Major advances in software in the last decades of the 20th century, including ERP systems and electronic spreadsheets, revolutionized how finance and accounting departments have done their work ever since. Artificial intelligence (AI) in all its forms is now in the process of enabling innovation on an even greater scale in the 21st century. ISG Research asserts that by 2028, all providers of planning and budgeting software will have incorporated AI and generative AI (GenAI) to reduce workloads and improve accuracy. As GenAI arrived, some forecast it would lead to the end of the accounting profession as we have known it and a substantial reduction in the number of people in finance departments. They were right on the first point but probably not the second. Technology will not necessarily replace people, but it will upskill them to improve productivity and performance.
AI, GenAI and agents are already fundamentally transforming work in the Office of Finance. Technology is spurring innovation, steadily eliminating low-value repetitive work and improving staff productivity. Although
Managing in uncertain times is always difficult. However, using today’s software, FP&A teams can improve the odds for success. Predictive AI makes it possible for financial and business analysts to rapidly create and update forecasts, plans and budgets in ways that best reflect past trends and experience as well as current assumptions and constraints. Spending less time handling data and spreadsheets also gives them more time to quickly set up multiple scenarios and devise options on how best to respond to them. Reforecasting and replanning cycles are fast, enabling enterprises to be agile in responding to change. Moreover, compared to spreadsheets, dedicated software makes it far easier to combine financial and operational data that makes planning easier and more useful for those in operational roles. Combining the two makes planning a more effective business tool for the leadership team.
AI-enabled planning software makes it possible to manage ahead of any future event, connecting the tactical trees to the strategic forest. The purpose of planning is not just to create a plan: enterprises spend time thinking ahead because it enables leadership teams, executives and managers to make more useful and better coordinated decisions faster and more consistently. Planning software eliminates the time analysts and others typically must spend on the mechanics of the process, so they spend more time on analysis. AI-enabled software gives them more time to focus on making planning a high-participation, interactive dialog focused on the tactics and resources necessary to achieve objectives.
The scope of applicable uses for all forms of AI is vast, and cloud-based software makes it possible for application providers to continually add features and capabilities. Some of the common use cases include:
The most consequential impact of technology in all its forms on accounting is the transformation of the staff from being mainly preparers to mainly reviewers and decision-makers. Technology can steadily reduce the amount of time accountants spend on repetitive manual tasks as well as checking for and fixing mistakes. This not only improves productivity, but it can also compress the time it takes to complete core processes. This is especially the case with financial consolidations.
Consolidation is necessary when an organization has multiple legal entities, subsidiaries, joint ventures or other forms of ownership or control of operating units. The financial consolidation process involves eliminating intercompany transactions and balances to provide a comprehensive and accurate view of the organization’s financial condition and performance. The consolidation process and its methods are tightly prescribed by financial accounting authorities and can be quite complex. This involves an intricate set of repeated processes that must be performed in a prescribed order and fashion. Enterprise software enables accounting departments to be more productive throughout the close by automating tasks and calculations, coordinating the execution of processes and facilitating communication among participants.
Consolidation and close processes require tight coordination and streamlined collaboration. Software assists in ensuring that steps in the processes are handled completely, correctly and in a timely fashion. Collaboration—even across multiple business units and locations—is assisted by direct communications, documents and notations by participants are easily accessed and necessary reviews and signoffs are performed. Those managing the process are assisted in being able to monitor progress and provide alerts when issues arise.
Consolidation software first appeared in the 1980s, but today’s software is much improved, incorporating real-time integration with source systems. This is important because of the myriad last-minute adjustments and corrections that take place during the consolidation process. Systems now offer more effective collaboration features to smooth the process and ensure resiliency, including secure data sharing as well as centralized document storage for working papers and supporting evidence. For those business organizations with especially complex structures and reporting requirements, the ability to consolidate using multiple accounting standards at different levels and branches of the corporate hierarchy can be useful.
Using consolidation software also helps organizations significantly shorten their close process. There has been general agreement that enterprises should complete the accounting close within a business week, yet our research finds that more than one-half take more than that to do the quarterly or semi-annual close. Workflow automation is especially useful in handling consolidations, especially in managing the process in a hybrid working environment and for organizations that span multiple countries. As with any workflow-enabled process, administrators spend far less time ensuring individuals have started or completed their tasks, hand-offs are smoother and, where reviews and approvals are required, these events are recorded and easily accessed by external and internal auditors and support assertions by executives that internal controls and procedures have been followed.
The six costliest words in managing a finance department are, “we’ve always done it this way.” Accounting processes are eternal, but how they are performed, using which tools, must constantly evolve to address the opportunities and constraints of the time. AI in all of its forms will substantially transform how finance organization operate by the end of this decade. Enterprises have had to deal with repeated shocks over the past five years. AI-enabled dedicated planning and budgeting software gives FP&A professionals a tool to respond to change quickly and with assurance, putting an end to “I’ll get back to you with that” as an answer to what-if and what-then questions. Today’s consolidation software can help finance and accounting executives make their department more productive in ways that improve the working environment and make it possible for them to attract and retain the best talent in a resource-constrained environment. ISG Research recommends that CFOs, Controllers and FP&A heads assess how technology can enable a more productive and more effective finance and accounting organization.