Picture a market that’s been utterly transformed by technology in recent years, and there’s a good chance you’ll think of the media and entertainment sector.
It’s not just the scale of the transformation: it’s the speed with which it’s happened. One of the world’s best-known streaming media services started only in 2007 as a DVD sales and rental business. Now it’s a global brand, and has been joined by many others, as well as by online services from mainstream broadcasters, online-only TV channels and radio stations, and more.
What’s interesting about this rapid evolution is that developments in technology have led to radical changes in business models: it’s not just a means of doing something better or faster, but of doing it in an entirely new way. Finance automation is an extension of this evolution: it can enable the finance function also to find new roles for itself and to make new and valuable contributions to the enterprise.
Recognizing the potential
Our recent industry report, “Reimagining finance for the digital age – Media and Entertainment sector,1″ found that many media and entertainment companies now recognize the potential of finance automation. More than a third of executives in media and entertainment (36%) said their organization had now agreed a transformation strategy for automation in the finance function, and businesses in this sector were likely to be found in the group of automation “Masters” – the small number of finance teams in the overall survey that were and are outpacing the rest in automating their finance processes.
The survey found that enterprises in the sector were more likely to have implemented artificial intelligence technology partially or fully, with 46% of media and entertainment respondents at this stage. The figure for the next best sector in this area, manufacturing, is just 30%. And more than half (53%) of businesses in the sector had partially or fully implemented analytics and machine learning technologies.
What’s more, media and entertainment businesses were increasing their automation of finance processes, with good levels of penetration across all 18 activities featured in this research. In several areas, including queries handling, payments, and collections, the sector was ahead of all the others in this regard.
Finance function – catching up
What’s interesting about these figures is that, while the industry has clearly embraced digital automation in finance, the benefits that accrue are being felt mostly within the function, and not beyond. In other words, while the media and entertainment industry as a whole may be exploiting technology to develop new business models, its finance operations still have some way to go.
For example, in the survey, only 38% of media and entertainment companies strongly agreed that effective use of automation can transform the finance function from scorekeeper to strategic business partner. Only 17% said they had been able to fully realize the potential to unlock new business insights through automation, only 23% had maximized the opportunity to make more accurate forecasts, and only 25% had optimized financial planning. And just 27% had in place an overall vision for transformation – fewer than in any other sector.
The good news is that the will is there. Some 72% of media and entertainment respondents agreed that finance needed to play a leading role in driving automation throughout the business, and 75% thought finance was ahead of other functions on this issue. This provides companies in the sector with a strong foundation on which to build enterprise leaders’ understanding of finance automation.
The sector’s most commonly cited challenge is concern about cyber security and data privacy, and businesses will need to confront the threat of cyber attacks –particularly in the context of new legislation such as the EU’s General Data Protection Regulation (GDPR). However, this concern is less than that noted by the survey in retail and in consumer products, but nevertheless still at the top of the list when talking to industry leaders.
The media and entertainment industry is more sanguine than many about potential impact of automation on the workforce, with just 20% citing a culture of fear around job losses as a significant risk – well below the other sectors in the research. With widespread expectation that automation will lead to fewer jobs in finance in future, this is impressive. It seems the industry has been able to make the case that these jobs will be of higher value, more fulfilling, and better paid.
What do the research results tell us about how media and entertainment businesses are handling the shift to finance automation?
- They need to build a vision for automation transformation strategy
- Their focus must turn to strategic goals as well as operational levers
- Security must form a critical component of automation strategy
- Business leaders must seize the initiative
They probably all seem obvious points – but that doesn’t invalidate them. When an industry like media and entertainment has blazed a business model trail so effectively, there’s every reason to expect it can achieve the same transformation for its finance function.
Read the “ Reimagining finance for the digital age – Media and Entertainment sector” report.
Read the full “Reimagining finance for the digital age” report.
As a professional accountant with over 30 years of operations experience, Marty Borcharding helps organizations in the Media and Entertainment sector transform their F&A business through leveraging Capgemini’s Global Enterprise Model (GEM), our offerings and services.
 The survey of 500 senior finance executives, conducted in January and February 2018 by Capgemini and Longitude, included 100 executives working in the media and entertainment sector (64 in Europe and 36 in North America). The conclusions from that wider research are presented in Reimagining finance for the digital age: https://www.capgemini.com/service/business-services/transform-your-finance-operations/reimagining-finance-for-the-digital-age/