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MarketScreener Homepage  >  Equities  >  Euronext Paris  >  Airbus SE    AIR   NL0000235190


Real-time Quote. Real-time Tradegate - 09/19 09:21:02 am
122.99 EUR   +0.14%
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Airbus Harnessing AI in Bid to Save Millions on Finance Tasks

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08/19/2019 | 05:45am EDT

By Mark Maurer

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.

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.

"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."

Less than half of companies' accounts-payable activity worldwide is currently automated, Accenture Strategy says. That figure is expected to rise to 80% by 2025. Processing invoices and expense reports are prime targets for automation.

And that's where Airbus is setting its sights. Less than two years ago, four Airbus Americas Inc. employees would review about 25,000 travel-and-expense reports filed annually by employees in Texas, Virginia, Florida and Mexico, according to Richard Masci, the head of financial system services and compliance at Airbus Americas.

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. "Shortcuts for compliance purposes are not the best," he said.

Last year, Mr. Masci oversaw the transition to a review system that utilizes AI to review expense reports. Airbus turned to AppZen Inc., a San Jose, Calif.-based software company, for the new technology.

The system developed by AppZen matches reports against a repository of accepted vendors, expense types and amounts to spot anomalies. The technology examines items such as the identity of a vendor, the existence of venues such as a restaurant, the type of expense and the amount. It checks for receipts and it can recognize more than 100 languages.

Today, a human only needs to review details the system deems noncompliant, typically one or two lines in a 30-line report, Mr. Masci said. For example, Airbus employees aren't permitted to expense alcohol on business trips if it's not part of a meal. The AI approval system might flag when an employee files a dinner expense from a bar that doesn't serve food, something a human might not always catch.

If the report passes muster, it is automatically validated and payment can be initiated. The system flags noncompliant entries in a report as low, medium or high risk. Nearly half of all expense reports are deemed noncompliant, Mr. Masci said. High-risk reports are blocked from payment. A travel-and-expense analyst will then review those lines and contact the employee with questions. The employee either resubmits with the missing information or, if noncompliant, removes the line and resubmits.

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.

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.

In 2018, the first partial year of the technology's implementation in the Americas division, Airbus paid off its initial investment of $50,000 and pocketed about $50,000 more, Mr. Masci said. The division expects to save $100,000 this year and at least $200,000 in 2020 in the Americas. The savings come from the reduction of required worker hours and the increase in rejected expense payments. Mr. Masci predicts a stricter approval system will ultimately make employees more disciplined about how they file expenses, reducing the number of questionable expenses.

If Airbus opts to roll out the AI platform worldwide, "we are talking several millions [of dollars] in savings," Mr. Masci said. The European division, which is based in Leiden, Netherlands, processes closer to 500,000 expense reports each year, he said.

The initiative comes on the heels of a similar project intended to digitize invoice approvals. The company used scanning technology to automate a manual system that often required employees to work overtime to chase down missing information from invoices, a process that Mr. Masci described as "extremely painful."

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.

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.

The expense-report approval process in the Americas headquarters, which is currently about 53% automated, is expected to become up to 80% automated by the end of 2020. Mr. Masci doesn't foresee a time when the processes will be entirely automated, because there likely will remain a need for some human communication.

The company also doesn't plan to lay off any of the Americas workers previously tasked with the manual finance efforts, he said. Many have been reassigned to take on auditing or other financial work within the finance team, which expanded following Airbus' 2017 deal to take control of Bombardier Inc.'s CSeries jets, Mr. Masci said.

"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."

Write to Mark Maurer at mark.maurer@wsj.com

Stocks mentioned in the article
ChangeLast1st jan.
AIRBUS SE 0.33% 122.4 End-of-day quote.46.15%
AIRBUS SE 0.10% 122.98 Real-time Quote.46.28%
E.ON SE 1.12% 9.055 Delayed Quote.3.74%
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Financials (EUR)
Sales 2019 70 329 M
EBIT 2019 6 950 M
Net income 2019 4 731 M
Finance 2019 14 745 M
Yield 2019 1,74%
P/E ratio 2019 20,3x
P/E ratio 2020 16,9x
EV / Sales2019 1,15x
EV / Sales2020 1,06x
Capitalization 95 492 M
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Technical analysis trends AIRBUS SE
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Income Statement Evolution
Mean consensus BUY
Number of Analysts 24
Average target price 143,13  €
Last Close Price 122,82  €
Spread / Highest target 33,5%
Spread / Average Target 16,5%
Spread / Lowest Target -10,4%
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