Pharma Finance Transformation: Unleashing AI for Cost Efficiency and Fiscal Excellence
February 7, 2024
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10 min
The global pharmaceutical industry continues to face a myriad of challenges. From battling rising inflation, soaring R&D costs, and supply chain disruptions to increasing competition compounded by regulatory changes and increased compliance costs, the unpredictable environment persists.
This unpredictable environment has brought about increasing pressure on finance leaders in the pharma industry, making it imperative for them to have clear visibility into every cost item on their P&L, stringent control over their spending, and effective cash and resource allocation strategies in place. Alongside, as seen in most industries, the role of finance leaders is also undergoing a paradigm shift, evolving from a finance leader into a strategic business advisor, driving strategic decisions to drive business growth. All this is leading to a transformative shift in the finance function with greater adoption of digitisation and automation and innovative technologies like data and analytics, artificial intelligence (AI), particularly GENAI.
This guide will teach you how to use your spend data to transform your business for profitable growth.
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GenAI is reshaping every business function; the finance function is no exception.
Recent insights from a recent survey of finance leaders by research firm Gartner Inc. establishes this trend – 68% of finance leaders are using AI or plan to use the technology, according to a recent survey of finance leaders by Gartner, Inc.
The integration of GenAI in finance operations is becoming a tangible reality. GenAI is poised to reshape every facet of the finance function, be it financial planning, analysis, or execution, and bring about a fundamental shift in finance operations across businesses.
Driving cost efficiency has always been paramount and is among the top priorities for all finance leaders. AI-powered spend analytics solutions help finance leaders get real-time and granular insights into the organisation's spending patterns, identifying areas of unnecessary or excessive costs and opportunities for savings, thereby optimising overall spending. With clean data being the foundation for accurate analytics, these solutions have in-built data consolidation, cleansing, categorisation, and analytics capabilities, eliminating the tedious manual crunching process. These solutions help finance leaders track spending across various dimensions. No cost will go unnoticed, whether it's spending by department, cost categories, suppliers, or location.
Budgeting and Forecasting are two critical but complex functions. Traditionally, budgeting has been one of the most time-consuming and laborious activities for finance teams, demanding extensive hours and significant efforts to consolidate and get their underlying data right and understand historical trends to define future budgets and forecasts.
Also, gone are the days when an annual budget defined once a year served as the ultimate annual business goal. To define future-proof budgets and steer business growth, finance leaders need to have real-time visibility into the budget vs spend vs rolling forecast until the end of the financial year picture at all times to take timely decisions and actions. This is where AI-powered solutions can help. These solutions automate data consolidation and cleansing and provide a real-time comparison of spend vs budget vs forecast. These solutions also provide proactive alerts when spending crosses the defined budget thresholds. This visibility is invaluable as it empowers finance leaders to maintain fiscal discipline and ensure expenditures stay within planned limits.
These solutions can quickly analyse large volumes of financial data, provide predictive and prescriptive insights, and perform what-if scenario analyses, empowering financial leaders to make accurate financial projections, optimise cash flow, and redirect resources strategically.
Making the right financial decisions is critical for organisations; hence, many of the best finance leaders make decisions based on empirical evidence rather than intuition. Advanced AI-powered solutions empower finance leaders to process large amounts of data into granular multi-dimensional insights. But that's not all - these solutions can provide predictive insights, market intelligence and actionable recommendations, thereby empowering finance leaders to make relevant and effective decisions. What's more - you can ask a question and get the answer straight from your data.
Integrating AI solutions in financial management gives finance leaders visibility into historical trends and patterns. They can analyse large datasets and reveal unnoticed fraudulent or suspicious transactions. These solutions are equipped with what-if scenario modelling, enabling finance leaders to proactively identify potential risks and fraud and take proactive actions to mitigate financial losses. In addition, these AI solutions enable finance leaders to ensure the accuracy and integrity of financial transactions, especially in their accounts payable processes. With 3-way or4-way matching capabilities, these AI solutions quickly compare the details in the purchase order, the goods received goods note, and the supplier's invoice and contracts, thereby preventing overpayments, duplicate payments, and fraudulent transactions.
In many organisations, finance leaders often grapple with the challenges of working with a lean team and are constantly under pressure to deliver timely and accurate reports to the CEO and the Board with confidence.AI technologies help automate many manual tasks like data consolidation and analytics, enabling finance leaders to present real-time spending reports to the CEO and the Board at any time and be 'Boardroom ready' at all times. Automation of routine tasks also helps free up the team from the manual number crunching activity to focus on more strategic activities.
Using AI-powered document or contract analytics solutions helps automatically extract key contract clauses, obligations, and financial details from contracts and documents, ensuring accurate financial reporting and increased compliance. These solutions also provide alerts for contract renewals, expirations, and spending irregularities, thereby empowering optimal decision-making and timely action.
GenAI is set to revolutionise the realm of finance function in the pharma industry. While some finance leaders have already integrated this within their function, many still need to learn about its potential and ROI. This is where solution providers like Spendkey can help.
Spendkey's AI-powered spend strategy solution leverages data, market intelligence and machine learning to convert raw data and documents into insights and actionable recommendations, empowering finance leaders to drive significant savings, improve budgeting and forecasting accuracy, improve working capital and make optimal business decisions to steer the organisation's financial strategy with confidence.
One of Spendkey's success stories involves helping a pharmaceutical company realise £25M in savings through AI-powered spend analysis. To gain insights into the benefits delivered, read the complete case study here
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