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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?
2 CONFIDENTIAL AND PROPRIETARY I © 2016 Gartner, Inc. and/or its affiliates. All rights reserved.
What is Digital
Business and How is
it Different?
3 CONFIDENTIAL AND PROPRIETARY I © 2016 Gartner, Inc. and/or its affiliates. All rights reserved.
Digital Business
The creation of new
business designs
by blurring the digital
and physical worlds
4 CONFIDENTIAL AND PROPRIETARY I © 2016 Gartner, Inc. and/or its affiliates. All rights reserved.
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
5 CONFIDENTIAL AND PROPRIETARY I © 2016 Gartner, Inc. and/or its affiliates. All rights reserved.
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?
6 CONFIDENTIAL AND PROPRIETARY I © 2016 Gartner, Inc. and/or its affiliates. All rights reserved.
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
7 CONFIDENTIAL AND PROPRIETARY I © 2016 Gartner, Inc. and/or its affiliates. All rights reserved.
Build the Dual Capability to Exploit and Explore
Refactor to Industrialize
Unlock for Innovation
8 CONFIDENTIAL AND PROPRIETARY I © 2016 Gartner, Inc. and/or its affiliates. All rights reserved.
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
9 CONFIDENTIAL AND PROPRIETARY I © 2016 Gartner, Inc. and/or its affiliates. All rights reserved.
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
Investment Principle:
"Best Price and Good Enough"
Capability B
Infrastructure & Compliance
Investment Principle:
"Risk Assess and
Manage"
Capability C
Innovation & Game Change
Investment Principle:
"Experiment and Write
Off"
Capability D
10 CONFIDENTIAL AND PROPRIETARY I © 2016 Gartner, Inc. and/or its affiliates. All rights reserved.
The Next Two Decades: Post-Nexus "SMART" Technologies
Sensor Networks and the Internet of Things
Thinking Machines
Augmentation
Robotics
Maker Machines
11 CONFIDENTIAL AND PROPRIETARY I © 2016 Gartner, Inc. and/or its affiliates. All rights reserved.
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
12 CONFIDENTIAL AND PROPRIETARY I © 2016 Gartner, Inc. and/or its affiliates. All rights reserved.
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
13 CONFIDENTIAL AND PROPRIETARY I © 2016 Gartner, Inc. and/or its affiliates. All rights reserved.
The World Is Moving Toward Platforms
Business as a Platform
MomentsProducts
Services
Markets
Business as a System
Products and Services
14 CONFIDENTIAL AND PROPRIETARY I © 2016 Gartner, Inc. and/or its affiliates. All rights reserved.
Platforms Are Powerful
Multidisciplinary by Design
Dynamically Connected and Reconfigurable
Semiporous Boundaries
Continually Sensing, Learning and Reconfiguring
PLATFORM ECONOMICS
NETWORK EFFECTS
15 CONFIDENTIAL AND PROPRIETARY I © 2016 Gartner, Inc. and/or its affiliates. All rights reserved.
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
16 CONFIDENTIAL AND PROPRIETARY I © 2016 Gartner, Inc. and/or its affiliates. All rights reserved.
The CEO Perspective
2016
17 CONFIDENTIAL AND PROPRIETARY I © 2016 Gartner, Inc. and/or its affiliates. All rights reserved.
[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)?"
18 CONFIDENTIAL AND PROPRIETARY I © 2016 Gartner, Inc. and/or its affiliates. All rights reserved.
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.
19 CONFIDENTIAL AND PROPRIETARY I © 2016 Gartner, Inc. and/or its affiliates. All rights reserved.
"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%
20 CONFIDENTIAL AND PROPRIETARY I © 2016 Gartner, Inc. and/or its affiliates. All rights reserved.
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
21 CONFIDENTIAL AND PROPRIETARY I © 2016 Gartner, Inc. and/or its affiliates. All rights reserved.
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?"
22 CONFIDENTIAL AND PROPRIETARY I © 2016 Gartner, Inc. and/or its affiliates. All rights reserved.
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%
23 CONFIDENTIAL AND PROPRIETARY I © 2016 Gartner, Inc. and/or its affiliates. All rights reserved.
Impact on
Performance
Management
24 CONFIDENTIAL AND PROPRIETARY I © 2016 Gartner, Inc. and/or its affiliates. All rights reserved.
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
25 CONFIDENTIAL AND PROPRIETARY I © 2016 Gartner, Inc. and/or its affiliates. All rights reserved.
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
26 CONFIDENTIAL AND PROPRIETARY I © 2016 Gartner, Inc. and/or its affiliates. All rights reserved.
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
27 CONFIDENTIAL AND PROPRIETARY I © 2016 Gartner, Inc. and/or its affiliates. All rights reserved.
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
28 CONFIDENTIAL AND PROPRIETARY I © 2016 Gartner, Inc. and/or its affiliates. All rights reserved.
Interactive Visualization
Source: Advizor Solutions
29 CONFIDENTIAL AND PROPRIETARY I © 2016 Gartner, Inc. and/or its affiliates. All rights reserved.
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
30 CONFIDENTIAL AND PROPRIETARY I © 2016 Gartner, Inc. and/or its affiliates. All rights reserved.
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
31 CONFIDENTIAL AND PROPRIETARY I © 2016 Gartner, Inc. and/or its affiliates. All rights reserved.
"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
32 CONFIDENTIAL AND PROPRIETARY I © 2016 Gartner, Inc. and/or its affiliates. All rights reserved.
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.
33 CONFIDENTIAL AND PROPRIETARY I © 2016 Gartner, Inc. and/or its affiliates. All rights reserved.
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.
34 CONFIDENTIAL AND PROPRIETARY I © 2016 Gartner, Inc. and/or its affiliates. All rights reserved.
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