remote Employees

According a new study by David Maxfield and Joseph Grenny, authors of the bestsellers Crucial Conversations and Crucial Accountability, communicating and working from different locations via technology is especially challenging for remote workers.

Fifty-two percent of the 1,153 respondents in the study who work remotely feel their colleagues don’t treat them equally. Specifically, remote employees feel that colleagues don’t fight for their priorities, say bad things about them behind their back, and make changes to the project without warning them.

“Our research over the past three decades proves the health and success of any team is determined by the quality of communication between colleagues,” says Maxfield. “Teams that can hold candid and effective dialogue – minus the emotions and politics – experience higher morale and results like better quality, shorter time-to-market, better decision making, etc.”

“When managers model stellar communication, the rest of the team follows suit,” says Grenny. “You can’t overestimate the influence a manager has on his or her team’s ability to engage in dialogue and create a collaborative and healthy culture.”

Grenny and Maxfield say managers who use the following skills to communicate with remote employees is the first step to ensure their teams happier, healthier and more successful.

  • Frequent and Consistent Check-ins. Check-ins can vary from daily to bi-weekly to weekly but should be consistent and entail a standing meeting or scheduled one-on-one.
  • Face-to-Face or Voice-to-Voice. Make a visit to remote employees or schedule a mandatory in-office day once a week, month, quarter or year. If in-person meetings are not possible, at a minimum use video conferencing technology or pick up the phone to ensure colleagues occasionally see one another’s face or hear one another’s voice.
  • Exemplify Stellar Communication Skills. The most successful managers are good listeners, communicate trust and respect, inquire about workload and progress without micromanaging, and err on the side of over-communicating.
  • Explicit Expectations. Managers who are direct with their expectations of both remote and onsite employees have happier teams that can deliver to those expectations.
  • Always Available. Successful managers maintain an open-door policy for both remote and onsite employees – making themselves available across multiple time zones and through multiple means of technology, often tailoring their communication style and medium to each employee.
  • Prioritize Relationships. Good managers go out of their way to form personal bonds with remote employees so the whole team can create personal connections and strengthen relationships.

CFOs Seek to Overcome Staffing Shortfalls to Meet Goals, According to AAFCPAs Survey

Boston-based AAFCPAs (FY16 net revenue of $26.7 million) has announced the results of its inaugural CFO survey. The results are captured in the report, “Behind Every Thriving Organization is A High-Functioning CFO.”

The report, conducted in collaboration with the Boston chapter of financial executives international (FEI-Boston) includes analysis from AAFCPAs’ partners, and highlights how sophisticated CFOs and senior financial executives are evolving to have wide-reaching organizational influence.

The survey polled 250 senior financial executives across New England, with nearly 70% of respondents reporting more than a decade of experience at the director level and above.

Key findings include:

  • 70% of respondents felt their relationship with their CEO is strong, yet 60% report some level of difficulty meeting CEO expectations.
  • 50% of respondents report their CEO relies on them most heavily for clarifying financial situations, as they are expected to serve as the CEO’s “right hand.”
  • 35% of respondents cited a pressure to increase profitability as the main driver for reassessing IT systems and processes, with the goal of achieving greater ROI from technology investments.
  • 55% of respondents felt as though their strategic, forward-looking mindset contributed to their career growth.

“The role of the CFO and financial executive continually evolves, and today is a key position for effective leadership of any organization,” says Matthew Boyle, AAFCPAs partner. “In order to meet expectations, CFOs must be masters of managing multiple priorities, collaborative, adaptive to new technology, and have a high-functioning finance team behind them.”

View the full report here.

SEC Inquires Go Unanswered Due to Spam Filter

According to a Fast Company article, on Aug. 10, the SEC emailed Axon Enterprises, a manufacturer of police body cameras and taser stun guns, with questions about the company’s accounting practices, but received no response. Then a month later, the accounting branch chief at the SEC, John Cash, sent another email to ask for a response to the initial inquiry. Once again, no response.

Cash emailed a third time to inform Axon that the inquiries were “outstanding and unresolved,” and so the correspondence would be made public. “As you have not provided a substantive response, we are terminating our review and will take further steps as we deem appropriate,” Cash wrote.

Axon said it only just discovered the agency’s queries on Oct. 19. The problem: the emails were relegated to the spam folder of the company’s new chief financial officer.

In a statement to Fast Company, Axon notes:

“Historically the SEC has sent hard copy letters. In this instance, they sent the request via email to one individual that had never corresponded with the sender before and therefore the sender’s message was caught in a filter and never reached the intended recipient. Once we were made aware of the original letter and confirmed receipt we responded to the SEC and we will be providing them with responses to their questions.”

The Seven Rules of Fearless Growth: What Fearless Companies Are Doing to Grow Faster and Smarter

Amanda Setili, author of Fearless Growth: The New Rules to Stay Competitive, Foster Innovation, and Dominate Your Markets, is president of strategy consulting firm Setili & Associates. According to Setili, when the rules we used to live by are becoming obsolete overnight, which doesn’t foster calmness and confidence.

“To be able to respond quickly and intelligently to the fast pace of change, all levels and functions in your businesses must be creative, responsive, and agile,” says Setili. “You’re going to feel fear, sure—and yet you must act in spite of it.”

In her work as a strategy consultant, Setili says she has found there are seven rules to help you navigate the new economy and achieve fearless growth.

  1. Embrace uncertainty.
    Uncertainty creates opportunities to pull ahead of the competition. Having the right risk mentality and moving quickly gives you an advantage over competitors that are slower to respond. Repeat past successes and keep budgets realistic and proportionate to projects.
  1. Get in sync with your customers.
    When you allow your customers to customize the products and services you sell, you’re able to learn a lot about them. This gives you the information you need to innovate new products, services and ways of doing things, and stimulate growth. You can also observe and cater to your outlier customers – the ones who use your products and services in unusual ways – to gain insights. They can provide you with a window into emerging market trends and ideas for new products and services.
  1. Partner, borrow and share.
    If you can collaborate with others outside your company, you can experience rapid adaption when the market changes. It benefits you to outsource things that are not your distinctive competency. All of this can leverage the ideas and capabilities outside your organization, while strengthening the people, processes and capabilities inside it.
  1. Connect and strengthen your ecosystem.
    Figure out who’s already in your company’s ecosystem and whom you would ideally like to have there. Then determine what value you would like each member to both give and receive. Consider creating a technology platform to enable richer interactions between ecosystem members and facilitate and nurture their real-life relationships with each other as well. Building the strength, size and participation in your ecosystem can fuel growth, build customer loyalty and insulate your company from market upsets.
  1. Open the floodgates of employee creativity.
    Be sure to continually pose new questions and challenge assumptions by introducing competition or games to stimulate new ways of thinking and free people to take risks. Allow new ways to work by encouraging collaboration and forming project-based groups, rather than top-down structures. Communicate your values clearly and frequently, so employees know what you expect, even when no one is looking.
  1. Learn fast and fearlessly.
    Keenly observing the business environment, taking action before you feel fully ready and incorporating what you’ve learned immediately into your strategy are all tickets to playing in today’s fast-changing global economy. Make sure you are constantly experimenting, learning from successes and failures, and applying your knowledge. Anticipate the changes in your business environment and set specific learning goals based on those changes.
  1. Build trust into all you do.
    Trust speeds innovation and growth and improves efficiency. To begin building trust, work to neutralize fear in your organization, making it psychologically safe for employees to voice their ideas and opinions, make decisions, take action, gain new skills and try new things. When you give people challenging but realistic goals, act in a transparent way, show vulnerability, grant people discretion about how they do their work, and show appreciation for work done well, you’ll be amazed how much your team can accomplish. Finally, foster and expect creative conflict by encouraging employees to disagree and challenge each other.

“Like it or not, it’s time to throw out the old rule book and start fresh with approaches that make sense for the new economy,” says Setili. “The strategies that help you facilitate trust, learning, creativity and partnership seem counterintuitive at first, but will soon pave the way to success not only for you but for your team and your customers as well.”

Guest Article: Navigating Through Preliminary Merger Discussions

Joe Tarasco

Joe Tarasco

Joseph A. Tarasco, CEO of Accountants Advisory Group

Most merger and acquisition deals typically go through five stages: preliminary discussions; transactional detail meetings and negotiations; an initial agreement outlined in a memo of understanding or letter of intent; due diligence; and the transaction agreement and signing of the partner / shareholder agreement.

Quite often, I am asked what are the pertinent types of questions that should be asked by the selling firm in a merger and acquisition transaction in the first few meetings. The following are some examples:

Vision, Strategic Planning and Future of the Firm

  • What is the vision and strategy for the firm for the next five years?
  • What is the culture of the firm?
  • Does the firm have an annual partner retreat and/or strategic planning meeting?

Partner Compensation, Management and Risk

  • How is partner compensation determined?
  • Do partners have annual goals and objectives? If so, how often are the partners counseled?
  • Are partners held accountable?
  • Describe your partner governance structure.
  • When was the last time you updated your partnership agreement?
  • Do you have partner meetings?  How often do you meet?
  • How is partner equity determined?
  • What are your average partner billing rates? Staff rates?
  • Has the firm gone through a de-merger or terminated any partners in the last five years?
  • Do you have any professional liability claims that have not been settled?
  • What has been your claim experience in the last five years?
  • What is the structure of your IT department?

Succession Planning and Professional Staff

  • How many equity and non-equity partners do you have?
  • Are any partners planning to retire in the next few years?
  • Do you have partner retirement payment projections for the next 10 years? Does the firm have a “cap” on retirement payments?
  • What is your staff turnover rate?
  • Describe your training program.
  • How often do you counsel staff?
  • What methods do you use to recruit staff?  Have they been successful?
  • Do you hold staff meetings?
  • What is your current staff-to-partner ratio?
  • Who oversees scheduling?
  • What is the structure of your HR department?

Partner Marketing Activity

  • What is the source of most of your new business? (If it is from referrals, what types of individuals and companies?)
  • How many partners bring in new business? How many are “rainmakers”?
  • For marketing purposes, is your firm organized into industry / service teams?
  • Are the partners held accountable for their marketing efforts?
  • Do you have new client acceptance criteria?
  • What does the firm do to identify additional service opportunities with existing clients?
  • Have you ever conducted a client satisfaction survey?  If so, what were the results?
  • What is the structure of your marketing department?

Service Offerings

  • What are the firm’s strongest niches?
  • Is the firm known as an expert in any industry?
  • What percentage of the firm’s revenue is compliance vs. consulting/advisory services?
  • What percentage of revenues is assurance versus tax?
  • Does the firm offer financial services? If yes, to what extent?

Do C-Suite Executives Work Differently?

In a new report, “Business Chemistry in the C-suite,” researchers from the Deloitte Greenhouse Experience team surveyed 661 C-suite executives.

According the report, C-suite executives are more likely than the general business population to think about the big picture, embrace the competitive spirit and make quick decisions. But the report also finds that those in C-suite roles are not necessarily more (or less) disciplined, punctual or practical.

The differences that the study reveals in the amount of Business Chemistry types in the C-suite are related to function, organization size, industry and gender.

The report discusses:

  • Factors influencing C-suite executives’ working preferences
  • Why we are seeing these patterns and what those implications mean
  • Recommendations for leaders and those who work with them

To read more about the study, please see the full report.

Guest Article: Beyond the Numbers: The CFO as a Cultural Change Agent

By Jeffrey Melnick, CFO, EisnerAmper

The idea of the traditional role of a CFO as purely a number-cruncher is as antiquated as pay phones and carbon paper. In fact, there should be little that is outside the lane of today’s CFO. A large part of this expansive view entails the ability of CFOs to drive changes to organizational culture in order to increase operational effectiveness across the entire firm. How can this transformation be achieved? It is through leadership and implementing leading-edge technology, of course.

A key goal at a professional services firm is to develop a virtuous cycle of success where the adoption of technology decreases staff friction points, which improves the employee experience, leaving their focus on helping to make our clients more successful. The CFO can be instrumental by helping overcome technology bias at an organization that may have developed over many years. But what supernatural power does the CFO have to cause this sea change? He or she can use both quantitative and qualitative metrics to show leadership – as well as stakeholders in IT, HR, marketing and practice leaders – that technology can be a powerful collaborative tool creating this virtuous cycle of success.

Jeffrey Melnick

A Journey Begins with the First Step

I followed four basics tenets as we implemented technology across the firm – mobile, easy to use, secure and transformational. My first step toward reshaping the corporate culture at EisnerAmper regarding technology began by creating a partner reporting system and dashboard to visualize the client data for which the partners are responsible. Next came mobile time recording, followed by better utilization of existing tools.

As the journey progressed, I tried a simple, but effective exercise. I charged the 37 professionals on my finance team to each provide one idea with respect to transforming, eliminating or investing in a technology. Perhaps by giving them some skin in the game, we actually came up with three times as many, 119 ideas, which we are currently prioritizing for impact and cost.

Coming to Fruition

One seed of an idea that grew out of an earlier finance brainstorming exercise pertained to expense reporting – a pain point on which we can probably all agree. Working with HR and IT, we launched a fully digital, fully mobile expense report system in December 2016 for all 1,500 EisnerAmper employees. Hearing the relief in the voices of colleagues who did their expense reports on a flight or during the train commute home because it made their lives incrementally easier, was a wonderful validation of our efforts.

We also tackled accounts payable. Our previous system was paper-based, labor-intensive and consisted of a dozen steps of transferring paper among our various offices. Our new electronic system is a digital 3-step process that offers better control and reduced staffing and storage costs.

We re-tooled and globalized our billing system with expanded capabilities. This seismic change allows our firm to “follow the sun” and utilize our infrastructure from San Francisco to Mumbai to expand client invoicing from only eight hours a day to nearly around the clock.

Other firm-wide technology initiatives include video conferencing, a more robust customer relationship management system, and a single HR system that replaced 14 separate ones. Each of these systems features apps for convenient use on a mobile phone or tablet.

As the CFO, I feel a responsibility to look at the bottom line and consider initial resistance, but then to always look at how the aforementioned cultural shifts in technology would improve employee capabilities and experiences, and the firm’s position over the long-term, which ultimately make our clients more successful.

Goin’ Mobile

A common refrain that I emphasize is mobile capability. As most people already live on their smartphones, this was more of a soft sell than a hard sell, but it did necessitate a slight change in cultural mindset. When client-facing practitioners are untethered from operations, the firm can move at a much faster pace. As such, we hired an app development team to bridge data flows. This went far beyond convenience; mobility frees staff to give more thought to their clients, which contributes to the development of our firm of the future.

The Verdict’s In

While the tenor of this article is a CFO beyond the numbers, there’s certainly no escaping them. Thankfully, all of the technology we invested in paid for itself via other cost take-outs, namely eliminating maintenance cost on legacy systems, reducing payroll, improved expense control and decreased location expenses. Perhaps, more importantly, we transitioned technologies that were formerly siloed and successfully integrated them across the entire firm – again, vesting people in the collaborative process. Other benefits included winning the “2017 When Work Works Award,” an increased Glassdoor score, and a decreased attrition rate.

What’s Next?

While we’ve made great technological strides over the past two years, we are certainly not resting on our laurels. My team will be working on a new, cloud-based, financial ERP system that will also be fully integrated across the firm. We’ll continue to invest in data streamlining in order to make it seamless companywide. Also, analytics will continue to play a big role. Firms today have mountains of data at their disposal – most of which is vastly underutilized. We need to gain a better understanding of our data to, for example, benchmark performance for clients.

Time for You to Make Some Changes

CFOs are uniquely positioned to leverage technological solutions that cut across the entire firm. Often that means being a champion for cultural change. (Lest I forget to mention that EisnerAmper has given me the tools and support to forge this change.) But the CFO’s investment in time and effort to bring about that change can result in a virtuous cycle that perpetuates success.