2019 Finance Trends Report - Microsoft Dynamics 365 - Axdata

 
2019 Finance Trends Report - Microsoft Dynamics 365 - Axdata
Microsoft Dynamics 365

2019 Finance
Trends Report

                Page 1
2019 Finance Trends Report - Microsoft Dynamics 365 - Axdata
Introduction
It’s a new era. We’re ten years removed from the peak
of the financial crisis, a new generation has transformed
the workplace, and every business is now a “technology”
business. The rules of the game have changed. Orga-
nizations that fail to evolve find themselves in a grow-
ing graveyard of companies that were out-innovated by
young, forward-thinking businesses. And now, the role of
finance must evolve, too.

Today, the stereotype of suit-wearing, number-crunching
finance personnel is being replaced by a new breed of
finance professionals. These finance leaders are the liga-
ments that connect technology across the organization,
the muscle that fights risk, the brains that drive innova-
tion, and they are the heart that’s embracing a new gen-
eration of workers.

To thrive in today’s business environment, in a world
with growing complexity, organizations are increasingly
relying upon the technological and strategic prowess of
their financial leaders. Today’s finance professionals must
navigate a range of new challenges and responsibilities,
reporting on the past, managing the present, and creat-
ing the future.

The following will explore six emerging trends in finance
that we believe will help empower finance professionals
to better evaluate and manage risk, build innovative cor-
porate strategies, and grow their businesses.

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2019 Finance Trends Report - Microsoft Dynamics 365 - Axdata
Trends
                            4
           The role of finance grows
       Finance leaders take on more responsibility

                           10
Changing customer demands disrupt industries
     Empowered customers force companies to evolve

                           20
Technology makes finance smarter and faster
       New technologies are revolutionizing finance

                           28
       Living in the age of uncertainty
         Uncertainty puts a strain on businesses

                           34
  Businesses adapt to an evolving workforce
         A new generation enters the workforce

                           42
  Companies face new risks and challenges
        Business leaders navigate new challenges

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2019 Finance Trends Report - Microsoft Dynamics 365 - Axdata
The role of
finance grows
•   The CFO’s role continues to grow
•   Finance’s involvement in IT grows
•   Finance takes on technology risk management
•   CFOs lead business transformation
•   The COO role continues to disappear
•   Finance leaders become strategy leaders
•   Expectations from Wall Street evolve

                                                  Page 4
2019 Finance Trends Report - Microsoft Dynamics 365 - Axdata
The role of
   finance grows

The CFO role continues to grow                                                        Executive summary
The role of the CFO can be summed up in two simple truths: 1) if something im-        Finance and the role of the Chief
pacts the bottom line, it’s the CFO’s responsibility, and 2) everything impacts the   Financial Officer (CFO) have been
bottom line. From staffing and employee engagement to product development             elevated and broadened in the past
and mergers and acquisitions, businesses increasingly rely on the financial and       several years, a trend that will continue
strategic prowess of their most senior financial leaders whose growing influence      moving forward.
can be felt throughout the organization.

                                                                                      Highlights
Finance’s involvement in IT grows                                                     • Global IT spending is projected to
Over the past decade, one of the most visible additions to the CFO’s responsibil-       reach $3.7 trillion in 2018, a 4.5%
ities has been the management of technology across the business. This should            increase from 2017.
come as no surprise given the growth of technology in all aspects of the corpo-       • Sixty-four percent of CFOs
rate world. Global IT spending is projected to reach $3.7 trillion in 2018, a 4.5%      reported being asked to take on
increase from 2017,1 and this growth is projected to continue into the foreseeable      broader operational leadership
future.2 Today’s businesses spend an average of 3.28% of their annual revenue           roles beyond finance.
on IT, and in some industries, such as banking and securities, this rate can be as
                                                                                      • Nearly 70% of CFOs reported plans
high as 7.16%.3
                                                                                        to increase investment in digital
                                                                                        transformation in 2018.
Due to the financial demands technology has created, both as a major expense
and as a capital asset, it is more important than ever for CFOs to have a com-
prehensive view of these large financial line items. But technology is now more
than just a number on a balance sheet, it’s the lifeblood of many organizations,
presenting new risks and revenue opportunities that will determine the future
of the business. As technology becomes a critical component in the financial
success of an organization, finance has taken a more significant role in managing
technology, particularly in the areas of risk management and investment.

 Global IT
Global   ITspend
            spend  is projected to
                       is projected to reach
 reach $3.7 trillion in 2018.
$3.7 trillion in 2018.
                                                            Page 5
2019 Finance Trends Report - Microsoft Dynamics 365 - Axdata
In 2017, the average
           cost of a data breach
           was $3.62 million.

         Finance takes on
         technology risk
         management
         You don’t need to look hard to find
         examples of companies who have
         been impacted by technology fail-
         ures or data breaches. Beyond the
         many unquantifiable costs to a data
         breach—from customer trust to em-
         ployee morale—the direct financial
         cost of a technology failure is signif-
         icant. In 2017, the average cost of a
         data breach was $3.62 million; and
         with an average cost of $141 per lost
         or stolen record, this number escalates
         quickly for large businesses.4 In a re-
         cent survey by IBM, 48% of CFOs list-
         ed cyber risks as a major rising trend
         transforming the business landscape.5
         As a result, finance leaders are taking
         on greater responsibility in helping
         their businesses better manage this
         large financial risk; fifty-seven percent
         of CFOs report that risk management
         will become a critical part of their role
         in the future, a number that jumps to
         66% among CFOs of companies with
         over $5 billion in revenue.6

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2019 Finance Trends Report - Microsoft Dynamics 365 - Axdata
Sixty-four percent of
                                                                        CFOs reported being
                                                                        asked to take on
                                                                        broader operational
                                                                        leadership roles beyond
                                                                        finance.

70+30+J
                            CFOs lead business                        The COO role
                            transformation                            continues to
                            Today’s industry leaders are leverag-     disappear
                            ing technology in exciting new ways       Finance leaders are increasingly in-

      70%
                            to transform their business models.       volved in operations. In a recent sur-
                            This trend has been exemplified by        vey by EY, 64% of CFOs reported being
                            the upsurge in Anything as a Service      asked to take on broader operational
                            (XaaS) offerings and on-demand ser-       leadership roles beyond finance.9 This
                            vices, which grew 7.3% in 2017.7          transition has been partially driven by
                                                                      the decline of the Chief Operating Of-
                            With technology leading this transfor-    ficer (COO). Today, only 29% of For-
CFOs planning to increase   mation, their newfound role as tech-      tune 500 and S&P 500 companies still
   investment in digital    nology leader has also pushed CFOs        have COOs, a decrease of 40% from
 transformation in 2018.    into the role of transformation leader,   2000.10
                            evaluating technology investments,
                            overseeing product development,           This COO decline can be primarily at-
                            and leading strategic planning for the    tributed to the fact that the CEOs of
                            organization. Accordingly, nearly 70%     many major corporations were pro-
                            of CFOs reported plans to increase in-    moted from within and had previously
                            vestment in digital transformation in     served as COO, as is the case at 48%
                            2018, with 40% planning an increase       of Fortune 500 and S&P 500 compa-
                            of more than 10%. And with 56% of         nies.11 Subsequent to these promo-
                            senior leadership identifying digital     tions, many companies opted to elim-
                            transformation as critical to long-term   inate the COO role and divide these
                            success, CFOs’ involvement in this        responsibilities between the CEO and
                            area will continue to grow.8              the CFO. While the distribution of
                                                                      tasks between these two executive
                                                                      leaders varies by company, often the
                                                                      CEOs, with their strong operational
                                                                      backgrounds, assume responsibili-
                                                                      ty for manufacturing and the supply
                                                                      chain, while CFOs take over procure-
                                                                      ment and IT oversight.

                                            Page 7
2019 Finance Trends Report - Microsoft Dynamics 365 - Axdata
Finance leaders
  become strategy
  leaders
  CFOs increasingly find themselves                        Technology is ubiquitous in modern
  serving as strategic advisors within                     businesses, and while CFOs may not               Only 54% of technology
  their companies. One primary factor                      be able to code a website or set up a            investments are
  driving this shift has been technolo-                    database, like technology, CFOs have
                                                                                                            actually controlled by IT
  gy’s proliferation across all aspects of                 also become ubiquitous throughout
  business. Where technology spend-                        the organization. Because CFOs pos-              departments.
  ing was once primarily consolidated                      sess a deep understanding of both
  in the IT department, today’s technol-                   the organization’s technology and its
  ogy budgets are generally distribut-                     operational units, they are a natural fit
  ed across the entire organization. In                    to drive corporate strategy. And with
  fact, an early 2018 survey found that                    a background in finance, CFOs pos-
  only 54% of technology investments                       sess a unique ability to apply a sys-
  are actually controlled by IT depart-                    temic and objective lens to business
  ments.12 With software and analytics                     decisions. While CFOs remain saddled
  solutions making up an increasing                        with a reputation for being penny
  percentage of technology spend,13                        pinchers and number junkies, the shift
  the average CMO now wields as much                       to a more quantified management
  technology spending power as a CIO. 14                   approach provides an essential coun-
                                                           terbalance to the gut instinct style of
                                                           previous decades.

   Worldwide IT Spending Growth

                          5+41312282850518585+413305488+514315792+515325994+416346097+4173563100
                 $4,000

                 $3,500

                 $3,000

                 $2,500
USD (Billions)

                 $2,000

                 $1,500

                 $1,000
                                                                                                        Global IT spending is projected to reach
                   $500                                                                                 $3.7 trillion in 2018, a 4.5% increase from
                                                                                                        2017, and this growth is projected to
                     $0                                                                                 continue into the foreseeable future.
                           2015        2016     2017        2018       2019        2020       2021

                 Data Center Systems     Software      Devices     IT Services     Communication Services

                                                                              Page 8
2019 Finance Trends Report - Microsoft Dynamics 365 - Axdata
Expectations from                          cording to a CFO Insights report by
                                                                                  Deloitte,15 today’s CFOs should plan
                                       Wall Street evolve                         on spending at least 20% of their time
                                       Before the mid-1980s, managing a           in investor relations.
                                       company’s investors was relative-
                                       ly easy for CFOs. Shareholders were        Of the emerging roles of the CFO, this
                                       generally an easily defined group with     new public persona is frequently one
                                       clear motivations and expectations.        of the largest challenges for many of
                                       But with the growth of sophisticated       today’s finance leaders, who are often
                                       private equity firms in the mid-1980s,     known more for their discretion than
                                       coupled with a transformation of           their yearning for the spotlight. This
                                       share registers, CFOs now had to deal      challenge can be compounded by the
                                       with institutionalized investors, which    competing interests of different inves-
                                       comprised the majority of sharehold-       tors; counter to the quarterly pres-
                                       ers at large firms by the mid-1990s.       sures of the past decade, companies
                                       While the CFO’s influence had been         like Amazon and Tesla are now shift-
                                       growing internally for decades, this       ing some investor mindsets toward
                                       shift in stakeholder relations pushed      accepting short-term losses with the
                                       many CFOs into the public spotlight        prospect of more substantial long-
                                       for the first time.                        term gains.16 Thus, it is the job of the
                                                                                  CFO to set the strategy for the busi-
                                       Since the growth of institutionalized      ness, both short- and long-term, and
                                       investing in the mid-1980s, CFOs have      to manage shareholder expectations.
                                       played an important role in managing
                                       relationships with private equity firms.
                                       And as the demands from Wall Street
                                       increase, so will the need for CFOs to
                                       directly engage with investors. Ac-

Get more done
CFOs and finance professionals are moving from number crunchers to strategic leaders. To make this transition,
finance teams must work faster and smarter. At Microsoft, we are empowering finance professionals to do more
with tools that streamline processes, provide greater visibility into operations, and deliver actionable insights.

Streamline operations                  Get greater visibility                     Be more proactive
Transitioning to strategic work        To effectively guide their organiza-       To grow their businesses, finance
requires that finance profession-      tions, finance leaders require visi-       leaders must look beyond the
als spend less time on routine ac-     bility into all areas of their business.   past and into the future. Micro-
counting tasks. From productivity      By combining unified data in the           soft empowers leaders with tools
tools, like Office 365, to workflow    cloud with powerful data visualiza-        to help them identify emerging
automation capabilities in Dy-         tion tools, like Power BI, Microsoft       trends, predict outcomes, and au-
namics 365, Microsoft is helping       provides finance leaders with a sin-       tomatically optimize workflows
finance teams get more done,           gle source of visibility into their or-    so that organizations can become
freeing them up so that they can       ganization—from a high level down          less reactive and more proactive
spend more time on high-value          to a transactional level—so they can       with their business strategies and
strategic work.                        make more informed decisions.              operations.

                                                       Page 9
2019 Finance Trends Report - Microsoft Dynamics 365 - Axdata
Changing customer
demands disrupt industries
•   Innovation raises customer expectations
•   Millennials evolve
•   Gen Z gains influence
•   Corporate responsibility gains momentum
•   The new X-economies disrupt industries
•   A-commerce (anywhere) becomes the new reality
•   Businesses try to take back margins

                                                    Page 10
Changing customer
   demands disrupt industries

Innovation raises customer expectations                                                  Executive summary
Stating that technology is changing customer demands feels like stating the ob-          Driven by technology and
vious. Innovation—from the printing press and combustion engine to computers             demographic shifts, today’s customers
and wireless internet — has always been a driver of demand, unlocking new                are more empowered than ever and
possibilities and raising expectations. Today, we find ourselves at the intersection     expect more from the businesses with
of rapid innovation and a new generation of consumers who have grown up                  which they interact.
empowered by technology.

Millennials evolve                                                                       Highlights
                                                                                         • Millennials make up roughly a
The number and influence of Millennials continue to grow. Today, Millennials
                                                                                           quarter of the U.S. population
make up roughly a quarter of the U.S. population,17 and according to the Pew Re-
                                                                                           and will overtake Baby Boomers
search Center, they will overtake Baby Boomers as America’s largest population
                                                                                           as America’s largest population in
in 2019 (73 million vs. 72 million).18 On the surface, Millennials look very different
                                                                                           2019 (73 million vs. 72 million).
from their predecessors: they are more diverse,19 better educated, and more
likely to be never married than any other adult generation was at the same age.20        • Purchases via contactless payments
                                                                                           are projected to increase to $1.3
They are also a generation who entered adulthood facing a strong headwind.                 trillion globally in 2019 and over $2
They have been crippled by student loans, with over 60% of students taking out             trillion by 2021.
loans to pay for college.21 The average student loan debt for Millennials grad-
uating in 2017 was nearly $40,000.22 To compound this, many graduated in the
midst of the 2008 recession. As a result, they have been pressured to take lower
paying jobs and have lower employment rates compared to workers of the same
age in past generations.23

However, despite these challenges, Millennials are smart and savvy. They have              The average student
become a generation that is fiscally responsible, with 63% of Millennials set-             loan debt for
ting savings goals and 59% reporting feeling financially secure, higher rates than
                                                                                           Millennials graduating
Boomers or Gen X.24 Seventy-three percent of Millennials stick to their budgets
every month, and 16% have saved over $100,000.25                                           in 2017 was nearly
                                                                                           $40,000.
While their financial burdens have led to lower rates of home and auto own-

                                                              Page 11
ership,26 Millennials do spend in oth-       Gen Z’s purchasing behaviors precise-
er areas; however, they remain thrifty       ly, but what’s clear is that they already
when they do. Case in point: Amazon          wield great spending influence. There
accounts for the largest volume of on-       was $829.5 billion spent on Gen Z in
line apparel sales for Millennials, near-    2015, accounting for 6.8% of total con-
ly 17%, more than double that of the         sumer spending that year.28 Further-
next largest seller, Nordstrom.27 This       more, over 70% of parents said their
shift to thrift has also played a role in    Gen Z children influenced their buy-
the growth of on-demand services,            ing decisions on clothes and food.29
sharing marketplaces, and online con-
signment stores.                             Gen Z is even more diverse than their
                                             Millennial predecessors and will be-
Gen Z gains influence                        come the nation’s first majority non-
                                             white generation.30 With this diversi-      By 2020, Gen Z will
As the size and influence of the Mil-
                                             ty comes a much more tolerant and           be the third largest
lennial cohort grow, they are prov-
ing themselves to be a generation of
                                             inclusive generation.31 Additionally,       generation in the U.S.
                                             growing up with the internet gave
tech-savvy individuals. But where Mil-
                                             them much greater visibility into
lennials were digital pioneers, helping
                                             global issues. As a result, they are
make technology mainstream, Gen Z
                                             a very globally and socially-mind-
is the first generation of digital na-
                                             ed population. Twenty-six percent
tivists, never having experienced life
                                             of 16-to-19-year-olds currently vol-
before computers and pervasive in-
                                             unteer, and 60% reported that they
ternet.

    70+30+J
                                             want their jobs to impact the world.32

                                             Like Millennials, Gen Z is made up of
                                             savvy shoppers. According to a recent
                                             report by Interactions, 89% of Gen Z
                                             considers themselves price-conscious

              70%
                                             shoppers and listed price as the top
                                             factor in making a purchase.33 Accord-
                                             ing to the report, 72% said they would
                                             switch from their favorite brand if they
                                             found a similar product at a lower price.
                                             Members of Gen Z also value commu-
                                             nity, with 59% preferring local stores
     Parents who said their Gen              over large retailers and 72% saying
      Z children influence their             they would be more willing to shop
          buying decisions.                  at national chains if they had more of
                                             a local presence in their community.

By 2020, Gen Z will be the third-largest     The profile of Gen Z is lengthy, and we
generation in the U.S., just behind Gen      have much to discover about them as
X, and they are already accumulating         they mature. But for now, one thing is
significant purchasing power. With           sure: Gen Z will have a significant im-
their oldest members only in their           pact on both business and the world.
early twenties, it is difficult to predict

                                                             Page 12
Corporate                              of Gen Z are more likely to share pos-
                                       itive opinions about companies doing
                                                                                  Should companies
responsibility gains                                                              help address

                                                                                  8983+87++
                                       good (87%), are more likely to protest
momentum                               to support a cause they care about
                                                                                  social issues?
Over the last decade, there has been   (58%), and are more likely to buy from
substantial buzz about Corporate       a company which addresses social or                                         94%
Social Responsibility (CSR), yet for   environmental issues (90%).35                89%                 87%
many companies, the financial costs                                                          83%
of change initially outweighed the     In response, businesses are investing
benefits. But as Millennials and Gen   more resources in corporate respon-
Z become more influential, both as     sibility initiatives. According to PwC’s
employees and consumers, they are      Global CEO survey, 64% of CEOs now
pushing businesses to behave more      feel that CSR is central to their busi-
responsibly.                           ness, rather than a standalone pro-
                                       gram.36 Even institutional investors
While 86% of general consumers feel    are getting on board, pushing firms
that companies should help address     to make more responsible decisions.37
social issues, 94% of Gen Z believe    And as Millennials and Gen Z assume
that companies have a responsibility   roles of power in the corporate world,
to do so.34 When compared to mem-      the impacts of CSR will only become         Boomers   Gen X   Millennials   Gen Z
bers of other generations, members     more pronounced.

                                                       Page 13
The new X-economies
disrupt industries
Millennials, burdened by high unem-       Sharing economy
ployment, low wages, and high debt,       The sharing economy—where con-
have rapidly embraced new business        sumers “share” products and services
models that offer them the latest         directly instead of purchasing via a re-
products with greater flexibility and     tailer or distributor — is another busi-
lower costs. In today’s market, start-    ness model that has grown in popular-
ups have led the way with these new       ity over the last several years. Perhaps   The sharing economy
offerings, but large businesses—either    the most commonly known example of         is projected to grow to
through acquisitions or internal de-      a sharing economy business is Airbnb,
velopment — are beginning to evolve       where travelers can rent rooms and
                                                                                     86.5 million U.S. users
their business models to the needs of     homes directly from other individu-        by 2021, up from 44.8
the modern consumer. These models         als. The sharing economy is projected      million in 2016.
fall into one of a few categories:        to grow to 86.5 million U.S. users by
                                          2021, up from 44.8 million in 2016.39
On-demand services
Projected to grow to nearly $57 billion   Subscription box services
in 2018, on-demand services repre-        Subscription box services have be-
sent perhaps the largest of these cat-    come incredibly popular due to their
egories.38 A model popularized great-     highly targeted nature and ease of
ly by Uber, on-demand businesses are      use. Companies like Birchbox, ClubW,
launching for just about every catego-    Stitch Fix, and NatureBox are just the
ry imaginable, from printing and dog      tip of the iceberg when it comes to
walkers to babysitters and massages.      the subscription box market, which
                                          now provides services for dogs own-
                                          ers, coffee lovers, mountain climbers,

      $57
                                          gold miners, and sock enthusiasts.

                                          Online consignment
                                          When eBay and Craigslist launched in
                                          the mid-1990s, they provided individ-

       billion
                                          uals with the opportunity to use the
                                          internet to sell used goods. Nearly
                                          two decades later, a new set of online
                                          consignment stores has emerged to
      Projected size of the on-           help streamline this process. Sites like
     demand economy in 2018.              thredUP, Swap, and TheRealReal allow
                                          shoppers to sell and purchase used
                                          clothes, jewelry, toys, and luxury fash-
                                          ion accessories online.

                                                          Page 14
XaaS
          As cloud computing becomes more
          ubiquitous, Anything as a Service
          (XaaS) business models are also be-
          coming more popular. The principle
          behind XaaS is that businesses can
          provide better, more cost-effective
          solutions to customers via subscrip-
          tions or pay-as-you-go models than
          via traditional software licensing mod-
          els. The most commonly known XaaS
          model is Software as a Service (SaaS),
          which provides individual software
          applications and services through the
          cloud; however, Platform as a Service
          (PaaS) and Infrastructure as a Service
          (IaaS) models have also gained trac-
          tion as a way for technology compa-
          nies to expand their footprint.

          While XaaS has historically referred
          to cloud computing, it is increasingly
          being used to define all service-based
          business models, from Transportation
          as a Service (Uber and Lyft) to Shop-
          ping as a Service (Trunk Club and
          Stitch Fix). Regardless of what you call
          it, it’s clear that customers’ needs are
          evolving and businesses must adapt
          accordingly.

Page 15
ers have consulted social media sites     ular consumers of its business part-
                                          for purchase inspiration or research      ners.43 In 2016, Instagram piloted its
A-commerce                                for years, we are only now seeing the     Shopping Tags program, allowing
(anywhere) becomes                        potential of these channels to trans-     companies to upload a product cata-
                                          late into direct sales.                   log and tag specific products on their
the new reality                                                                     posts. When clicked, a tagged product
Technology has granted customers          Today, idea-collection site Pinterest     takes the user directly to the product
access to a dizzying array of products,   has 175 million users, and 93% of them    page. The program has since expand-
and customers expect to be able to        use the site to plan purchases. More      ed to thousands of businesses, and the
purchase on their terms, whenever         than half of them also use the site to    results have been promising.44 Indus-
and wherever they want. From social       shop for products.41 Pinterest’s “Shop    try leader Nike has announced that it
buying on Instagram to v-commerce         the Look” feature employs computer        will sell certain products via Instagram
with Alexa, businesses are no longer      vision and human curation to allow        in what they describe as a “seamless”
forcing customers to their websites       users to shop Pinned products on the      experience for customers.45

to make a purchase; instead, they are     web and their mobile devices. Early       One issue brands face in expanding
turning every platform into a pur-        tests showed that users visit a compa-    social media sales is that many cus-
chase platform.                           ny’s website two to three times more      tomers are not aware that they can
                                          frequently when “Shop the Look” Pins      shop directly via social media sites; in
                                          are deployed.42 Additionally, Pinterest   a recent survey, 26.4% of respondents
Social media selling                      for Business offers a “Buyable Pins”      said they had never heard of social
Social media continues to grow in         option, which allows customers to         commerce.46 However, if social media
popularity; globally, 482 million peo-    purchase a company’s products di-         platforms and retailers can generate
ple became new active users in 2016.      rectly on Pinterest with a credit card    better awareness — and remove bar-
Today, a total of 2.789 billion social    or Apple Pay.                             riers to purchasing with a smoother
media users are spending an average                                                 transition from browsing to buying
of 40 minutes to four hours on social     Instagram continues to explore ways       — social media users will readily be-
media sites each day.40 While custom-     to turn its 700 million users into reg-   come in-app consumers.

                                                          Page 16
20+80+J
Voice-first conversational
commerce
In 2016, nearly half of U.S. smartphone
users consulted virtual personal assis-
tants (VPAs) — such as Microsoft’s

                                                       20%
Cortana, Apple’s Siri, Amazon’s Alexa,
and Google Assistant — and Gart-
ner predicts that by 2019, 20% of all
smartphone interactions will take
place via VPAs.47 While the shopping
capabilities of voice-enabled VPAs
are still nascent, as they evolve, they
will offer a powerful new platform              Smartphone interactions
through which businesses can reach               that will take place via
customers directly.                                   VPAs in 2019.

In addition to living on mobile de-
vices and computers, VPAs now exist        Microsoft’s Cortana, Amazon Alexa,
on household devices like the Har-         and Google Assistant are working
man Kardon Invoke, Apple HomePod           toward developing better user expe-
Amazon Echo and Google Home. A             riences for their voice-first merchant
VoiceLabs report estimated that by         ecosystems, adding skills and fea-
the end of last year, 33 million voice-    tures that make the checkout process
first devices would be in circulation,48   easier and more accessible. In early
and these devices are beginning to         2017, only 28% of U.S. residents indi-
drive sales: Amazon Echo owners            cated that they would use a VPA to
make 6% more purchases on Amazon           buy goods and that they were more         Amazon Echo owners
than they did prior to owning the de-      likely to use their VPAs to play music,   make 6% more
vice.49 Shopping capability on Google      give weather information, or provide
Home launched in February 2016 and         search results.51 As users increasingly
                                                                                     purchases on Amazon
18 months later, predicting the growth     rely on their VPAs, the trend toward      than they did prior to
of voice shopping, Walmart part-           voice interactions will continue along-   owning the device.
nered with Google to offer hundreds        side the development of other artifi-
of thousands of products for sale via      cially intelligent systems—based on
Google Assistant, with a vision that       gestures, biometrics, and more—that
customers will use Google Home de-         will make these type of interactions
vices to reorder frequently purchased      easier and more natural for users.
items.50

                                                           Page 17
Brands go direct-to-consumer                  Gillette On Demand. The new service           Globally, $590 billion was spent using
In order to pursue bigger profit mar-         allows customers to order refills via         contactless payments in 2017, and
gins and retain control of the cus-           text.58                                       purchases via contactless payments
tomer experience, some brands are                                                           are projected to increase to $1.3 tril-
bypassing traditional retail channels         Since the cost of entry is minimal to         lion in 2019 and over $2 trillion glob-
and going straight to the consumer.           existing retailers, the marketplace is        ally by 2021.65
Cutting out the middleman allows              already saturated with subscription
retailers to build relationships with         services; as of early 2018, subscrip-         As mobile wallets become more
customers and collect more accu-              tion box aggregator My Subscription           broadly adopted, businesses are look-
rate data. This shift, in turn, enables       Addition indexed roughly 3,000 box-           ing to capture a piece of the mobile
brands to develop more personalized           es.59 And now, even major retailers           payment market, which is projected
experiences, something that 75% of            — including Starbucks, Amazon, Ma-            to grow to $112.29 billion by 2021.66
customers prefer.52                           cy’s, Walmart, and Nordstrom — are            The list of mobile payment providers
                                              joining in with their own subscription        is growing and now includes PayPal,
  75% of customers                            box services. To succeed in this sector,      Intuit GoPayment, Barclaycard bPay,
                                              subscription services must feature an
  prefer personalized                                                                       Chase Pay, Visa Checkout, Walmart
                                              offering that has the ability to surprise     Pay, CVS Pay, Target Wallet, Starbucks,
  brand experiences.                          and satisfy customers on a recurring          Kohl’s Pay, Square, Stripe, Venmo,
                                              basis.                                        LevelUp, PayAnywhere, and more.
Having achieved a valuation of $1.2
billion, Warby Parker has succeeded           Mobile payments go mainstream
with direct-to-consumer (D2C) sales,                                                        Further pushing mobile payments
                                              Apple Pay launched to great fanfare           into the mainstream is the broader
initially via e-commerce platforms
                                              in October 2014, but the public has           adoption of mobile wallets as a whole.
and now with physical locations as
well.53 Major multi-channel retailers         been slow to adopt this technology.           An increasing number of businesses,
Nike and Adidas have doubled down             In 2016, a study by Auriemma Con-             from stadiums to airlines, are leverag-
on their D2C efforts. Nike announced          sulting Group reported that only 27%          ing mobile wallets for paperless tick-
a new company alignment, the Con-             of users with an eligible device had          et distribution. As adoption increases
sumer Direct Offense, that includes           used contactless payments.60 At the           around the world, it seems clear that
the creation of a Nike Direct organi-         time, 39% said they would use mobile          mobile wallets are the way of the fu-
zation, which will strategize ways to         payments more if stores accepted it,          ture.
deepen one-to-one relationships with          but the study found that even when a
customers.54 In 2016, Adidas launched         store did accept mobile payments, less        Number of Apple

                                                                                            1+83211452+1740100
                                              than a third (31%) of users consistently
Avenue A, limited-edition boxes that
                                              used mobile pay, most frequently cit-         Pay, Samsung Pay,
ship curated selections of women’s

                                                                                                                                        150 million
apparel and footwear to subscribers.55        ing that they simply forgot.61                and Android Pay
                                                                                            Contactless
Direct-to-consumer           subscription     Despite its slow start, mobile pay-           Users
services have grown significantly in          ments may finally be reaching a tip-
popularity; visits to subscription-box        ping point. Apple Pay is now available
websites increased 3,000% from 2013           in 20 markets around the world, works
to 2016.56 Arguably one of the most           with 4,000 card issuers, and is avail-
successful D2C practitioners is Dol-          able at 50% of U.S. retailers.62 This in-
lar Shave Club. The men’s grooming            creased availability has driven growth
                                                                                          20 million

company disrupted its sector, retain-         in the market; Apple Pay, Samsung
ing nearly half of its customers for one      Pay, and Google Pay currently have a
year after their first subscription, and      user base of roughly 150 million and
was purchased for $1 billion by Unile-        are expected to exceed 500 million
ver in 2016.57 To compete with Dollar         users by 2021.63 And these numbers
Shave Club and online market com-             don’t even account for China’s lead-
petitor Harry’s, Gillette recently initiat-   ing mobile payment provider, Ali-             2015               2016                   2017
ed its own shaving subscription club,         pay, which boasts 520 million users.64                   Android Pay   Samsung Pay   Apple Pay

                                                              Page 18
After a decade of
  downslide, many
  businesses have cut
  and optimized as far as
  they can.

Businesses try to
take back margins
Over the past decade, traditional re-     and mean, cutting costs and stream-
tailers have seen their profit margins    lining operations wherever possible.
slowly disappear. Online retailers,       This quickly created a race to the bot-
namely Amazon, are able to offer a        tom, with companies competing on
wider variety of products than a brick    price while trying to optimize opera-
and mortar retailer can, while simulta-   tions enough to stay profitable. After
neously avoiding the overhead costs
                                          a decade of downslide, many busi-
involved in running a physical store.
                                          nesses have cut and optimized as far
To stay competitive, retailers were
compelled to slash prices to match        as they can; now, in a change of strat-
those offered on Amazon.                  egy, they are looking to increase profit
                                          margins, building value for customers
This price slashing necessitated some     through improved offerings, superior
drastic changes on the back end: busi-    service, and delivering amazing cus-
nesses were forced to become lean         tomer experiences.

   Deliver amazing experiences
   Driven by new technologies and changing demographics, today’s customers demand more from brands than ever
   before. Businesses must be more responsive to new trends and deliver the seamless experiences customers now
   expect. At Microsoft, we’re helping companies meet changing customer demands with the tools and technology to
   better understand customer needs, become more agile, and deliver amazing experiences for their customers.

   Understand customers                   Improve agility                            Exceed expectations
   As customer behaviors and ex-          Businesses must work with greater          As the baseline for service con-
   pectations evolve, businesses          precision and agility to meet today’s      tinues to climb, companies must
   must gain visibility into their us-    rapidly changing customer and mar-         rely on technology to deliver the
   ers’ needs to get ahead. Microsoft     ket demands. By connecting data            amazing experiences that cus-
   Dynamics 365 enables companies         from across the value chain, Microsoft     tomers expect, at scale. Microsoft
   to track product usage and per-        Azure and Dynamics 365 help orga-          is empowering organizations with
   formance so they can predict and       nizations improve communication            the tools and technology to create
   prevent potential issues and create    between business units, predict and        innovative, frictionless experiences
   better, more engaging experiences      respond more rapidly to trends, and        that delight customers and exceed
   for their customers.                   better manage changes on the fly.          expectations every time.

                                                          Page 19
Technology makes finance
smarter and faster
•   Finance drives technology advancements
•   Blockchain becomes more than just a buzzword
•   Businesses establish a culture of data
•   AI and ML deliver instant intelligence
•   Automation streamlines operations

                                                   Page 20
Technology makes finance
   smarter and faster

Finance drives technology advancements                                              Executive summary
Finance professionals have long been technology pioneers, a fact for which they     Finance professionals have a history of
rarely receive credit. The expansion of the telegraph in the U.S.—from a single     embracing cutting-edge technology,
40-mile line connecting Baltimore and Washington, D.C. in 1844 to over 23,000       leading the charge to adopt the tools
miles spanning the United States just a decade later—was driven by exchange         that have revolutionized the business
traders who needed a way to share market information faster. In 1865, the pan-      world. Today’s CFOs proudly follow in
telegraph, an early form of the fax machine, was originally used to verify signa-   their footsteps.
tures in banking transactions between Paris and Lyon, France. In 1918, the Fed-
wire Funds Service—a Morse code system sent via telegraph — was established
in the United States to transfer funds between the 12 connected Federal Reserve     Highlights
Banks, the Federal Reserve Board, and the U.S. Treasury.                            • The global blockchain market is
                                                                                      projected to reach a value of $20
In 1958, Bank of America issued the BankAmericard, the first modern credit card,      billion by 2024.
which would change financial transactions forever. The 1960s brought the ATM        • Eighty-five percent of CEOs
and the first electronic systems that could provide up-to-the-minute stock mar-       reported that their CFO’s ability to
ket information through desktop terminals. The 1970s saw the launch of the Nas-       gather and analyze data was key to
daq electronic bulletin board, SWIFT, and MIDAS, all of which simplified, stan-       profit growth.
dardized, and secured the way financial information was distributed around the
world.                                                                              • Businesses will generate $2.9
                                                                                      trillion in business value from AI by
The 1980s gave us electronic trading platforms, cash machine networks, and            2021.
in 1984, Jane Snowball made the world’s first online purchase. Companies like
eBay and Amazon pioneered e-commerce in the 1990s, while direct trading, Chip
and PIN systems, contactless payment systems, and the first version of Bitcoin
launched in the 2000s.
                                                                                      Finance professionals
Finance has long operated on the cusp of technology, and from digital spread-         have been pioneering
sheets to accounting software, finance professionals have pioneered digital tech-     digital technology
nology in the workplace for decades. Today, finance professionals are driving
the adoption of new analytics tools and techniques to help improve operations,        in the workplace for
better forecast business performance, and help their organizations strategically      decades.
plan for the future.67

                                                          Page 21
Blockchain becomes                         icant returns from blockchain. A re-
                                           cent study from Accenture reported
more than just a                           that blockchain could help cut costs
buzzword

                                                                                       23+77+J
                                           and deliver savings of more than 30%
First described in 1991 by Stuart Haber    across the middle and back office.
and W. Scott Stornetta,68 blockchains      This includes an estimated 70% sav-
are decentralized, shared ledgers          ings on central finance reporting and
where all transactions are recorded        50% savings on compliance, central-
securely by encryption in near re-         ized operations, and business opera-

                                                                                             23%
al-time and are immutable (incapable       tions.75 Many of these savings are due
of being altered or deleted). Block-       to streamlined processes, optimized
chain technology sparked a revolu-         data quality, improved transparency,
                                           and better internal controls.
tion in 2009 when Satoshi Nakamoto
leveraged blockchain to provide the
                                           While blockchain has become popu-
data structure for a novel peer-to-
                                           lar due to its efficiency in processing
peer electronic cash system, Bitcoin.69
                                           financial transactions, companies are       Businesses currently using
                                           already looking to blockchain to solve       blockchain technology.
Despite blockchain being nearly three
                                           other business problems. A number
decades old, we are still in the early
                                           of blockchain solutions now enable
adoption phase, but blockchain tech-
                                           companies to build anti-counterfeit
nology is expected to grow rapid-
                                           databases, track stolen products, or
ly over the next six years,70 with the
                                           track items with specific qualities, such
global blockchain market projected to
                                           as diamonds from conflict zones or
reach a value of $20 billion by 2024.71    luxury products that rely on product
Even today, attitudes are changing         authenticity.76 One promising applica-
fast. In AFP’s 2017 MindShift Survey,      tion of blockchain is with contract and
only 1% of organizations had imple-        document management — digitizing
mented blockchain, while 51% report-       and moving the governance of paper
ed no plans to do so.72 By their 2018      certificates, warranties, and contracts
report, 23% said they were currently       into a blockchain — which can auto-
using blockchain technology,73 a huge      matically update the documents when
year-over-year leap.                       a triggering event occurs. And testing
                                           has already been implemented in the
Businesses are discovering revolution-     food safety industry, where blockchain
ary applications for blockchain tech-      allows food to be granularly tracked,
nology across many industries, in-         so when a producer identifies an issue
cluding a number of areas impacting        — like a tainted batch of spinach—
financial operations. For example, a       they can contain the problem by iso-
blockchain can connect ledgers from        lating the source and issuing a recall
across an organization’s supply chain      for only the affected products.
(supplier, manufacturer, distributor,
shipper, retailer, and end consumer)       Other potential benefits of employ-
to make tasks, like tracking a product’s   ing blockchain technology include
journey, much more accurate and effi-      reduced risk of fraud, reduced time
cient. Tracking a product’s journey via    to complete transactions, better net-
blockchain can turn a manual process       worked loyalty programs, and in-
that once took days into an automat-       creased customer trust. Today’s fi-
ed process that takes only seconds.74      nance leaders must understand
                                           blockchain and the possibilities of-
Businesses are poised to see signif-       fered by this disruptive technology.

                                                           Page 22
Priorities of the future
finance function

    12%               13%                 14%                    17%                          22%                             23%
Drive efficien-   Refine risk man-    Reduce finance      Make significant         Meet the need for new skills     Improve big data and analyt-
cy improve-       agement capa-       function costs      changes to the           by transforming how finance      ics capabilities to transform
ments through     bility, including   through new         finance function skill   talent is recruited, retained,   forecasting, risk manage-
offshoring,       cyber.              tech, such as       set.                     and developed.                   ment, and understanding of
shared                                robotics and pro-                                                             value drivers.
services, and                         cess automation.
outsourcing.

                                                                                                                Percent of finance leaders that chose

Businesses establish
                                                                                                                category as number one priority
                                                  rate reporting, and build more intelli-
                                                  gent business strategies.
a culture of data
Big data has been a buzzword for the              Beyond data analysis, CFOs face an-
past few years, so it should come as              other modern-day data challenge: as
no surprise that finance leaders con-             they take on larger roles within IT and
tinue to focus efforts on data and an-            analytics, CFOs are forced to tackle
alytics programs. Eighty-five percent             the growing issue of data manage-
of CEOs reported that their CFO’s                 ment. This includes both data storage,
ability to gather and analyze data was            as well as monitoring and managing
key to profit growth,77 and in a recent           data quality. These critical tasks not
study by EY, “improving analytics ca-
                                                  only enable CFOs to do their job, but
pabilities to transform forecasting,
                                                  they allow other functions to operate
risk management, and understand-
                                                  more efficiently. Without data qual-
ing of value drivers” was the top pri-
                                                  ity control, CFOs and other business

                                                                                                    11+13+14172223sH
ority most commonly cited by CFOs
                                                  leaders risk making decisions based
(23%).78
                                                  on flawed information.
As finance professionals move into
strategic business leadership roles,              As data and analytics play an increas-
the importance of having quality data             ingly important role in business, com-
grows, and they must increasingly rely            panies—and their CFOs—are working
on their technology counterparts to               to establish cultures of data across
help them drive business intelligence.            their organizations. This means that
Seventy-three percent of finance                  measurement strategies and data
leaders said that closer CFO-CIO                  collection plans are the starting point
alignment was important to achieving              and not an afterthought, there is a
financial transformation.79 With more             high level of fluency in analytics across
intelligent and powerful cloud com-               teams, and business leaders have ac-
puting, big data is finally moving into           cess to the data they need, whenever
new areas, helping finance leaders                they need it, to make informed strate-
close books faster, deliver more accu-            gic decisions.

                                                                     Page 23
AI and ML deliver                            some form of cognitive intelligence.
                                             This may include visual perception,
                                                                                           used to help identify fraud by moni-
                                                                                           toring behavioral patterns, flag when
instant intelligence                         speech recognition, or decision mak-          a payment will arrive late, or detect
Not long ago, artificially intelligent       ing. Machine learning is a type of            changes to market conditions. These
machines seemed like a thing of sci-         artificial intelligence where comput-         tools are also being used to help miti-
ence fiction; even today, when peo-          ers leverage new information to im-           gate risk by ensuring regulatory com-
ple think of artificial intelligence (AI),   prove their outputs automatically.82          pliance and improving operations,
many still envision human-like robots.                                                     flagging abnormal changes or anom-
But in practice, artificially intelligent                                                  alies for further investigation.

                                                     $2.9
machines have been around for de-
cades, making our lives better, safer,                                                     Classification
and more efficient. So why all the buzz                                                    Artificially intelligent systems can be
now?                                                                                       used to organize and classify data
                                                                                           categorically. Through classification—

                                                   trillion
In short, it’s because these systems                                                       often referred to as segmentation or
are only now getting really good.                                                          clustering—businesses can leverage
Correction: really, really good. In 2016,                                                  AI to reconcile transactions, cate-
Microsoft’s Artificial Intelligent and             Business value generated                gorize expenses, and even evaluate
Research team reported that their                      from AI by 2021.                    interactions between categories to
conversational speech recognition                                                          identify correlations.
system had reached human parity,
i.e., their system made the same or                                                        Probability
fewer errors converting speech to text       The power of these intelligent com-           These AI systems can be used to con-
as a professional transcriptionist.80        puters — which are frequently cloud-          duct probability analysis. These tools
This system, which boasted a word            based — is in their ability to process        give finance teams the ability to run
error rate (WER) of 5.9% in 2016, has        a large volume of information at a            faster, more accurate data models.
since improved to a WER of 5.1%.81 As        speed which humans are not capable            This enables them to quickly test how
the processing power and accuracy            of achieving. While reaching human            changes to specific variables will im-
of these intelligent systems improve         parity in WER is excellent, the true          pact outcomes, such as how differ-
— from advancements in neural net-           power of this artificially intelligent sys-   ent prices will impact revenue or how
works to natural language processing         tem is that it can transcribe hours of        changes to net payment terms will al-
— the opportunities to leverage these        audio in seconds at that same WER.            ter cash flow.
technologies increase as well.               This proficiency makes artificially intel-
                                             ligent computers extremely effective          Optimization
To understand how artificial intel-          in performing four categories of tasks:       Lastly, these tools can be used to opti-
ligence and machine learning will            detection, classification, probability,       mize systems, processes, and decision
impact finance, it’s first useful to un-     and optimization.                             making. Through real-time data anal-
derstand what these terms mean.                                                            ysis, intelligent systems can calculate
While there are many types and               Detection                                     the probability of various outcomes
definitions of AI, it can commonly           Intelligent systems can be used to an-        and optimize accordingly; analytical
be understood as a computer that             alyze large amounts of data and de-           models can weigh information and
performs a function that requires            tect anomalies. In finance, this may be       make optimizations based on the re-

                                                              Page 24
sults. In finance, this type of optimiza-   The merging of big data with intelli-
tion can be used to maximize profits        gent technology has made processing
by dynamically optimizing prices at         large data sets easier than ever, and
different times, reducing shop floor        from mining big data to predictive an-
injuries by slowing down a machine          alytics, finance leaders are increasingly
when a sensor identifies a potential        relying on these new, intelligent tools
issue, or cut costs by automatically        to help them succeed. Today, finance
optimizing resource allocation across       professionals are being asked to apply
the organization.                           their systemic approach for numbers
                                            to data that reaches far beyond the
Despite its many benefits, just 15% of      realm of finance, including assess-
businesses are currently leveraging         ing consumer data to forecast sales
AI, but 31% are planning to imple-          trends, economic indicators to predict
ment intelligent systems over the next      market trends, and operations met-          Artificially intelligent
year.83 Eighty-three percent of compa-      rics to help streamline processes and       computers are extremely
nies said that AI is a strategic priority   cut costs. Beyond dollars and cents,        effective in performing four
for them.84 As organizations reap the       finance leaders possess the ability to      categories of tasks:
efficiencies and insights of AI, Gartner    extract knowledge from numbers and          detection, classification,
predicts that businesses will generate      apply that knowledge to make strate-
$2.9 trillion in business value from AI     gic business decisions, and now, with       probability, and
by 2021.85                                  AI, these leaders are becoming smart-       optimization.
                                            er and more powerful than ever.

                                                            Page 25
Fifty-three percent of
                                                                             companies outsource
                                                                             tax functions.

Main drivers for
outsourcing all or part of
the compliance function

  Need for additional
        assurance on
compliance processes

                                                                           Automation
                                                                           streamlines
    Lack of in-house
    compliance skills

                                                                           operations
                                                                           As increasing transaction volumes
                                                                           and ever-changing regulations are
                 Cost                                                      making finance more complex, busi-
                                                                           nesses are looking to reduce the costs
                                                                           of the many manual tasks required
                                                                           in bookkeeping and accounting. Fif-
                                                                           ty-three percent of companies in De-
Compliance activities
    associated with                                                        loitte’s most recent Global Outsourc-
  business function                                                        ing Survey86 reportedly outsource tax
        outsourcing
                                                                           functions, and 42% outsource certain
                                                                           finance functions. For compliance
                                                                           specifically, 56% of companies said
                                                                           the main reason they outsourced was
                Other
                                                                           due to lack of in-house skills, while
                                                                           38% cited costs.87

                                                                           With the rise of AI, businesses are
                                                                           now turning to robotic process au-
     Lack of in-house
       language skills                                      2016   2017    tomation (RPA) to help reduce costs,
                                                                           speed processing, improve quality
                                                                           controls, and free up their employees’
                         0%   10%   20%   30%   40%        50%       60%   time for more strategic work. Eighty-

                                                      Page 26
eight percent of businesses projected       review. They may also review em-           and 75% of financial staff’s time, free-
a moderate to high demand for RPA           ployee expenditures — particularly         ing them up to focus on more mean-
in finance and accounting in 2018,88        on gifts and entertainment—to help         ingful work, like predictive analytics
while 66% reported that automated           identify potential areas of conflict or    and performance management.93
AI applications would become appli-         policy abuse. Furthermore, they can        Before long, today’s manual financial
cable to their finance and accounting       help businesses manage financial risk      processes will be a distant memory,
over the next couple of years.89            through tasks like detecting changes       but automation alone won’t trans-
                                            in risk exposure and helping to deter-     form finance; successful finance de-
Automation—enhanced by AI and               mine the causes for such movement, as      partments will continue to need hu-
machine learning—is streamlining fi-        well as in evaluating customer risk and    man oversight and a knowledgeable
nance operations in many ways and           making recommendations on cred-            workforce to help drive strategic busi-
saving money by completing previ-           it limits or maximum loan amounts.         ness growth.

                                                                                           40+60+J
ously manual tasks faster and more
efficiently. RPA—artificially intelligent   Companies are finding that digital as-
workers90 — can now be used for             sistants are reducing operating costs
many tasks, including digital invoic-       by as much as 80%,91 and a study by
ing, expense management, fixed-as-          Accenture showed that robots will be
set accounting, conducting general          able to automate or eliminate up to

                                                                                                   40%
ledger account reconciliation, evalu-       40% of transactional accounting work
ating customer risk, and auditing ex-       by 2020.92 But this doesn’t mean that
pense reports.                              automation will be the end of the fi-
                                            nance professional. To the contrary,
Beyond faster speeds and lower costs,       automation, AI, and RPA are elevating
automation is playing a larger role         the finance function, allowing workers
in compliance. Automated, intelli-          to spend less time on tedious manual
gent systems can review employee            tasks and more time deriving high-           Robots will be able to automate
disclosures, open accounts, and pa-         er-value strategic insights for their          up to 40% of transactional
per statements to flag any trades or        businesses. These technologies are             accounting work by 2020.
transfers for the appropriate level of      estimated to recover between 25%

   Work faster and smarter
   From risk management to strategic planning, finance professionals are taking on new, important challenges in the
   workplace. To meet these changing demands, they must leverage innovative, intelligent tools to combat new threats
   while fostering growth. At Microsoft, we’re making finance smarter and safer with unified data that powers intelli-
   gent, automated systems.

   Unify business data                      Get predictive insights                    Automate workflows
   Finance leaders need real-time vis-      To succeed in today’s competitive          As the pace of modern business
   ibility into business operations and     business environment, business lead-       accelerates, finance teams are
   performance to make informed             ers need better financial forecasts and    looking to streamline processes
   decisions. From cloud-based data         foresight into emerging market trends.     and get more done. With Azure,
   solutions on Azure to intelligent        With artificial intelligence and machine   Dynamics 365, and Microsoft 365,
   analytics tools in Dynamics 365,         learning embedded, Dynamics 365 al-        we’re providing businesses with
   we’re helping businesses turn data       lows companies to be less reactive and     tools to automate workflows and
   into actionable insights so they         more proactive and provides them           simplify communication so they
   can optimize operations and make         with the knowledge to make smarter         can improve efficiency, productiv-
   more strategic business decisions.       risk and investment choices.               ity, and compliance.

                                                            Page 27
Living in the age
of uncertainty
•   The age of uncertainty
•   Regulation changes create uncertainty
•   Businesses brace for Brexit
•   Leaders try to navigate a highly politicized environment
•   Uncertainty takes a toll

                                                      Page 28
Living in the age
   of uncertainty

The age of uncertainty                                                                 Executive summary
From Brexit negotiations and trade tariffs to immigration reform and environ-          In an incredibly polarized political
mental policies, the unpredictability of today’s political and social landscape        environment, attitudes can shift on a
reigns supreme among the factors concerning finance leaders.94                         dime, making it difficult for companies
                                                                                       to plan for the future.
As the future of various regulations around the globe remains unclear in a highly
politicized environment, uncertainty is placing a great amount of pressure on
businesses; forty-nine percent of finance leaders feel that they are exposed to        Highlights
more uncertainty today than they were three years ago.95 This uncertainty can          • Forty-nine percent of finance
be seen in the amount of cash U.S. businesses are accumulating, an amount that           leaders feel that they are exposed
continued to climb in the third quarter of 201796 despite projections of steady          to more uncertainty today than
U.S. GDP growth in 2018,97 signaling that finance professionals remain cautious          they were three years ago.
about the economy.                                                                     • Forty-two percent of global CEOs
                                                                                         reported over-regulation as a top
Unfortunately, the waters on the horizon appear no calmer than those of the              concern.
past year, so finance leaders need to prepare their businesses for more uncer-
                                                                                       • Sixty-six percent of consumers
tainty ahead.
                                                                                         felt it was important for brands to
                                                                                         take a public stand on social and
Regulation changes create uncertainty                                                    political issues.
Over the last 18 months, a string of major regulatory changes has been initiated
and enacted. From GDPR to tariffs, these regulations span across a wide range of
disciplines and touch nearly every business. As business leaders adapt to comply
with the latest regulations, they remain concerned over the impact of additional
pending regulations that could upend their operations. In 2018, 42% of CEOs
globally and 50% of CEOs in North America reported over-regulation as a top              Forty-nine percent of
concern,98 with 54% citing rising risk levels due to industry-specific regulation.99     finance leaders feel
Finance regulation
                                                                                         they are exposed to
Finance professionals continue to face an onslaught of changes to financial reg-         more uncertainy today
ulations. Last year, new revenue recognition rules went into effect for most public      than three years ago.
entities. These new rules, created by the FASB and IASB, attempt to simplify and

                                                            Page 29
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