Bionics, digital financial management opening agencies up to do more valuable work

In many ways federal CFOs are at the center of the agency reform effort. Budget and data from spending are driving decisions about everything from the locations of offices to federal workforce modernization efforts to shared services to deregulation around things like grants and acquisition.

Just take one of the management priorities under the PMA, getting payments right.

A cross-agency working group highlighted 159 findings and came up with 28 priority recommendations.

Additionally, each agency program reporting an estimated cash loss over 100 million dollars will provide goals or milestones, along with progress updates to improve the prevention of improper payments resulting in cash loss.

Of the top 24 programs with cash loss, nine saw drops in the amount of improper payments between 2016 and 2017, including the earned income tax credit and Medicare fee for service.

The focus by the administration on these types of initiatives combined with the development of technologies like robotics process automation and machine learning is creating a tremendous opportunity for the financial management community.

Demek Adams, a principal at Grant Thornton who leads the financial management practice, said agencies can jump on that bandwagon and improve not only their financial management, but their overall business processes and citizen services by making better use of the data.

“This is a huge time of disruption in a positive way, and disruption creates opportunity,” Adams said on the Digitizing Financial Management show sponsored by Grant Thornton. “Everyone should be excited about the opportunity that a lot of disruptive technologies like robotics process automation, machine learning and artificial intelligence create.”

This latest disruption changes the perspective of federal financial management from one that focused on audits, compliance and transactional processes to one that is using technology to be a business and decision enabler.

Adams said something like RPA can take the processes that require a lot of time and labor, and streamline them so financial managers can focus on more important, data driven efforts.

“Some of the most strategic CFOs are not just looking at technology to streamline their processes, but are collaborating with them to think about the enterprise view and even more so the people aspect around using the new technologies,” he said. “There is a lot of discussion around bots, machine learning and AI, but there is an absence around the people. In the federal government, 70-to-80 percent of their budgets for appropriated funds are made up of salaries and expenses of either full-time equivalents or contractors. We have to be more aware of the impact of this technology on the workforce to truly optimize the outcomes of this technology.”

These efforts fall under a new moniker: digital financial management and bionics.

Adams said agencies should consider five performance drivers as they transform their financial management services. He said at the end of the day performance is the ultimate metric in how agencies are delivering services.

“How do we enable the human to transition from a transactional mindset to a more analytical mindset leveraging this technology,” he said. “The financial management community is ready. Do they know they are ready? Has it been communicated in the right way to reassure them that they are ready, I think there is an opportunity. This is a change management exercise. We have to readdress what their jobs will look like, understand this is not about losing jobs, but this is about shifting focus and driving value for taxpayers.”

The five performance drivers are:

• Organizational structure—the hierarchy of the agency.
• Culture—the values, benefits and outcomes the organization wants to achieve.
• People—the skillsets and personalities of the managers and workers.
• Process—the end-to-end tasks used to meet the goals of the agency or office.
• Technology—financial, feeder and other systems that impact the environment.

“Culture is the number one driver,” Adams said. “A Harvard Business Review article looked at creating a culture of curiosity. They really looked at the business case for curiosity. There are a lot of curious folks out there, but you have to look at how they are incentivized. Clean audits are their first and foremost priority in the financial management community. Getting transactions out timely is, a lot of times, how they are assessed. Curiosity in our environment is not enough and that’s where the change agents…who are doing a lot of innovative things are very impactful.”

Adams said money is the natural incentive to get financial offices to move off of low value work and into high value work. If agencies can save money by using RPA or machine learning to take care of those transactional processes, and can use the extra money data analytics and improving the mission outcomes.

He said agencies have a long laundry list of things they are not able to do and RPA presents them with an opportunity to accomplish more with the funding they currently have.

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