There’s a truism in Silicon Valley and elsewhere that the best way to learn is from your failures. I don’t totally agree with that, but you can read about that in another post. Today I want to dissect a success story for the lessons it can provide founders.
Ordinarily as a startup mentor I wouldn’t be reading an article featuring a large enterprise like like Airbus. And having very little interest in finance, I would have even less interest in a story about Airbus’s finance tasks. But the title of this Wall Street Journal article, Airbus Harnessing AI in Bid to Save Millions on Finance Tasks, caught my eye due to one acronym – AI. And as usual, the sub-title is a great summary of the article:
The aircraft maker’s Americas unit is digitizing the approval of expense reports and payment of invoices.
After reading the article I realized it is a good case study of how to succeed with marketing new technology to an “old” company. I’ve added my comments after each quoted section of the article.
Airbus SE is using artificial intelligence to squeeze cost out of its finance function, an experiment launched in the aircraft maker’s Americas division that could save the corporation millions of dollars annually if rolled out in other regions.
Notice how this is framed as an experiment, or as we mentors would call it, “a pilot.” Note this is a geographically defined pilot, which is a good way to run a pilot as you aren’t having to deal with multiple languages or currencies from an international pilot.
The new process was deployed first in the Herndon, Va., headquarters of Airbus Americas. It has since been rolled out in most of the division’s other offices in North America.
Note how the companies first did a pilot in a single office before deciding to roll it out across North America. You want to test in the smallest meaningful unit of the business. Meaningful to both you and the client. Beware of scope creep!
It’s one of the latest examples of how companies across sectors are digitizing operations to increase efficiency, reduce human error and free up employees for tasks that require more human judgment, such as strategic planning, analysis and audits.
The author has done a great job of summarizing the pilot’s benefits to Airbus in one sentence. You need to do the same for your pilots!
“Companies can now automate highly repetitive activity at a lower cost with a higher degree of accuracy,” said David Axson, head of the CFO consulting practice at Accenture Strategy, a unit of consulting firm Accenture PLC. “This especially applies to high-volume-use cases like accounts payable.”
AI is just beginning to be used in professional services like accounting, so the quote from David Axson is another example of encapsulating the benefit of using AI in finance from a domain expert.
Manually combing through every line of a single expense report could take about an hour—more, if the receipt was in a language foreign to the reviewer. More still if there were red flags, such as missing receipts.
Sometimes reviewers took shortcuts, such as going on trust and approving an expense associated with a foreign receipt they couldn’t understand, to get through a pile of reviews. That could lead to errors, Mr. Masci said.
These are two generic benefits of automation: far times faster than manual processing, with far fewer errors. Founders need to apply these generic benefits to the specific problems of their client, as Mr. Richard Masci, the head of financial system services and compliance, at Airbus Americas has done. Airbus has just become a reference client for AppZen! Make sure your pilot agreement gives you the right (but not the obligation) to publicize your pilot after its successful completion.
The average time between submission to approval has gone from a couple weeks to a few days, and the workload for human reviewers has been cut by more than half, Mr. Masci said. Over time, the system will detect patterns to process information faster and more accurately.
N.B. how Mr. Masci has quantified the benefits to his company. Clients need to understand both the qualitative and quantitative benefits of your product. It would be interesting to know if AppZen and Airbus set quantitative goals for the pilot. It sounds like if they did they were met or exceeded.
The success of the expense-approval project also could pave the way for other digitization efforts outside of its finance function, Mr. Masci said. Which is why the expense-approval process is so important—it helps the company grow accustomed to the technology.
This may have been the way the pilot was positioned, if not it should have been!
Airbus initially had to get comfortable with the idea that humans aren’t viewing every line of the invoices or expense reports they’re approving. But trust in the new system was quickly earned: Mr. Masci said there has been a 70% reduction of human-introduced errors. He’s shooting for 90% in 2020.
Again Airbus is focused on quantitative measures of success, not a surprise in a financial division. But also notice that there is a need for continuous improvement. Just because the pilot went well, AppZen can’t rest on their laurels.
“The AI is not here to lay off, but basically to reshuffle activities,” Mr. Masci said. “We’re planning on reusing resources in a smarter way.”
Finally Mr. Masci assuages the fears of employees who may worry about losing their jobs to AI. Any founder selling products using AI needs to be aware of employee, and especially union, fears of layoffs and address them head-on from the get-go.
If I was AppZen I might try to recruit Mr. Masci away from Airbus, he seems to have a very high level of customer understanding of the benefits of their product and great ability to communicate it 🙂