Judgement vs. Data Analysis and Who Can Get It Done?
At a time when treasurers have a lot to process, judgement may get lost in the need to get things done during the next-wave transition to digitalization.
Treasurers’ Group of Mega-Caps members met for their (rescheduled) 2017 H1 meeting on May 17. Planning for tax changes, particularly the potential use of repatriated cash, remains a key priority for members. However, highlights of the day also included a presentation on planning for the digitalization of treasury and the resulting need to recruit staff members skilled in data visualization and software languages, including R and Python. Right on cue, one member discussed how the company’s machine-learning tool helped forecast accounts receivable with 15%-20% less volatility. This prompted some members to voice concern that overreliance on data may leave some treasury departments with staff lacking the judgment and real-world experience required to react appropriately to change.
Surfing the digitalization wave. Rapid advances in automation and digitalization present both immense opportunities and challenges for treasurers unsure if their staffs and platforms are well positioned for what one treasurer calls the “digitization storm” that’s creating “non-specific anxiety about the future.” To ride the wave and prevent what this member has labeled the “tsunami effect,” treasurers must look within and beyond their departments to find staff skilled in data visualization tools to aid in forecasting, including programming languages R and Python, and encourage learning of required skills. But as one presenter half-joked, “Excel is really hard to kill,” suggesting this transformation will take time as treasury moves outside its comfort zone and embraces new tools.
Redefining treasury. The uptick in technology change is also impacting treasury transformation projects. One member described “immense change” as he pushes to move his treasury department “into the 21st century,” improve risk management and complete a 10-year “journey” to get SAP implemented across all businesses. He and others described ongoing efforts to define what duties fit into core treasury, what can be relegated to service centers and what doesn’t belong in treasury. Most members agreed that while centralization is key for control, a model based on “following the sun” that shifts responsibility and oversight to regional treasury centers as the sun moves from Asia to Europe to North America is optimal. Also deemed ideal but not common is what one member has achieved: having M&A valuation report to treasury, avoiding what another treasurer described as having 10 groups come up with 10 different costs of capital when evaluating a deal or relying on a corporate finance team that, as another member said, “will make any deal look right.” This valuation role is consistent with the increasing need for treasury to support broader business goals as some functions like cash management are automated.
Finally, as members confront the reality of digitalization forcing change on the treasury of the future, some found common ground in warning that overreliance on data will leave departments ill-equipped to deal with real-life scenarios requiring hands-on experience. “I get a little worried about judgment versus data. We’ve seen this movie before,” said one member, also mentioning the issue of pushing too much responsibility to shared service centers. That said, there is widespread recognition that treasury needs to make use of new cloud-based tools and find staff well versed in the tools and programming languages that will allow more senior treasury members to make better decisions and focus on supporting broader business goals.
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