3149: Driving Efficiency and Innovation in Finance: The BlackLine Perspective

[00:00:04] How is artificial intelligence reshaping the roles of the Chief Information Officer and indeed their strategies in digital finance transformation? Well, my guest today is the CIO of BlackLine and he's got a robust background bringing more than two decades in enterprise cloud environments, cyber security and AI initiatives.

[00:00:30] And not only that, he brings a wealth of knowledge on the evolution of technology leadership. So, as businesses navigate the complexities of digital finance, I want to learn more about the importance of understanding the symbiotic relationship between technology and financial strategy becomes increasingly essential. So, how are CIOs leveraging AI to drive innovation and efficiency across industries?

[00:00:59] And what can we learn from their journeys? Enough for me. Let's get today's guest on. So, a massive warm welcome to the show. Can you tell everyone listening a little about who you are and what you do? Thank you, Neil. And I'm glad to be with you today. My name is Sumit Jhaar and I am the Chief Information Officer at BlackLine. Been with the company for almost eight months now, but was very, very familiar as a customer before I joined them. And I'm excited to be part of their executive team.

[00:01:28] Wow. I imagine there's a fair bit of pressure on you there. And I've got to ask, I mean, as a relatively new CIO of BlackLine, what are some of the key priorities in leading a company's digital finance transformation? And how do you plan to leverage your experience in the cloud and cloud automation technologies to achieve this? Because I feel like there's almost a big story there in itself.

[00:01:50] Well, that is true. And Neil, I actually happen to be their first CIO. So there's a lot of catch up and there's a lot to do there. This company is around, I would say, we are an organization of around 1,700 employees serving 4,400 customers globally. We are a global company. We are a public company.

[00:02:12] And the best part of working for this organization is that we are used on a daily basis by the most conservative technology skeptical users. I'm talking about financial users, finance department users. So it's a very different experience. But I have been a CIO of two other companies in the past. And you're right. I carry a lot of experience on automation and AI in my past life.

[00:02:40] And as I joined here at Blackline, the most important, I would say, the goal at this point of time is to bring all the goodness of modern tech that's available to us and put that to use, make our employees more productive, turn our internal operations by the use of technology into a comparative advantage for us.

[00:03:05] This is a very fast moving pace. As you can see, technology is changing, moving so fast. And, and I have a strong feeling that if you use it the right way, this could be an advantage for your business, a very, very critical advantage.

[00:03:20] And that's my goal. I want to make sure no matter which part of the business you're talking about, whether it is the sales organization, touch points with our customers, touch points with our partners, every aspect of our business can be differentiated by the use of technology. I want to make sure our customers feel good when they engage with us. And that's the experience we want to build for them.

[00:03:44] And that's, that's part of my role because I'm responsible for the technology strategy for all of our internal operations. So that's where we are and very excited to see where we are heading at this point of time. And that's one of the reasons I invited you on the podcast to join me today, because I always try and get people thinking differently about the impacts of technology in their lives and work and indeed world.

[00:04:08] But Blackline, of course, is famous for helping businesses solve their most complex finance and accounting challenges. You've previously had significant experience driving digital transformation initiatives in your previous role. So fast forward to present day, I love how you guys have come together. So how does the approach to digital transformation in finance differ from, let's say, other industries? And what are the unique challenges and opportunities that you're looking at now?

[00:04:36] This is something even I learned as I spent my last eight months and started to get to know not only our technology, but also our customers. One thing that I've observed over time is that finance users sometimes get called out for being slow to the adoption of modern technology. And that is probably true to a certain extent, but there are real reasons behind it. And sometimes I feel those reasons are not very well understood.

[00:05:05] You are talking about a community of users who have to deal with unique challenges that some other departments sometimes don't have to. I'm talking about the accuracy, reliability, regulations, compliance. This is an area, especially if you're working for a public company, you can't mess around with numbers. The numbers have to be done right.

[00:05:31] And if that requires one-time review, two-time review, or even more than that, finance organizations always have this pressure of making sure that there is no margin of error. They cannot make mistakes. So that's one unique challenge. Second, I would say every aspect of their business processes is highly, highly regulated. It's auditable. They have to make sure they provide an evidence of how they got to their numbers in the end.

[00:06:00] See, I work for a public company and I worked for public companies most of my life. And it was fascinating to see how much effort and work goes in the end of a quarter, end of a month, end of a year. The finance teams are scrambling to make sure not only they close their quarter fast enough, but also to make sure that there is no concession, no compromise on the data integrity. The numbers transactions need to match.

[00:06:28] And you are dealing with that kind of responsibility. You, over time, become skeptical about the use of technology, especially when the technology is not as accurate as you expect it to be or not as predictable as you expect it to be. So that's really interesting to see. And that's why it's very fascinating to work with a company who has established itself as a market leader for the most skeptical side of users of technology.

[00:06:59] And I think one of the things that I've observed in 10 years of recording this podcast and 3,000 plus interviews is how the role of CIOs has evolved to be more collaborative, especially with CFOs, for example. So how do you see that relationship evolving in the context of digital finance transformation? And are there any other key areas of collaboration between these two roles that you see? Funny you ask that question, Neil.

[00:07:26] In my past life, I have worked closely with several CFOs. In some cases, I actually ended up working for the CFO as part of their organization. In my current job, I am a close partner, and the CFO is one of my peers, and we both report to the CEOs. But the relationship has evolved over time. And I'll give you some perspective. Traditionally, in the past, this wasn't a very close relationship for several reasons.

[00:07:56] If you ask a traditional CFO, I would say they would normally look at the IT organization or the CIO organization as the technology support team for their back office operations, but not exactly as a strategic partner. And if you talk to a CIO, you sometimes will hear that they don't always look at the CFO organizations

[00:08:23] as the most easiest one to adopt the latest and greatest of technology. CFOs were not exactly looked at the most transformative users, generally slow to adoption of new technology. And what I'm noticing now is that is changing fast, real fast. And part of the reason that that is happening is that both of these leaders, whether it is CFOs or CIOs, both are being asked by their management,

[00:08:52] by the CEOs to drive the transformation at the organization level, focus more on the strategic goals of the organization, whether it is the growth, customer experience, play a direct role in that outside the comfort zone of what you traditionally have been doing. And as that is happening, there are mutual alignment, mutual dependencies that are starting to come out.

[00:09:20] CFOs are finding it that, hey, if I'm being asked to drive more transformation within my organization, I need more AI, I need more automation. And who's a better partner than the CIO of your organization to help you with that? And the CIOs are realizing that if I'm able to transform the CFO operations, not only directly drives the efficiency that both of these leaders care about,

[00:09:46] but that also helps you set an example for the rest of the organization. End of the day, both of these are horizontal groups. Both of these groups work and support the rest of the organization, which are more vertical in nature. So there is actually far more similarities in the goals that they are trying to achieve, and the realization is happening that the partnership is far more important. If you look at, for example, in my case, Mark Parton, our CFO,

[00:10:15] very, very progressive CFO. I mean, I see him spending less time on the day-to-day back office, the traditional finance organizations work, but he's spending far more time these days on driving the conversations around strategic growth. And he's talking about AI, the use of AI within the organization on the product side. He's talking about where do we make investments, the business investments. So we talk about stuff that we both care about.

[00:10:44] And this is so refreshing and so different from the traditional CFO-CIO relationship that I've seen in the past. And we must have hit a world record here for tech podcast going 15 minutes without mentioning AI. But we must bring it up because AI is playing an increasingly central role in digital transformation in every aspect. But how are you integrating AI into black lines operations?

[00:11:12] We hear a lot of hype, but I love sharing more real-world stories and use cases of how businesses are using it. And if you are integrating AI at the moment, what kind of benefits do you see and business value for finance teams in particular? What are you seeing here? Yeah. So this actually became one of the most promising opportunities for me when I joined Blackline. First of all, AI has been evolving for quite a while.

[00:11:40] But what has happened in the last two years, I would say, is a new form of AI that has come up with a new promise. I'm talking about generative AI, generative form of the AI. And the reason this form of AI is getting so much traction is because it's able to solve certain kind of problems that were far more difficult to solve in the past.

[00:12:02] And it is giving new means to people like me, leaders like me, to solve those problems, which we either avoided in the past or just found it so difficult to solve. Case in point is how you manage or process unstructured or semi-structured data. I'm talking about, let's say, PDF documents, contract documents. I'm talking about POs.

[00:12:30] I'm talking about billing statements, Excel spreadsheets or simple text or even media content, audio video content. The technology in the past always struggled with unstructured data. And the reality is that if you look at any organization, almost 70% of data is unstructured, which means we have been living.

[00:12:57] The problems that we have been solving were around that 30% space and that 70% space was untapped, but had huge promise that we simply could not tap into. This is where AI is starting to help on now. So coming back to our conversation on finance, there is so much that AI has as potential for finance organizations.

[00:13:24] When you look at, let's say, the controller's world, take an example, revenue operations team. These guys are analyzing contracts to figure out the impact on the revenue treatment. AI can help you with that. Your billing organizations, your order booking organizations deal with purchase orders and making sure that the invoices that are going out are actually in line with purchase orders. There's so much manual comparison of documents, validations happen. AI can do all of that for you.

[00:13:53] You look at, let's say, the cash operations, how you manage and predict the cash inflow, outflow. AI can help you with that. There is so much potential that we are finding in the use of AI. And this is the same kind of learning that we are now trying to apply on our product side.

[00:14:15] The key thing here to note is, just like the promise that we have, there is also a realization of the risk with the new form of AI. If the data is not good foundationally, AI can easily make mistakes. If the data is not in good shape or if you don't train AI properly, it can start hallucinating.

[00:14:39] And if you're not designing the architecture of AI solutions carefully, you might end up sharing data that's very difficult to unshare afterwards.

[00:14:47] So we are trying to take a very responsible approach towards AI at Blackline by combining different forms of AI techniques and limiting the constraints of the generative form of AI by complementing it with other means, including automation technologies, tool-based systems, machine learning, etc. We call that as composite form of AI.

[00:15:14] And that's where we feel it's ultimately going to head. Combination of AI techniques are going to make it far more mature than it is today. And as we look beyond the hype of AI, I think another big topic right now and will be next year is the ROI of AI projects. And that focus on, hey, what problems are we really solving here?

[00:15:34] So from your experience in working with AI, how do you see AI-powered solutions helping global CIO managers like yourself manage their operations more efficiently and ultimately enable you to scale more effectively? Is there anything that excites you here or anything that you can share around how you're using it? There's a lot to talk about on that topic, Neil. Let's talk about the promise first. Yes.

[00:16:00] So if you ask me the ROI of a technology solution five years back when AI was not as popular, I would give you a metric of 2x to 3x, any investment, any dollar that I spend on AI, sorry, on traditional technologies, I would expect an ROI of 2x to 3x.

[00:16:23] And when I look at AI-bound solutions that my team is delivering now, we are now talking about the potential of 5x to 7x ROI. So right there, it tells you about the potential there is.

[00:16:35] The other things that I'm observing with AI is that the pace of building solutions with AI, how quickly can I build solutions and deploy them much, much faster than traditional techniques of upgrading an ERP or a CRM solution that nobody likes?

[00:16:53] What we are finding is that you can combine the power of AI with your traditional systems like ERPs and CRMs, make them smarter, more intelligent, and get the more out of them by combining these two things together. Same goes on experience side with all the new conversational side of chat GPT.

[00:17:15] Now businesses are trying to build the same experience for their employees and customers, so they don't need to build tons and tons of dashboards just to get a simple question answered. The future, I think, is conversational way is going to change the way we engage with systems. That's not happening probably in next one or two years, but I think next five to 10 years, you will see that there is a huge change in how we humans engage with technology or systems.

[00:17:44] Wow, that is a powerful answer there. And those stats around ROI of a tech project several years ago to what we're seeing now is quite mouth-watering and something we don't hear enough about. And, of course, as we race forward, though, are there any ethical considerations that you think businesses maybe need to address as AI becomes more embedded in those financial operations,

[00:18:07] particularly around issues that we hear about all the time, whether it be transparency, data privacy, and accountability? Yes. So, Neil, again, another good question. These are real issues. And that's why several CIOs, in fact, in my peer group that I speak to, most of us are talking about the right way of operationalizing AI. How do we make sure?

[00:18:33] It's very easy to just build a simple chatbot married with your internal company data deployed, and then very quickly you will realize that it's starting to make mistakes, it's giving you wrong answers, and that kind of fills the excitement around the hype that exists today. So, to your question about transparency, your question about accuracy, your question about security,

[00:19:01] new tooling has starting to come up that is making the underlying AI foundational models more transparent, more secure. But unless and until in the design process, the IT organizations make a conscious effort to treat these limitations of AI, there is always a risk of these investments going south.

[00:19:26] So, my recommendation to your audience is to make sure that as you are designing new AI solutions, you ask yourself, are you letting AI take a decision or action by itself? Or is it the right thing to put a human in the loop? My recommendation is the latter. I don't think AI is at a place where it can independently, autonomously basically make decisions or take actions.

[00:19:52] It can do all the grunt work for you, which is generally the 70% of the work, and then let a human kind of review the final outcome, make the final decision. Those are the means and controls we are debating, discussing internally, to make sure that the limitations get handled through other techniques of technologies that actually complement the AI. So, it's an ongoing topic. Technology is evolving. We're getting better every single day,

[00:20:21] but we're not exactly where we can just let AI on its own and drive things by itself. Yeah, again, so many big points there. And I think another point, a topic for another day is how overuse of AI could maybe lessen the critical thinking skills of the human, and yet the human needs those critical thinking skills to approve AI scenarios and work with it. But that's a topic for another day.

[00:20:47] If we look beyond the finance sector, what potential do you see AI playing in driving transformation across other industries? And how can Blackline Solutions maybe play a part in contributing to that broader AI-driven shift? So, first of all, AI is, I would say, capabilities and this opportunity is so significant that I feel it's going to touch every single part of the industry.

[00:21:16] Now, that's going to happen over time, but there are certain industries where I'm very, I can already see the impact is happening next couple of years or so. And some that come to my mind, one is the customer support industry. I mean, who likes to get on a call with a customer agent? It takes five minutes just to prove your identity, another five minutes to explain the problem, only to be transferred to another agent.

[00:21:46] I feel like that side of the technology, that side of the business is probably 19th century technology. And I think that's ripe for disruption. And AI has the capability to totally transform that whole call center experience. That's coming. Second, I would say media and entertainment business, this generative form of AI is very, very capable of on the creative side.

[00:22:12] I mean, the way you can create images, videos, and the creative content is picking up. There is a lot of potential in that. There are some risks about which jobs are going to be taken out and which jobs are going to stay. All that discussions are going on. But overall, I see a lot of potential in media and entertainment, customer support, to a certain extent, even manufacturing, a lot of potential in healthcare. Now, to your question about Blackline,

[00:22:40] I think our approach to the responsible use of AI is going to drive maturity in how you use AI. It's going to set some standards about the right use of AI. Blackline is trusted by its customers, by the most conservative side of customers, about the right way of building a technology for finance teams, finance organizations.

[00:23:09] And I think we'll still be a leader in how we drive AI for financial users. That's the expectation, and we are on that path already. And as we look towards 2025 and beyond, we're only a matter of weeks away now, how do you envision the future of finance technology evolving over the next five to ten years? And as I say that out loud, I know how ridiculous that is when you learn how much technological change we've experienced in the last two years alone.

[00:23:39] But when you look at areas particularly within AI and automation reshaping traditional roles and processes, anything you can share around how you see all of that evolving? It's evolving on a daily basis these days, Neil. It's hard to predict what's going to happen two to five years. But I would say it's becoming a catch-up game. Even for technology leaders like us, it feels like every week some sort of new innovation has come up. And now we are expected to kind of learn it and adopt it, absorb it.

[00:24:09] But still, I'll try to answer your question. As far as finance world is concerned, I see significant increase in AI use on fraud detection. I think data entry compliance checks are going to get a lot easier. I think dashboards are going to get replaced by chatbots for conversational experience. There's going to be less rules to write. Data is going to be driving more decision-making.

[00:24:34] A lot of these things are generic, not exactly finance specific, but it's going to see its impact on finance operations as well. Well, exciting times ahead. And I think you hit the nail on the head when you said it feels like a catch-up game. I think we all feel that at the moment, this pressure of being in a state of continuous learning. But I've got to ask, as someone right in the heart of the space, eye of the storm, so to speak, where or how do you self-educate? How do you keep up to speed with the pace of change?

[00:25:05] That's the hard part because it's changing so fast. And Neil, I'm not a big book reader, so I don't spend a lot of time reading stuff. What I find actually, what works for me is getting on podcasts like these in my spare time, which is hard to get these days. But whether I'm driving to work, driving for groceries or just getting a simple break, I like to listen to podcasts. This is my way of connecting with the other thought leaders.

[00:25:33] I find that approach to be far more fruitful and far more interesting to learn about new techniques. The other thing I would say is technology has made it so easy these days to stay connected with your peers, your connections. And I spend a lot of time working with the other CIO leaders in the community, and we are constantly connected and asking for feedback from each other. So that seems to be working for now.

[00:26:00] We'll see if we're able to live up to the expectations that the pace at which technology is moving these days. I love that. I cannot thank you enough for spending a little time with me today. And for anyone listening that would like to carry on this conversation we started today, where's the best place for people listening to find you? Black line, learn more about your team, et cetera. Where would you like to point everyone listening? You just want to dig a little bit deeper. Well, just pay attention to our LinkedIn handle.

[00:26:30] All the content that we produce, whether it is podcast or blogs, article, the best way to find that is following our handle on LinkedIn. So please go find ourselves, Black line on LinkedIn, and we'll find a way to share everything that we want to share with you. Awesome. I'll make sure there's links to everything there, including your website on the blog post associated with this episode today. We covered a lot from the current role of the CIO,

[00:27:00] how CIOs are working more in collaboration with CFOs, the benefits of AI in digital transformation, and how AI is benefiting global CIOs too. And there were so many big stats that you dropped that certainly got me thinking about that ROI question too. But more than anything, just thank you for sharing your insights today. Thanks again. Thank you, Neil. So a big thank you to my guest for sharing his expert insights

[00:27:27] into the convergence of AI and digital transformation and financial strategies. So how are you integrating innovative technologies in your roles? What impacts do you foresee in the near future? As always, share your thoughts and join the conversation on any social media platform, just at Neil C. Hughes, or email me, techblogwriter at outlook.com. Well, let's keep exploring these vital developments together. And if you enjoyed it today,

[00:27:57] while you wait till you hear tomorrow's episode, we've got another cracker lined up for you. So you are cordially invited to join me again, but thank you for listening as always. And I will speak with you all tomorrow. Bye for now. Bye for now. Bye for now.