Automation, digitization, global trade pose challenges for business leaders, report says

A new report by The Economist Intelligence Unit, sponsored by Basware, is shedding light on how technology innovation and shifting global trade dynamics are challenging businesses.

The report considers three trends — automation, digitization and shifting trade dynamics — that finance and procurement executives expect to affect their companies most, what their impacts will be, and how business leaders are preparing for the developments. The report’s findings are based on a survey of more than 400 finance and procurement leaders in the U.S., the UK, France and Germany.

The executives expressed hopefulness about their organizations’ abilities to meet the technological and global trade challenges anticipated in the future, says the report, “What’s now and next for finance and procurement?” About 64% of senior finance and procurement executives expressed confidence that their organizations will adapt to continued automation, digitization and global trends in trade more effectively than their peers.

Survey respondents indicated that they expect automation and digitization to boost technology expenditure and reduce human workforce numbers. At the same time, trade dynamics are expected to increase costs and drive executives to seek new sources of growth.

The report found that the biggest impact of automation in business will be on internal processes. Respondents expect the automation of payments, procurement processes and supply-chain management to have the most significant impact on their organizations, ahead of artificial intelligence-powered decision-making or decision-making within other key finance and procurement processes. These forms of automation are also expected to reduce companies’ headcounts.

According to the report, 71% of survey respondents believe finance and procurement play a key role in responding to automation, digitization and trends in global trade.

“This has huge implications for workers,” the report states. “Somewhere between 75 (million) and 375 (million) people worldwide may need to find new occupations, adapt existing roles or acquire a fresh set of skills,” management consultancy McKinsey predicts.

Employers also must position themselves for such change. Thirty-six percent of survey respondents said the most commonly cited impact of automation is a reduced need for staff. Officials say this means a smaller headcount will be performing more highly-skilled tasks, with nearly 34% of respondents stating that they expect automation to allow for more time to focus on strategic initiatives.

The majority of survey participants stated that they expect to prepare for automation by increasing their technology and digitization budgets, a strategy adopted by 39% of respondents.

Digitization efforts are expected to reduce overall costs while ramping up competition for talent, respondents stated. Just under 32% of survey participants suggested that digitization is likely to bring down costs. Additionally, nearly 31% of respondents agreed that recruiting employees with specialized digital skills would be key to digital transformation at their organizations.

Thirty years after the inception of the internet, digital technology continues to disrupt business models, survey respondents acknowledged. To keep up with this continuous innovation, companies will need to be flexible in their procurement practices, the report said.

China and U.S. trade relations and post-Brexit trade negotiations are also factors in these trends, according to the report. Finance and procurement executives surveyed said these trade relations are the two most impactful trade trends and are likely to have negative effects, such as an increase in procurement costs and greater supply-chain complexity.

These impending challenges are forcing companies to prepare for shifting trends in global trade, the survey shows, such as through developing alternative sourcing options. Securing alternative sales leads/markets was another common response among 32% of respondents.

“Companies cannot predict the future but they can prepare to adapt,” the report states.

“A common thread linking preparations that companies have taken for automation, digitization and global trade dynamics is the ability to be responsive to whatever fate may throw at them.”

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