鈥淥ur CEO wants us to think and act like a digital company,鈥� said Dariush Shoja, vice president and corporate CIO at Sun Life. 鈥淯sing , we are digitizing and modernizing finance.鈥澛�

Shoja spoke during a session at the event in Boston, Massachusetts, where he showcased the company鈥檚 digital transformation that modernized the company鈥檚 finance platform.

Digital Closes Gap Between Generative AI Promise and Reality

Shoja immediately struck a responsive chord from the audience in the room who chuckled when he jokingly asked if anyone鈥檚 nightly dreams during college revolved around a career in finance. Drawing from his company鈥檚 experience with digital transformation, he acknowledged the industry鈥檚 change management challenges.

鈥淲hen we鈥檙e talking about finance in the context of digitization, it鈥檚 not just about automation or systems. It鈥檚 a paradigm and culture shift,鈥� he said. 鈥淵ou need to start at the top with the CEO, CFO, and everyone on down to support the change. Organizations aiming to become digital and adopt state-of-the-art technologies like generative AI should focus on getting buy-in for the journey.鈥�

Modern Financial Services Platforms Are Cloud-Based

Coming from earlier sessions in the day that touted the incredible promise of technology advancements like generative AI, Shoja was also candid about overcoming the reality that professionals in the financial services industry face.

鈥淗istorically there hasn鈥檛 been a significant amount of investment to update finance systems that are aging or nearing end of life. However, we saw the opportunity and made the right investment to modernize,鈥� said Shoja. 鈥淥ne of the key enablers of growth is moving to the cloud. Digitization is creating the foundation for our future as we modernize our platforms.鈥�

Connected Data Drives Informed Decisions

One of the objectives of Sun Life鈥檚 platform modernization was to connect previously disparate data between geographies and business units. With operations in regions worldwide, including North America, Asia-Pacific, and Europe, along with an expanding product portfolio, managing data was paramount to effective financial management that fuels customer satisfaction and company growth.

鈥淲e have to build, evaluate, and run complex actuarial policy models that meet evolving regulatory mandates worldwide and corporate profitability objectives,鈥� said Shoja. 鈥淕oing to the cloud has provided efficiencies through consistent operations across every geography. Moving from manual spreadsheets to automated dashboards provides finance with faster access to insightful analytics from larger and more complex data sets. People can easily drill down to find the information they need to make the right optimal decisions.鈥�

Out-of-the-Box Digital Thinking

Like every organization that鈥檚 managing millions of transactions, data standardization and integration was extremely important to create Sun Life鈥檚 modern global platform.

鈥淓ven though our systems were only about 15 years old, eliminating technical debt was key to our transformation,鈥� said Shoja. 鈥淲e replaced traditional ways of thinking with out-of-the-box strategies, using modern native tools in the cloud platform to gain efficiencies. For example, when we want to pay a claim, the system automatically generates all relevant journal entries. We鈥檝e strategically aligned technology with finance teams.鈥�

AI Can Save Valuable Time for Financial Services

Shoja saw numerous solid use cases for generative AI, traditional AI, and machine learning in the financial services industry. AI could quickly find data gaps, speed up time-sensitive quarterly close, expedite the accrual management, and simplify reporting. Sun Life has created a team that鈥檚 focused on AI use cases in finance and other areas. The company is also relying on partners to bring the full value of AI capabilities into the business.

鈥淟arge language models may not be feasible for organizations to build on our own. Instead, AI can be built into digital solutions,鈥� he said. 鈥淎s 麻豆原创 is doing, we need partners to provide AI solutions and make it part of their package.鈥�

Authorities are starting to involve themselves in business transactions, disrupting well-established business processes and taking control of the invoicing flow between suppliers and buyers. As a result, they have the data needed to prevent tax evasion and start auditing taxpayers automatically or even auto-populating tax returns moving toward tax bills. Additionally, sustainability efforts and climate change regulations further impact tax regulations.

Amid these shifts, 麻豆原创 can provide peace of mind to navigate complexities efficiently. By understanding the evolving tax landscape, businesses can leverage 麻豆原创 solutions to help streamline compliance processes and drive automation to capitalize on emerging opportunities.

麻豆原创 solutions for global tax management are tailored to help address modern tax challenges. 麻豆原创 S/4HANA Cloud can provide transparency and compliance on a global scale, enabling businesses to embed tax requirements in processes.

Through localized solutions that offer standardized but flexible business processes, a complete suite of solutions facilitates efficient tax management, from e-invoicing to statutory reporting and overall tax compliance. With 麻豆原创 technology and expertise, businesses can achieve greater accuracy and agility in tax compliance, paving the way for sustainable growth and competitive advantage.

To help tax professionals prepare for and become valuable members of tax transformation projects, 麻豆原创 is introducing a new course: .

The course is designed to equip professionals with the knowledge needed to navigate today’s tax landscape and learn new capabilities that can be leveraged as part of 麻豆原创 S/4HANA-enabled transformations to simplify tax compliance.

The course offers practical strategies to learn about the different tax types, global developments and their business relevance, and the importance of technology with a focus on 麻豆原创 S/4HANA and 麻豆原创 solutions for global tax management. It begins on April 30 and聽. By enrolling in this course, tax professionals can gain valuable insights into industry best practices and leverage the latest 麻豆原创 innovations to help optimize their tax processes.

In a time of rapid change, 麻豆原创 supports businesses on their journey to tax compliance and growth. Through collaboration with 麻豆原创 and a commitment to continuous learning, businesses can navigate the complexities of taxation with confidence and achieve their long-term objectives.

Erika Buson is part of Product Marketing for Global Tax Management and Entity Close at 麻豆原创.

What may sound complicated to outsiders is being celebrated by finance ministers worldwide as a milestone in achieving fair taxation, as the new global taxation rules are expected to dramatically change the international tax landscape and increase the fairness of tax systems.

The majority of countries can look forward to higher tax revenues. It is estimated that, worldwide, between US$100 billion and $240 billion every year is lost in tax revenue as a result of 鈥� until now 鈥� legal tax avoidance techniques such as base erosion and profit shifting. However, for the companies affected by BEPS 2.0 and for tax experts, this new set of rules brings with it a lot of work.

Reducing Tax Avoidance and Tackling Tax Havens

BEPS 2.0 aims to ensure that large multinational enterprises and, in the EU, large-scale purely domestic groups operating in a single market pay a minimum effective corporate tax rate. The project is being driven jointly by the Organization for Economic Cooperation and Development (OECD) and the G20 countries; 141 states were involved in the discussions and the rules were negotiated over several years.

BEPS 2.0 consists of two pillars. Pillar one covers a new system of allocating tax rights over multinationals. In line with the rules, these rights will be reassigned from the country in which the company is located to market jurisdictions where profits are earned without the company being physically present there.

Fifteen Percent Minimum Tax Rate Worldwide

Pillar two introduces a minimum tax rate of 15% for large multinational groups with global revenues of more than 鈧�750 million. Any companies that do not comply with these rules risk facing sanctions. It is this second pillar in particular that requires companies to make numerous adjustments.

鈥淭he new rules mean that we as 麻豆原创 have to decide how we can leverage our solutions to help companies gather all the necessary data,鈥� says Irina Sheftelevich, senior customer advisor of Performance Management, Sustainability, Planning, and Analytics at 麻豆原创. 鈥淥ur software enables our customers to conform to the complex set of regulations and implement them in a transparent manner.鈥�

Collecting the Right Data

奥颈迟丑听, 麻豆原创 offers an application companies can use for multiple use cases such as allocating costs and revenues, calculating transfer prices, and calculating current and deferred income tax, also under the new regulation of BEPS 2.0 Pillar 2. The application collects data and information models from other 麻豆原创 and third-party solutions and compiles it in a data model that helps ensure compliant tax accounting and tax management. Fully integrated with 麻豆原创 S/4HANA, the application can be deployed both in the cloud and on premise. In the application, tax experts can adjust the logic by configuration, harmonizing the E2E process across multiple countries and tax jurisdictions, even after go-live, enabling an optimized tax structure.

麻豆原创 Profitability and Performance Management can connect in real time with the relevant data sources such as 麻豆原创 S/4HANA, 麻豆原创 Business Warehouse, or . Likewise, it can also connect to systems for employee data, tax data, and other financial data. Once the data has been integrated, the focus is on modeling and creating tax calculations and simulations: What if we have losses instead of profits? Which impact has adjusted transfer prices to our effective tax rate? How can we keep our tax burden to a minimum while complying with the new rules on the minimum tax rate?

鈥淚n implementing BEPS 2.0 we must use our solutions to identify and integrate the right data, put the new rules into practice, and ultimately create the necessary reports end to end. It鈥檚 a complex process that can only be modeled and managed in an intelligent way with the help of technology such as 麻豆原创 Profitability and Performance Management,鈥� says Sheftelevich.

Data Requirements for the Global Minimum Tax

Some of the data required for the global minimum tax calculations might have to be calculated specifically for this purpose, according to a . 鈥淗ere, financial and non-financial, structured and non-structured, and transactional and aggregated data is needed,鈥� says Sheftelevich. 鈥淭he hardest part is understanding which data the customer needs and where exactly in their systems it is stored.鈥� It鈥檚 about combining 鈥渂usiness knowledge, technology, and internal efficiency.鈥�

With 2024 fast approaching, not much time is left to achieve this, even if many are speculating that the timeline may be extended. No one should count on such a delay, says Sheftelevich. 鈥淥ur customers and partners are under considerable time pressure. Transitional safe harbor rules haven鈥檛 changed that.鈥�

Complexity Requires Quick Action

What鈥檚 more, countries can adapt certain rules to suit their circumstances. 鈥淭he complexity, data, and time pressure involved make this a huge challenge. A great deal of flexibility will be needed for potential adjustments. Not all the rules have been published yet, and some aspects still need clarification,鈥� adds Sheftelevich.

As the driving force behind the project, the OECD has issued examples that apply to all countries. 鈥淭hat鈥檚 why we are providing a solution that on the one hand takes into account all the basic rules and that on the other hand is agile enough to deal with changes and the specific requirements of individual companies and countries,鈥� says Sheftelevich. The rules on the minimum tax are part of pillar two. Whether there will be further pillars is yet to be seen.

Teaming Up with Tax Advisors and 麻豆原创 Partners

麻豆原创 is discussing all the necessary requirements to meet the new rules with its customers, and in doing so has enlisted the help of the world鈥檚 top four accounting firms. Teams from 麻豆原创 are working with national and international tax offices, tax accountants, and tax technology consultants to help companies understand the complex new rules and assess the possible effects.

To make sure everything is completed in time, the programs and content packages that have been optimized for BEPS 2.0 are being rolled out worldwide in collaboration with 麻豆原创 partners. And consultants are working with these partners to develop a plan so that the affected companies are ready when the rules take effect.

鈥淐ompanies must act now to ensure they are ready for 2024,鈥� advises Sheftelevich. 鈥淐ustomers are extremely interested. Whenever we organize information events on BEPS 2.0, they always get booked up very quickly.鈥�

Thomas Boerner is product owner of 麻豆原创 Profitability and Performance Management.

According to , some businesses have improved their ability to connect finance and accounting processes and standardize critical financial workflows with finance software. Increasing automation with applications, such as the , can provide a foundation for consistent communication, data accuracy, auditable completeness, and efficiency throughout the financial close.

IDC’s methodology for determining business value revealed that these companies realized significant advantages, with three critical benefits generating, on average, 474% ROI and an eight-month payback rate.

Boost Efficiency Through Automation and Visibility

Performing account reconciliation in Excel and e-mailing that information to stakeholders is time-consuming and prevents full visibility into the entire company’s reconciliations. Even worse is the potential for delayed, incomplete, or noncompliant reconciliations with business and regulatory policies.

Introducing automation into the account substantiation process can dramatically reduce the manual effort in validation and reporting, freeing up financial staff resources to focus on higher-value tasking. In IDC’s survey, respondents suggested that 麻豆原创 Account Substantiation and Automation supports their automation of critical steps, including account reconciliation (100%), task management (83%), journal entry (67%), transaction matching (50%), and variance analysis (50%).

After adoption, the average team efficiency increased by 12%. Surveyed companies completed reconciliation activities 18% faster and journal entries 11% faster while increasing the percentage of financial reports yielding accurate results by 3%. Such outcomes mean that the time typically allocated to one full-time employee can be freed up to work on other projects 鈥� translating into an annual productivity-based business value of US$78,800 for each organization participating in the study.

Accelerate Processing with Data Accuracy

Inaccurate data and a lack of trust can become significant bottlenecks in the validation and reporting process. They can hamper overall financial close efficiency, riddle cash validation and reporting with errors, and slow the flow of business-critical insight needed to make critical decisions quickly.

Participating CFOs shared with IDC that the modern capabilities of 麻豆原创 Account Substantiation and Automation minimize those risks. They have achieved improvements, such as shorter time to close and enhanced process transparency. Furthermore, analytics tools help pinpoint areas in account substantiation and reconciliation that require greater attention and improvement.

In return, this benefit elevates the status of finance organizations from a cost center to a value center. For example, CFOs and CIOs can collaborate more to support the business as digital transformation accelerates and digital-first business models emerge and proliferate. This partnership also shifts the criteria used to invest in new financial applications toward a greater focus on security, modern infrastructure, functionality, and ease of use.

Drive Stability by Integrating Workflows

Equal to efficiency and speed, gaining and maintaining control of the validation and reporting process is also critical. The ability to standardize and centralize activities and relevant data is desirable for business environments facing anything from industry uncertainty and economic turbulence to high growth.

Companies interviewed by IDC indicated that using a single, integrated application for account reconciliation, task management, journal entry, transaction matching, and variance analysis is the key to accomplishing this goal. Centralizing all those tasks in 麻豆原创 Account Substantiation and Automation enables them to manage the whole financial close and help ensure annual audits are performed faster, compliantly, and more confidently.

Additionally, the messiness of the traditional financial close experience is replaced with increased stability because 95% of their account reconciliation happens in 麻豆原创 Account Substantiation and Automation. This approach helps ensure every person involved in financial close and auditing processes feels more engaged and knows what needs to be done next. But more importantly, everyone understands how their role adds value to the business.

Optimize Confidence with Better Control

Based on IDC’s research, the complexities of today’s financial close process are reaching a point where manual work is an impediment. Instead, a cloud environment is needed to support the automation of repetitive, low-value tasks and enterprise-wide data exchange and collaboration.

For that reason, many finance organizations worldwide rely on 麻豆原创 Account Substantiation and Automation by BlackLine. As a result, they can adjust the speed and scale of their financial close processes to meet not only their business needs but also the expectations of industry and regulatory auditors.

Explore the value and benefits your accounting- and finance-related activities can gain from the 麻豆原创 Account Substantiation and Automation application by BlackLine. .

Bil Khan is a senior director of Global Partner Marketing at 麻豆原创.

Last week introduced , an artificial intelligence (AI) model that uses natural language query in the form of conversation to carry out tasks at a level of sophistication that would seem to require the talents of a skilled knowledge worker. AI technology like ChatGPT is showing up in data analysis, research and report writing.

Some knowledge workers may be concerned about being replaced by AI-powered innovations, as Nobel laureate economist Paul Krugman recently wrote in the . For other knowledge workers, however, AI and machine learning tools may be just what they鈥檝e been looking for to keep pace in the age of increased productivity.

麻豆原创鈥檚 Take

鈥淢y prediction is that next year is going to be the year of data-to-decisions,鈥� said Pras Chatterjee, senior director of Product Marketing, Planning and Analysis at 麻豆原创, who presented his business and technology predictions for 2023 on , a program of VoiceAmerica Talk Radio Network.

鈥淥ver the last 10 years, organizations have really been focused on growth, year over year,鈥� Chatterjee explained. 鈥淭hat phase of growth might be over for a little while, but that doesn鈥檛 mean there鈥檚 less of an opportunity for profitability. I think it鈥檚 really a time for finance to take advantage of technology to drive better profitability.鈥�

AI and the Future of Finance

One trend that Chatterjee has been paying attention to is the long lead time in realizing the promise of emerging technologies like AI and machine learning. This weekend that promise became much more tangible to him as he played around with ChatGPT, OpenAI鈥檚 new innovation tool. He and his daughter experimented with the technology by asking ChatGPT questions and gauging the intelligence of the AI-generated responses.

As a Chartered Professional Accountant (CPA) with experience advising Fortune 500 organizations in bringing new technology solutions to finance teams, Chatterjee began to see the immediate value of AI innovations. 鈥淚 thought to myself, if I鈥檓 asking questions and getting answers 鈥� and my daughter is asking questions and getting her homework done 鈥� what does that mean for finance departments and people looking to do analytics in organizations?鈥�

The advancement in natural language query demonstrated by tools like ChatGPT opens new possibilities for better insights into organizational data, which can have profound effects on decision-making.

鈥淚t gives you insights-to-action, so you can take action immediately,鈥� Chatterjee observed. 鈥淭he stage is set effectively that you have access to all your data. If you start adopting modern analytics solutions on top of your data, you can ask questions in the context of the way your business performs; namely, what are my opportunities? What are my challenges? Where am I struggling? Where can I do better effectively? I think this gives you a handle on having much greater profitability, but also an advantage over your competitors and ultimately delivering better best-in-class shareholder values.鈥�

So, can AI drive shareholder value in a downbeat year?

Chatterjee predicts that while it may not be a good year in terms of economic growth, finance departments will lead best-in-class organizations across the globe to adopt technology which will have significant benefits. 鈥淭hey鈥檒l be able to ask the right questions, adopting AI and machine learning, because it is here now,鈥� he said.

Chatterjee believes the technology has finally arrived. 鈥淭he time for AI and machine learning isn鈥檛 three years from now. It鈥檚 at our fingertips, as this weekend showed with one million users trying [ChatGPT] in the first couple of days.鈥�

That鈥檚 exceptional growth for any disruptive technology, noted Chatterjee, who suggested that understaffed finance departments awash in data could reap value from the help of AI-powered digital assistants. 鈥淚 think AI and machine learning is going to drive a ton of profitability and growth in finance organizations 鈥� and ultimately lead to more shareholder value for all of us.鈥�

Contact:
Ilaina Jonas, Senior Director of Global Public Relations, 麻豆原创
+1 (646) 923-2834, ilaina.jonas@sap.com

Essential to any business success is having the right data to make rapid and precise decisions in this quickly changing environment. But there are challenges:

• New business environment are increasing the complexity of financial management, creating the need for more extensive and precise data.
• Finance professionals need transparent access to data and key performance indicators (KPIs) and often require real-time analyses and recommendations in order to take appropriate action.
• Most companies do not have the detailed information required for individualization because the manual workloads and costs necessary to obtain and process it are prohibitively high.
• Because companies cannot consider a product鈥檚 entire lifetime in forecasting revenues and margins, they struggle to design the best combinations of product and service offerings and to set optimal prices.
• Traditional financial indicators are no longer the only decisive factors in measuring a company’s success at creating value. Non-financial dimensions, such as environmental, social, and governance (ESG) factors, are gaining importance due to regulatory and legislative developments and new societal demands. Today, most companies are not able to correlate non-financial information with financial information. Companies are struggling to make data-based tradeoff decisions, such as the effect of specific emission reduction goals on the profitability of different products.

To address these challenges, we joined forces with partner Boston Consulting Group (BCG) and combined 麻豆原创 solutions and our strength as the leading enterprise software company with BCG鈥檚 deep industry and functional expertise.

Together with BCG colleagues Marc Rodt, partner and director of the Center for CFO Excellence, and Patrick Weber, project leader, we came to the realization that by applying the known concept of digital twins to the finance world, we can make significant strides forward in helping to solve these challenges.

Introducing 鈥淒igital Financial Twin鈥� for Informed Decision-Making

The collaboration explored the concept of digital financial twin, defined as a digital representation of financial and selected non-financial metrics, including those measuring relationships, structures, and processes across the entire product lifetime and value chain. This twin precisely allocates metrics to products, services, suppliers, customers, and employees.

A digital financial twin addresses the challenges mentioned above by precisely allocating financial and non-financial information to products, sections of the value chain, or organizational units. This allocation is made possible first by the expansion of classification attributes for data and second by the availability of modern in-memory databases that can aggregate data in real time.

In the automotive industry for example, an individual car would have a digital financial twin 聽represented by using the vehicle identification number (VIN) as attribute and carrying all financial and non-financial data regarding this car for its entire lifetime, from its development to its end of life.

A digital financial twin could provide four key benefits:

• Detailed control information down to the individual product level
• Transparency into value contributions over the entire product or customer lifetime
• Integration of non-financial information with traditional financial metrics
• Information availability in (near) real time

How to Implement a Digital Financial Twin

The first requirement for implementing a digital financial twin is having a next-generation enterprise resource planning (ERP) system and data layer based on modern cloud-based architecture. Many companies may need to upgrade or replace their legacy ERP systems to better integrate automation and human decision-making into their finance functions. Companies can transition to this landscape by building a data and digital platform that decouples the data layer from the next-generation ERP and any existing legacy systems.

But implementing a digital financial twin is not just a technology change. It will require non-technical changes that allows the company to apply the capabilities, adjustment to accounting standards and processes, as well as downstream consolidation and reporting processes, shifting from IT to finance when it comes to controlling the data, letting go of legacy systems, and making the commitment to transform.

Building the Foundation with 麻豆原创 Solutions

As a market leader in enterprise application software, 麻豆原创 helps companies of all sizes and in all industries. 麻豆原创 S/4HANA Cloud provides an integrated, intelligent ERP solution that runs on the in-memory database 麻豆原创 HANA and can serve as the foundation to the digital financial twin. For organizations on legacy systems daunted by the requirements of such a twin, we offer RISE with 麻豆原创, a comprehensive solution with 麻豆原创 S/4HANA Cloud, coupled with 麻豆原创 Business Technology Platform, analytics, and business process intelligence with 麻豆原创 Signavio and 麻豆原创 Business Process Intelligence, along with guided journeys and outcome-driven services from 麻豆原创 and partners.

Stefan Paetzold is chief business enterprise consultant at 麻豆原创.
Bernd Weissenmayer is principal business enterprise consultant at 麻豆原创.