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From the original graphical user interface (GUI) and using a mouse to manage business expenses, to leveraging artificial intelligence (AI) and machine learning (ML) to create context for spending and identify patterns, finance has always been central to the digital revolution. Join us as some of the original members of the SaaS and ERP landscape and former SAP »ÆÉ«¶ÌÊÓƵ senior executives ¨C Mike Eberhard, Board Member of Oversight and Chris Juneau, Chief Marketing and Product Officer of Oversight ¨C have a conversation with Jeanne Dion, Director of the Value Delivery Group at SAP »ÆÉ«¶ÌÊÓƵ, to share their insights on the ¡®then and now¡¯ of how technology impacts finance and accounting for a perspective on how to manage your organization today.

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Transcript:

Jeanne Dion:

Hi, I'm Jeanne Dion, the Director of the Value Experience Delivery team here at SAP »ÆÉ«¶ÌÊÓƵ. My team works with customers to analyze data for programmatic improvements across their overall spend processes. We typically concentrate on our customers' desired business outcomes and today I have two great friends with me to talk about the technological impact on finance and accounting. So, I'd like to introduce Mike Eberhard and Chris Juneau. Mike, if you wouldn't mind going ahead and introducing yourself to the audience, I think they may know who you are already, but let's go ahead and do that.

Mike Eberhard:

Sure Jeanne, while the folks who do know me know me from my 17 years with »ÆÉ«¶ÌÊÓƵ and SAP »ÆÉ«¶ÌÊÓƵ. And most recently for the last six years, I was leading the »ÆÉ«¶ÌÊÓƵ business and then expanded with SAP to include Ariba and others. And really my background is 30 years in the financial system space. So, I'm really looking forward and thank you so much for the opportunity.

Jeanne Dion:

Thank you. And Chris, how about you?

Chris Juneau:

Hi Jeanne. Again, Chris Juneau, I spent 17 of my 20 years working very closely with Mike at »ÆÉ«¶ÌÊÓƵ and then SAP »ÆÉ«¶ÌÊÓƵ in 2014. And I most recently retired from SAP »ÆÉ«¶ÌÊÓƵ and I joined Oversight Systems as the Chief Marketing Officer and Chief Product Officer.

Jeanne Dion:

Thanks, Chris. So, I want to start today by laying some groundwork. As somebody who worked on the opposite side of finance, technological discoveries, and implementations I did a lot of work that was really manual, and it amazes me now to see what's happening in the landscape today. So, Mike, I was just wondering, you mentioned you've had a significant amount of experience moving across these financial technology fields. Could you kind of describe the landscape when you started your career?

Mike Eberhard:

Sure. My initial position in the financial system space was really in ERP and it was the mid-nineties, even mainframe ERP to date myself a little bit more. And mainframe ERP, I think "manual" is a great term to use Jeanne. It was data entry heavy and that's really what it was designed for more than anything else was that data entry component. Then I had an opportunity to move over to a company called PeopleSoft and PeopleSoft was an ERP solution that had adopted a new technology called "client server." And believe it or not, that was the first time where business users really got an opportunity to use a Graphical User Interface or a mouse or anything like that.

Jeanne Dion:

I remember that, I remember that ¨C that was like revolutionary.

Mike Eberhard:

It was. I mean, people loved to be able to interface with their system at that point and from a technology standpoint it was important because it was a time where integration was coming in to be really important. So, you could let's say, look at a journal entry and then double click and right go right into the source system that created that entry. And it started to make some and big advances in financial users and how they interact with the systems. And they didn't have to pick up the phone and call another group or do a lot of things that they were doing manually and that was amazing. It was also a time where we were doing preparation for the new millennium. And so, people were really making whole system decisions across the entire enterprise and that integrated suite of solutions ended up becoming one of the primary priorities in their decisions, but big license fees, really big consulting fees to implement it, hardware and infrastructure to support it. And so, it was very long return on investment.

Jeanne Dion:

So, when I think about that and I think about what happened during that period and we move forward like we can fast forward into the software as a service or those cloud solutions, they started to emerge right around then. I know you were involved in that as well, even before you came to SAP »ÆÉ«¶ÌÊÓƵ, which is one of the premier SaaS systems. So, would you be willing to talk a little bit more about how those SaaS solutions began to impact finance? I know how it did for me personally, I joked and said that the Graphical Interface was revolutionary, but it was, but this was just brought my game to a whole other level, my team and I could do some amazing things with a SaaS application. So, from a background perspective, what did you see as an industry person of the impact that was happening?

Mike Eberhard:

Well, it was a huge change. The first I would say was the ability for any company to adopt a world class, best in class solution and process. Right before that, for example, I think most people recognize Salesforce as one of the primary champions of building out SaaS solutions. Before Salesforce came around you would likely lead to the best solution out there with Siebel, which was a great sales automation system and platform, but huge costs to license and implement and support that system ongoing. And so only the biggest companies really could afford to compete in that way. And when Salesforce came out that barrier to entry came down and you started to pay for the service as you used it, which allowed for a better return on investment. And the other massive change was... After Salesforce and then other companies out there, »ÆÉ«¶ÌÊÓƵ included, they started really lowering the barrier to entry on implementation.

And so, it got to the point where it was a lightweight solution with IT. And that was revolutionary for finance because finance typically sat in the backseat about what would the next systems that were going to be implemented inside of an organization. And so, their own needs and their own solutions were pretty low on the priority list when it came to systems that affected product or systems that affected sales and distribution. When SaaS came in it allowed the finance professionals to be able to say number one, we can implement this, we can support this much lighter lift from an IT standpoint. And it started to create a lot of solutions inside of finance that they got a tremendous amount of value at. So, I would like to think of it as finance got to move from the back seat to the front seat and they really started to be able to adopt systems that they needed.

Jeanne Dion:

Yeah. I agree with that. I mean, I felt like I moved from the kids' table at Thanksgiving up to the grownup table once we started pulling in some of those SaaS applications. And I also felt like it gave me the chance to have more control over how things were implemented, how things were configured and then how I could continue to do my job after it, it actually made it so that there was automation further down the line that could come to bear, which was really incredibly empowering for me as a finance leader.

Mike Eberhard:

Yeah. The SaaS system's, one of the biggest values of that model was that you didn't have to do big, expensive implementations to get innovation. And so, you would get innovation on a consistent basis. And so, it was really up to you in finance to say, I want to take advantage of these next level capabilities that have come out and made a huge difference.

Jeanne Dion:

And so, when I think about that as being a milestone if we look at them like ages. We had the age of the initial technology where it kind of changed who we were. Then we had the age of SaaS, which really upped our game. What would you say is the next technological age that really impacted our finance professionals?

Mike Eberhard:

Well, I think there was one in between and that was smartphone. And so, when you look at the topic, we were talking about earlier about data entry, even when SaaS came through there was still a fair amount of data entry that was happening inside of accounting and finance organizations. And when the applications began to adopt smartphone technology, what you found is that a lot of that data entry started happening at the source and that freed up a tremendous number of resources inside of finance and accounting to focus more on strategic topics and real value of the organization.

And so, I think smartphones was another one beyond software as a service or cloud that really helped the finance organization. But I believe the next level of innovation that's going to have a huge positive impact on finance is really around getting these solutions much smarter, using artificial intelligence, using machine learning. These smartphones enabled solutions have created a massive amount of data. And so, the ability to remain compliant and the ability to manage that level of data really goes to the next level when you start infusing AI and machine learning.

Jeanne Dion:

Yeah, absolutely. It starts to look to doing things here in artificial intelligence as being something more of a strategic versus the absolute hands on tactical. And Chris, I don't know if you have anything that you thought about as this being that last big major impact to finance. What do you think? What's happening within the finance field especially with people retiring?

Chris Juneau:

Sure. Jeanne, I think... If you go around to many organizations, regardless of size, and talk to the finance leaders, they're likely strapped for people, even though organizations may grow; finance departments, traditionally do not. And then as you and I are chatting prior to this podcast is there is a growing number of finance professionals who are retiring and therefore we have a human capital shortage. So, I think that combined with greater compliance being applied at the state, local government, geographic level. So, you have a number of forces at work on finance professionals as they continue to try to do the traditional things of finance, ensuring business continuity, closing the books and so forth. And so, I think tools like AI drive increased productivity as well as enable rapid compliance with continuing emerging regulatory issues and so forth in a time when finance departments are not growing in size.

Jeanne Dion:

You know, I think about it too. I have a daughter who recently graduated from college and when I think about how her course of studies changed so drastically from when I went to school and the idea that technology is pretty much baked into everything they learn today. Everything that our college graduates are learning bakes that in there as almost an expectation that things are going to work this way and that they're going to be automated, but I read a lot of stories, there's a group of people who also feel, oh my God, the robots are coming, they're going to replace us. When you talk about artificial intelligence what role do you believe that artificial intelligence can play in a finance and accounting space? And I'll toss that out to either one of you.

Chris Juneau:

Yeah, I'll be happy to take that first and then have Mike respond as well. I think first and foremost AI is uniquely suited for pattern identification. Human beings are not ideally suited for pattern matching across the vast amounts of data of which Mike was referencing that evolved through all the technology advances. So, I think leveraging AI in the right way to help finance professionals focus on what's most important within their financial processes, whether it be again, business continuity, time to close in terms of your books or compliance with their own internal policies or various regulations is key. So, I think AI could be liberating to finance professionals versus sort of marching. The robots are coming in to take over the finance professionals¡¯ jobs.

Jeanne Dion:

Yep, exactly. What do you think Mike?

Mike Eberhard:

I think the core point that we have a massive amount of data now and you couple that with the fact that I don't think there's any finance organization that hasn't had a visit from risk and compliance within the last 30 days. And there are more and more checkpoints from a risk and compliance standpoint that's coming in. Some of it has been building cooperatively alongside of technology because the more we automate the more there's some needs for checkpoint and process and audit and those types of things. The key takeaway though is that most companies and certainly most finance organizations don't have the ability to just double their workforce to comply with the new data and matching and auditing that's required. And it doesn't matter whether it's in setting up a new vendor or whether it's coming through on expense reports and adhering to foreign corrupt practices act or new SaaS rules.

And so, it gets to the point of where you really can't move forward and comply without beginning to use technology against your data sets. And I think that's not something to fear. Certainly, there isn't as Chris said, the ability for humans to do some of the things that we really want AI to do now. And it's different than if you were working on the shop floor and being replaced by a robot, this is a much different situation. And I think this really does lift the finance organization from the tactical and move them much more into strategic.

Jeanne Dion:

I mean, just a couple of things that both of you said that have struck me, I mean, we know that based on multiple surveys that most organizations or a typical organization will lose about 5% of annual revenue to white collar crime, that occupational fraudulent behavior no matter where it happens. We also know that if it's happening in one place of spend it's happening probably across the board because things like that tend to happen in clumps. But we also know that in times of economic uncertainty, that type of behavior actually skyrockets. And to your point, it takes about 14 months to find something like that happening. So, you're 14 months in with somebody's eyeballs, looking at it, having something that could be automated and really check those patterns is really powerful for an organization.

It can really bring the work as you said to a strategic level and provide you with some of that exception based type work. But I do want to ask, we know that AI has a lot of potential and what we've been talking about is having finance, accounting professionals work smarter, not really harder for compliance and efficiency. Is there a couple of examples that you can give us where you can show where that works really well? I know I have a preference of what part of spend it would work well on, but just want to toss it out to you guys as well because you see a lot of this in your every day.

Chris Juneau:

Yeah. I can take a first crack at that Jeanne. At oversight, we just completed a spend insight survey and you're absolutely right. I believe and I don't have the exact stat in front of me though T&E spending is down due to the pandemic, cases of noncompliance or potential fraud are up over 200 plus percent. And when we talked to our customers and I was just chatting with a few in Atlanta last week, novel idea, we were actually in person visiting with Atlanta-based customers. And three things that are on their mind is first unused tickets with airlines. So many of our customers and were all »ÆÉ«¶ÌÊÓƵ customers have negotiated with the airlines to have all those airline credits over the last 18 months that are typically identified with an individual to be able to be pooled together.

So, they could literally burn those credits down as people begin to travel again. But what they're seeing is employees are also submitting expenses with those even though they may have used a credit. And so, the oversight »ÆÉ«¶ÌÊÓƵ detect technology is identifying those duplicates. Is it fraud? Was it intentional? Regardless, you're not allowing that money to go out the door because you're trying to burn down those credits. Second, there's been a high proliferation of gift card purchasing which has been fascinating to see across our customers. And again, identifying those patterns, how are the gift cards? What are the gift cards? Who is purchasing the gift cards, to what purposes? Because that has just ramifications from taxability, both personal tax liability. In Australia, we call it fringe benefit tax and so forth. So, it's allowing technology to spot these trends in these patterns.

And then the third had a chat well with our mutual customer with Southwest Airlines, I listened to the webinar that was recently conducted and how excessive mileage reimbursement is up and that's near and dear to Mike's heart because he and I worked on an initiative on »ÆÉ«¶ÌÊÓƵ Drive launching. And Southwest is having to remind their employees who now can live anywhere, which typically in an airline you did have a lot of flexibility, but even more so that you cannot be reimbursed for driving to your place of employment. So those are the things that we're seeing just immediately and primarily being driven by the pandemic that traditional systems we don't believe would've caught these patterns, surface these patterns and our organizations are changing their policies, reminding their employees of what is allowed, not allowed and so forth. So those are some of the examples I wanted to point out.

Mike Eberhard:

The other one that I've heard a lot about Chris is the home office expenses and millions of dollars that are being spent much without process and that's another one that's being battled right now Jeanne.

Chris Juneau:

That's right.

Jeanne Dion:

Yeah. We're seeing that a lot when we speak with our customers, we're seeing a lot of that type of non-travel spend that's showing up on expense reports and so audit teams aren't really familiar. The people teams aren't really familiar with how to audit this on an expense report number one, but number two, some of this spend, you have to wonder, as you mentioned Chris, the de minimis tax benefits on some of this, especially like gift cards or even on the office supply spending. If I spend $600 on an office chair and I put it through on an expense report, am I expected to mail that back when I'm done?

Chris Juneau:

Great point. And it's great that organizations have... Many organizations given their employees such flexibility to work remotely and so forth, but there are consequences from that freedom as well.

Jeanne Dion:

The other thing that we've noticed and I'm sure you all have noticed as well is the rise of the third-party payment, the Venmos, the PayPal's even the Amazon accounts, Alibaba, all those different pay systems that you may or may not know who that vendor is. And so, having to try to figure out what's going on there. I don't even want to open up the can of worms on Amazon returns, I don't even want to go there. But just that idea from that perspective of looking at it, are you seeing an uptick in those type of vendor stories that are happening and that your tools are catching?

Chris Juneau:

I can take a first response to that. We absolutely are because we're seeing that primarily as Mike was saying related to home office expenses. Increasing use of Best Buy for their 80-inch TV screen monitor and so forth. We're less seeing some of the trends in terms of payment though, I think that's a new opportunity that we should partner with »ÆÉ«¶ÌÊÓƵ in terms of solving. But also, the way to purchase to your point, look at Uber Eats, now we're identifying things, why are employees continue doing Uber Eats when it's a weekend and not a workday and so forth. So, I think it's partly the proliferation of payment platforms, but it's the proliferation of things that you can buy and the ways that you can purchase, which are going to confound finance and accounting organization for years to come.

Jeanne Dion:

Exactly. When we think about the ongoing evolution of companies and jobs and business requirements and all the things that are happening, kind of tying back to this whole artificial intelligence piece of work, how would you advise finance teams to take a look at what they have now that might be semi-automated, where do you think that they would best be served putting their automation dollars towards?

Mike Eberhard:

Well, I think that's a great question Jeanne. And I think if you look at most of the solutions out there, they've been really focused on creating efficiencies up into the process of finance and accounting. And so how long and how hard did we work at »ÆÉ«¶ÌÊÓƵ of making a system that was as easy possible for the end user? The traveler, the person that can now just take a picture of the receipt.

Mike Eberhard:

And I think what we didn't have the opportunity to focus on as much was a lot of the back-office processes, right? And so right now I think this is a fantastic opportunity, especially with the state of where spend is today is to look at those back office processes and say, where can you evaluate and do it in conjunction with where compliance like partner with compliance to get ahead of the curve of what those requirements are going to be over the next 12 months and begin to look at solutions like Oversight and others that can get deep into your expense process, deep into your payables process on a back-end and look at providing a tremendous amount of value that way. And that's a perfect spot to automate because I think that's been ignored for 20 years.

Jeanne Dion:

It sure has. To Chris's point earlier, we were always throwing people at it, but now there aren't as many people to throw at it, so how do we get value out of it? And I think that's a great way to look at it is to evaluate those back-office processes and take a look from there. We've been so focused on making the employee experience and the optimization kind of front and center for the end user. We've got some people on the backend who haven't had it as easy as some of the rest of us for a long time.

Mike Eberhard:

That's right.

Jeanne Dion:

... for a very long time.

Chris Juneau:

Yeah. You're absolutely right Jeanne. Many of us worked at »ÆÉ«¶ÌÊÓƵ, always joked that we were building solutions and we were probably unique in that regard where we wanted the users to spend the least amount of time, the end users in that technology. Now I think to Mike's point, we do need to re frame the challenge for the finance and accounting professionals. How do we have them spend the least amount of time ensuring their process and then enabling process efficiency? And then as Mike also said that intersection of process efficiency, scalability all during a pandemic with a decentralized workforce. Now, combining that with where we see compliance going, enabling those professionals to do their job more effectively and to focus on the bigger strategic issues in their organization versus focusing on the health of their financial processes.

Jeanne Dion:

Yeah.

Mike Eberhard:

And compliance and audit is still manual, Jeanne is kind of how you open this up on how much work is manual? I think they're still manual in many ways.

Jeanne Dion:

Yeah. They are and I have been challenging our customers as part of what I do here at »ÆÉ«¶ÌÊÓƵ every day to rethink how they run those processes and to rethink where is the value in that process? Where does it bring value to the corporation and where can we better assist? One of the things I have spoken with customers about a lot is to rethink that entire workflow of approval on an expense report.

Do you really need to have the manager review it or is it better to move to an exception base, fix the exceptions and fix the behavior later using dashboard technology to tell you where you have problems, so you can start to target your training because once this spend has happened the toothpaste is out of the tube. It's not like you're going to get it back in. So, it's not like you're preventing anything from happening there. It's the training at the front end, but you need tools to help you target that. And I think that the Oversight tool is one of the more remarkable tools that we have in our arsenal to be able to perform that kind of automation to a workflow that affects everybody in the chain, whether it's somebody who's made the purchase right down to somebody who's going to make a journal entry; it affects everybody.

Mike Eberhard:

Yeah. I couldn't agree with you more Jeanne. And the way that's going to happen is by making the system smarter and smarter and by leveraging AI, right? Those bouillon audit rules that were in most expense reporting solutions were really invented in the nineties and they identified that an expense line item needs to be reviewed, but there's no other context. With AI, you can evaluate the same transaction, but with the context of all the transactions that they're processing, right? The transaction exceeds the normal amount for this expense type in the company or the transaction was with a non-approved vendor or as you talked about earlier, a non-approved payment method and it could be the gift card purchases which weren't allowed. They're just a... It's a perfect opportunity to apply the pattern recognition and only bring the real actions that are needed for people to engage. By doing that, you can start taking certain people out of the approval process, maybe not a review process, but out of the approval process.

Jeanne Dion:

Right. That's great. So, I could talk to you guys all day about this because this is one of my favorite topics, but I know we have a finite amount of time. I only have you for a certain amount of time. So, I'm just curious, is there any parting words of advice that you would like to give to any finance or accounting professionals who are listening to us talk today? if you could pick one thing that they should be focused on, can either one of view, both of you want to chime in on that?

Mike Eberhard:

Yeah. I'll go first, Chris and then you can sum it up.

Chris Juneau:

Sure.

Mike Eberhard:

I think with all the transformation that's occurred over the last 30 years, much of which we talked about, it's going to pale in comparison to the next. And I think it's an exciting time to be in finance, I think there's scary parts and the level of compliance and rules that are coming in can get scary. But a lot of the times for me the scarier ones have become the most fun. And I'd suggest opening up and embracing change and looking for how the finance organization can ensure that they're ahead of compliance and risk and I can't wait to see it happen. So, thank you, Jeanne.

Jeanne Dion:

Yeah. Thank you.

Chris Juneau:

Yeah. And to build on what Mike said, I think it's an opportunity for finance and accounting professionals to rethink their current processes and their approach to compliance. As Mike said getting ahead of audit and so forth, because that's the opportunity that technology advancements have brought through the years. And Jeanne you said it yourself; many times, we always told the customer, yes, we can automate your current existing manual expense reporting process, but why would we? Why not take the opportunity to rethink, which has been a theme for SAP »ÆÉ«¶ÌÊÓƵ in 2021? So, I think this is a great opportunity for finance and accounting professionals to rethink their approach to not only their processes but also how they're driving greater compliance.

Jeanne Dion:

Absolutely. And I never thought I'd hear this, but it makes my heart sing, that finance is really part of the digital revolution.

Mike Eberhard:

It is, it absolutely.

Chris Juneau:

Absolutely.

Jeanne Dion: