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Organizational management is a vast and complex field, and the diversity of software available to support operations is remarkable. Each type of software plays a unique role, serving specific needs. Therefore, MyABCM stands out as a specialized solution that excels in addressing specific challenges of cost and profitability management in companies, not as a substitute for BI tools, despite having embedded BI to benefit companies without a BI solution.

Purpose: difference in function and focus

While BI generates dashboards that merely compile and display information obtained from other software and data sources, MyABCM processes and transforms information cubes, cross-referencing and calculating from various sources to then generate new data that can serve as a basis for cost and profitability management, providing vital reports for decision-making. Thus, it plays a more strategic role, offering features that enable understanding the actual costs of the business across different dimensions, such as channels, customers, activities, and specific products, etc.

In other words, the goal here is to minimize the use of cost allocations throughout the organization and, consequently, eliminate the terrible distortions linked to these allocations that can be very dangerous for companies, impacting various managerial decisions on pricing, sales commissions, discounts, etc.

A BI, on the other hand, seeks existing data in the organization such as Accounting Accounts, Production and Billing Volumes, periods, and others, and presents this information in an organized and didactic way. However, note that here there is no transformation of information, and therefore, the allocations continue to occur. For this reason, Prof. Bala Balachandran from Kellogg University in the United States often comments that “these increasingly sophisticated BI systems allow extremely misguided decisions to be made very simply and quickly!” which is a danger!

Let’s see an example:

Imagine a factory that produces various products from the same raw material: plastic. The ERP records data such as the value of input purchases, payroll, accounting entries, production and billing volumes by product and customer. Potentially, we have here a flawed cost model, since allocations were used for the costs of support areas and, although we know precisely the billing customer by customer, this information is of little use when we want to understand the result customer by customer, after all, we do not have information on the “costs of serving”, we did not allocate marketing and sales expenses for these customers and channels and we do not even know to which areas the IT expenses are being allocated in the organization.

MyABCM, in turn, allows for a sophisticated modeling of costs and profitability, which essentially consists of designing a structure where the various accounting accounts of the company are allocated using allocation criteria that make sense and respect a cause-and-effect relationship through multiple levels until reaching the dimensions necessary for the client to manage their company. These dimensions may include Products, Customers, Channels, Markets, Projects, Businesses, Segments, etc., and also include the costs of support areas. In this way, we have a complete snapshot of costs with full traceability that allows managers to make the best business decisions based on facts.

And if you already have or intend to use a BI, do not worry. MyABCM integrates with all of them.

Implementation: ease and focus on cost modeling

MyABCM stands out for its ease in the process of construction and data loading in the cost modeling structure. While BI software generally requires complex and extensive configurations, MyABCM is a ready-made calculation engine that requires only parameterization, without the need for development, simplifying implementation.

Functionalities: what does MyABCM do that bi’s don’t?

Powerful Calculation Engine

MyABCM has a robust calculation engine, optimized specifically for the requirements of cost and profitability management. Designed with a specialized distribution mechanism, it is capable of in-memory calculations, optimizing appraisal time.

Scenario Creation

The scenario-building function allows users to create and explore various hypotheses, providing a broader view of the financial implications of different situations.

Push and pull simulation

Within the scope of scenario simulations, we have another important differentiator of MyABCM: push and pull simulations. The push simulation involves the sequential propagation of changes in variables throughout the model, to understand what the final result would be if some variables were changed. The pull simulation, on the other hand, goes back to identify the initial conditions necessary to achieve specific results, identifying bottlenecks and capacity constraints, and acting as a true sophisticated planning component in organizations.

This approach provides a deeper insight into the financial implications of different scenarios, allowing not only to anticipate changes but also to retroactively understand the factors that led to certain outcomes. This capability goes beyond the possibilities of BI’s, which do not perform such detailed and sophisticated analyses.

Cost monitoring:

MyABCM offers detailed cost monitoring in different contexts, including Actual, Budgeted, Standard, and Goal, providing a holistic view of financial performance.

Reciprocal allocations:

MyABCM is the only solution on the market that manages reciprocal costs in all modules and with optimized performance at the computer processor instruction level, an essential resource in interdependent organizational environments. By allowing allocations between sectors that share services and resources, MyABCM offers a more accurate and realistic view of costs.

As an example, imagine here that the IT area works for HR and also for Production; already the HR area also works for IT and for Production; note that between HR and IT we have a simultaneous cost allocation that must be calculated in order to avoid distortions in costs – MyABCM deals with this transparently and with extreme agility.

This process goes beyond the cost calculation tools offered by BI’s. The ability to handle interdependencies between sectors, essential for the financial health of the business, is not contemplated in BI’s, precisely because it does not align with their objectives.

Reports: a detailed and customized view

BI software is powerful in generating reports. However, they depend on other tools to generate advanced calculations for cost management. MyABCM, on the other hand, offers the ability to create specific reports, tailored to the needs of cost and profitability management of the organization. This allows for a more in-depth and targeted analysis, optimizing the decision-making process.

Moreover, MyABCM offers integrations with other systems, such as ERPs and BI’s themselves, facilitating use in conjunction with various tools employed in the organization.

Ultimately, when choosing between BI software and a specialized solution like MyABCM, organizations should consider their specific needs for cost and profitability management. With its focused approach, advanced functionalities, and ability to provide precise insights, MyABCM stands out as a strategic choice for companies seeking more accurate and efficient financial management.

Learn more about how MyABCM can help your organization. Fill out the form below and talk to our experts!

There are various system options for cost calculation in SAP, varying in value and features.

In this article, we will introduce a Brazilian alternative that not only integrates seamlessly with SAP but also specializes in cost and profitability calculation, offering numerous advantages for your organization.

MyABCM: available on the SAP Store

For companies looking to optimize cost calculation in SAP, MyABCM stands out as a specialized option with many attractive features. Available on the SAP Store, the system integrates smoothly with SAP and offers a series of functionalities that allow companies to get a snapshot of their cost structures, simulate scenarios, and make more confident decisions.

Benefits of MyABCM

MyABCM offers a series of advantages for companies wanting to efficiently calculate costs and profitability:

Cost-Effectiveness for SAP cost calculation

While many available solutions may represent a significant cost, MyABCM is more affordable, delivering valuable and efficient features. This makes it an attractive option for companies of various sizes, enhancing the return on investment.

High Traceability of Costs

MyABCM is notable for its ability to provide a high degree of cost traceability. This is essential for companies that want to understand the origin of their expenses, optimize pricing, comprehend the role of each product, service, and customer to the organization, and make informed decisions based on accurate data.

Agility in Calculations and Information Availability

The ability to gain insights in less time is invaluable for companies that need to make agile decisions in a dynamic business environment. One of the major benefits of MyABCM is the speed of implementation, calculations, and information availability, combined with smooth data integration between SAP and its system.

Used in Over 50 Countries

MyABCM is used by large companies in more than 50 countries to calculate costs in SAP, covering a wide variety of sectors, including banking, industrial, governmental, healthcare, and many more. This global adoption is a confirmation of its effectiveness in meeting the needs of organizations of all sizes and in different segments, with flexible tools that adapt to the specifics of each business.

Optimized cost management on the SAP Store

For companies looking for specialized solutions to enable integrated cost management within the SAP ecosystem, MyABCM stands out for being accessible and offering functionalities specifically developed to optimize the identification and calculation of costs, with excellent cost-effectiveness. Make this strategic decision: fill out the form below and speak with our experts.

Cost management is an essential but often complex discipline that challenges both students and business administration professors. Going beyond theory and showing how the process is done in the reality of an organization may not be an easy task, but it adds value to teaching and helps prepare students for the realities of the job market.

Therefore, we have developed our academic program with the aim of promoting good practices in cost management and helping educational institutions prepare their students for professional life. See what Professor Alex, who uses MyABCM at Universidad Católica Boliviana San Pablo Regional La Paz, has to say.

MyABCM in the Classroom: A Revolution in Teaching

“Over the past few years, I have been using MyABCM to teach cost management to my students. This program has completely transformed the way I present and analyze cost information in the classroom.”

One of the key features of MyABCM is the ability to create customized cost models that simulate real businesses. Professor Alex emphasizes, “I can configure different costing systems, such as job order costing, process costing, and activity-based costing. This allows students to experiment with different costing strategies and understand the financial impact of each decision.”

Intuitive Interface and Ease of Use

MyABCM stands out for its intuitive interface and ease of use, even for students with little experience. The Professor emphasizes, “The platform generates automated reports and charts that facilitate the analysis of results. This helps students develop critical thinking skills and interpretation of accounting data.”

Practical and Interactive Learning

In summary, MyABCM has significantly improved the effectiveness of Professor Alex’s classes. He highlights, “It allows students to learn by doing, rather than just reading texts and abstract theories. I would definitely recommend this innovative software to any cost accounting lecturer looking to make their classes more interactive and engaging.”

Elevating Cost Management Teaching

Professor Alex’s testimonial highlights the transformative impact of MyABCM on cost accounting teaching. By providing a practical and interactive experience, our platform not only simplifies complex concepts but also inspires critical thinking and prepares students for the challenges of the professional world. Together, we are raising the standard of cost management teaching, empowering the next generation of financial professionals.

In the dynamic landscape of education, innovative tools play a crucial role in enhancing teaching. In this article, we delve into the experience of Professor Laura Ghezzi, a Certified Public Accountant with a degree in Administration, who chose MyABCM to enrich her classes on Costing and Activity-Based Management.

MyABCM in Classrooms: A Natural Choice

Professor Laura Ghezzi shared with us why she chose MyABCM for her classes: “In the Costing and Activity-Based Management course, the professors were already familiar with the MyABCM tool from previous implementations in professional development and its previous academic use. This made it the first choice when thinking about a tool that demonstrates the application of the specific theme of the course.”

MyABCM’s Real-world Experience: An Enrichment for Students

One of the main contributions of MyABCM to Professor Ghezzi’s classes is its ability to provide students with a concrete view of the implementation of ABC costing in business practice. “Being able to observe firsthand how the ABC system is implemented in real life is very enriching for students. This allows them to have a concrete idea of its application and the possibilities for subsequent analysis based on the data loaded into the software.”

Tangible Support for the Teaching and Learning Process

When asked how MyABCM supports the teaching and learning process, the professor emphasizes: “In the course, we navigate directly through the tool in a case application in one of the classes. In another, we show the different tables and graphs obtained for the analysis of information for decision-making.”

MyABCM at the Forefront of Business Management Education

Professor Laura Ghezzi’s experience highlights MyABCM as an essential tool in her cost management teaching process. By providing a practical perspective on ABC costing, MyABCM not only enriches students’ learning but also offers a tangible approach to understanding and applying concepts.

Professor Ghezzi’s commitment to choosing a tool that not only meets academic needs but also has practical application in the professional world positions MyABCM at the forefront of business management education.

Seeing our partners thrive by implementing our solutions fills us with satisfaction. Today, we are pleased to share the inspiring testimonial of Freddy Araque, Co-Founder of Ebitda Group.

The company, comprised of professionals with extensive experience in countries such as Peru, Chile, Argentina, Bolivia, Paraguay, Brazil, Colombia, and Mexico, is headquartered in Quito and has a client network that extends beyond the borders of Ecuador. See what Freddy Araque says about our partnership:

“The strategic alliance we maintain with MyABCM has allowed us to stay ahead of the regional competition regarding Cost, Profitability, and Performance Management. Its specialized technology has facilitated the support of our clients in their efforts to assess, quantify, and execute strategies, allowing for consideration of historical trends and fostering future projections.

The different business sectors in which we have carried out joint implementations have experienced a transformation of their cost, expenditure, and indicator information, which have become true management insights that support decision-making. Without a doubt, the future of finance is connected to Industry 4.0 through agile processes, use of analysis, and integration of financial, commercial, operational, and administrative information sources and, for these challenges, we see MyABCM as the ideal technology to combine the best practices related to Performance Management.”

This testimony reinforces that, together, we have transformed the cost, expense, and indicator information of the various business sectors into real management insights that support strategic decision-making. And the support of partners like Ebitda Group is indispensable in this process. Through this partnership, we have brought about a notable change in the ability of more organizations to understand and use their data to drive their business growth.

We are committed to working closely with Ebitda Group and other partners to drive our customers’ business transformation, providing innovative solutions, exceptional support, and real results. Together, we are prepared to face the challenges of the modern business world and embrace the opportunities of the digital era.

Parametrus, a Brazilian company based in Porto Alegre, with a global reach, is a Platinum Partner with over a decade of work alongside us and has been a key player in the marketing of our solutions. Through this collaboration, customers from multiple segments and of varying sizes chart their strategies and make decisions based on accurate cost and profitability information generated by our solutions.

With access to advanced resources, these companies can solidify their presence in the current highly competitive business environment. The accurate information on costs and profitability provided by MyABCM solutions, with the technical support of Parametrus, allows organizations to make managerial and operational decisions assertively, in addition to enabling the implementation of actions to maximize profits, expanding their competitive advantage.

Therefore, we are very happy to share the testimony of Rodrigo Campagnolo, Managing Partner at the helm of this valuable partner:

“We have been partners of MyABCM for over 10 years and the use of its solutions has allowed us to model complex cost and profitability management systems, capable of adapting to the operational reality of any company. The tool allows us to use different costing methods, according to the operational needs of each company, consolidating everything into an integrated model for analysis and decision-making. In addition to this, the competence and dedication of the MyABCM team facilitates our work and helps us to ensure customer satisfaction.”

With the support of Parametrus, we have taken our solutions to more customers and new market segments, always delivering together expertise in cost and profitability management and a differentiated service. As a result of this collaboration, year after year we share knowledge, strategies, and of course: a lot of growth!

We are proud to be part of this journey of success and we reaffirm our commitment to continue providing innovative solutions and exceptional support for Parametrus, its customers, and all of our partners.

There are many challenges to pricing BPO services, as the outsourcing company practically absorbs its clients’ costs with the promise of reducing them. This is why it is essential for BPO companies to be able to visualize and properly control their own internal costs.

Especially because it’s an industry with few entry barriers, where competitiveness tends to grow. In such cases, the tendency of organizations in the sector to resort to low prices as a competitive tool must be resisted. Incorrect pricing, neglecting cost information, makes BPO companies highly vulnerable to financial difficulties and compromises the quality of the services provided.

The importance of cost management for BPO companies

Many management challenges lead companies to adopt cost-cutting measures. In this scenario, costs are generally selected on fronts that supposedly don’t deliver direct value to service users, in an attempt to reduce the impact of these cuts.

However, what we observe in practice is that this analysis is often done incorrectly when not well supported by management models suitable for the activities performed. Therefore, regardless of their niche of specialization, companies that provide BPO services need to implement cost management tools to ensure that their rates are set correctly and to avoid damaging the service when the need arises to reduce costs.

It is essential to establish standards capable of identifying the different costs related to each of the organization’s activities, and then allocate them properly and set prices for the services offered based on the resources they consume. In this way, it is possible to price the BPO service with adequate profit margins and maintain the company’s financial health.

Main costs for BPO companies

The costs of a business can vary significantly, even within the same sector. However, for didactic purposes, we will illustrate below some of the main costs involved in the operations of a Financial BPO company.

Costs of Financial BPO companies

Infrastructure, rent and space

The cost of physical space depends on several factors, such as location, the number of workstations (and the space required for each one), and decompression areas, restrooms, among others. All these factors must be considered as cost generators and the impact of each one on the quality of service provision must be assessed in order to understand when it is possible to reduce costs on this front and when it is worth investing in this sector, even if the relative costs increase.

In the case of organizations working with a remote model, it is necessary to observe the costs generated on other fronts, such as technology, staff allowances, etc.

Energy

We present energy costs separately from other infrastructure-related costs because they can be substantial and often offer opportunities for reduction. Depending on the number of employees and workstations, as well as the type of equipment used, energy costs can vary significantly.

Staff Costs

Financial BPO companies must pay attention to personnel costs. The activities of each department or customer service cell must have their employee costs carefully tracked, especially since the workforce required to provide a service, when underestimated, leads to a drop in productivity that impacts the profitability of the business.

Here, it is worth noting the importance of listing all the costs of labor obligations, which extend far beyond the monthly salary. Training, vacations, Christmas bonus, benefits, taxes and bonuses need to be accounted for properly so as not to affect the pricing of services.

In this context, it is necessary to establish methods for monitoring productivity and properly estimating the size of the team, so as not to waste resources or underestimate the workforce needed to deliver quality services.

Technology: equipment, software, and obsolescence

Technology costs can be some of the most difficult to measure and control, as they are not limited to the initial investment in equipment, but also its maintenance, replacement, upgrades, etc. It is also necessary to account for the costs of the software used in the organization’s activities, as well as making the correct relationship between technology costs when assessing the possibility of expanding the team, for example.

Indirect costs (back office)

Indirect costs are some of the most challenging for organizations because they don’t have such an explicit relationship with the company’s activities. However, tracking and allocating them correctly can be the difference between a profitable or loss-making service for the organization.

Learn more about overhead management!

Cost drivers for BPO companies: a structure for every business

Here you have seen in general terms some of the main costs to be taken into account when pricing BPO services. However, it is important to note that each organization will have different cost drivers, depending on the various activities carried out internally.

Therefore, correct pricing for BPO, with a guarantee of profitable margins, depends on the application of studies to understand how your organization, with its specificities, applies resources to different activities and services.

Do you need expert help identifying costs and pricing your BPO services? Fill in the form and talk to our team!

Cost reduction in companies is always a goal, but it is becoming an urgent need as organizations’ margins shrink worldwide. Some contributing factors include government pressures, rising taxes, new competitors, increasingly demanding customers, issues now such as ESG (environmental, social, and corporate governance), shortages of skilled labor, and supply chain problems.

Therefore, reducing costs and expenses is the top priority for companies. And when we talk about reducing costs, we immediately think about laying off employees.

What is the difference between costs and expenses?

Before we start, let’s clearly understand the differences between costs and expenses. Then, we will discuss the reasons why we are looking to make a cost reduction in companies.

What is cost?

Cost is any value applied in producing a product (in the case of manufacturing companies) or in providing services (for service organizations). Some examples of costs are labor, raw materials, inputs, as well as the amount spent on the production of this product or the provision of this service with electricity, maintenance, depreciation of machinery and equipment, cleaning, and conservation materials, among others.

In addition, costs can be classified into:

What is an expense?

Expenses include all the amounts spent by the company to keep it running.

Usually, the expense is related to everything spent in the area of sales, finance, administration, human resources, systems, marketing, and the BackOffice in general. Therefore, expenses are a type of expenditure that has no direct connection with the company’s “core” activity, such as producing goods or providing services.

However, even if they do not contribute directly by generating new items to be marketed, expenses play an important role and certainly their use can have an influence on increasing the company’s revenue.

And in turn, expenses can be classified as fixed or variable:

In this context, it is worth noting that expenses are costs and expenses in general. And typically, when someone talks about reducing costs they are talking about “reducing expenses”, but in a “colloquial” way. Thus, it is worth remembering that it is also essential to analyze the possibilities of reducing expenses in the organization.

Want to understand in more depth? Click here and read 5 tips to improve your expense and spending control.

Why reduce costs?

The question above is very simple, right?

But its answer is inversely proportional, proving to be extremely complex.

Reducing costs is one of the greatest allies of profitability. Every company seeks to reduce costs without measuring efforts, but as we mentioned, it is a very complex task. We must be aware that when reducing costs, we must always be cautious not to cause negative impacts and end up in deficit.

To better understand how to adopt a cost reduction strategy without negatively impacting your results, click here and read our full article.

Reducing costs in companies is not an easy task

Were companies that attempted cost-cutting satisfied with their initiatives?

Not always: research by the US Conference Board found that of all the companies that have tried to cut costs:

A study by Deloitte showed that 75% of companies that laid off employees to reduce costs had to rehire others for the same positions within one year.

Another survey, this time by McKinsey, showed that only 10% of cost reduction projects were successful three years after implementation.

But why did these reduction initiatives fail? Surely because of the lack of a better understanding of how resources were consumed in organizations. The natural consequence of not measuring properly is the inability to manage well.

How to reduce costs in companies efficiently?

To solve this problem, see 8 actions that will reduce your costs and, consequently, increase your profits:

  1. Set goals
  2. Be careful with false impressions
  3. Analyze your costs in percentages
  4. Use a reliable recording system
  5. Re-evaluate your tax regime
  6. Learn to negotiate with suppliers
  7. Hire qualified professionals
  8. Invest in marketing actions

But the main lesson of all is: understand your costs.

Not understanding exactly how much a product, service, customer or channel costs ends up damaging the entire decision chain of companies! Definitions such as what prices and tariffs to practice, which customers to serve, what discounts we can grant and what commissions to pay our salespeople among many others go through a real understanding of costs and the ability to measure them properly!

Did you know, for example, that between 20% and 40% of products and services make a loss? And that 20% of customers are loss-making? See more on the subject in this article dedicated to service costs!

So, it raises the question: what actions will we take immediately after identifying bottlenecks in our organization?

Sergio Marchionne, the former CEO of Fiat/Chrysler, played a significant role in the company’s revival in the 90s. Besides being a great manager, Sergio Marchionne has always had a great sense of humor. After the launch of the Fiat 500e electric car (better known as the “cincoecento electrico”) Sergio went public and asked, “Please don’t buy our cincoecento!”.

A few months earlier the Fiat 500e had been launched with much pomp and circumstance, consuming many millions of Euros with the promise of being the great European competitor of Tesla and with the advantage of being extremely economical. The product launch experienced many delays, and when it was finally ready, only a few units were sold. Studies showed that the loss for each unit sold was 20,000 euros!

Undoubtedly, understanding costs and establishing strategies to control them are significant challenges in company management. And this cannot be overcome if we do not have a clear ability to make the best decisions, with well-defined methods, processes, and appropriate methodologies for the significant challenges that lie ahead.

Do you need help with cost reduction in your company? Fill out the form to talk to our experts!

BPCE is one of the largest banking groups in Europe. For this reason, it requires cutting-edge technological support, which is provided by Informatique Banque Populaire (IBP), one of the group’s affiliated entities. IBP’s role is to create innovative technology solutions that simplify banking processes.

In addition to developing information systems for the group’s member institutions, IBP’s experts are responsible for designing, testing, and launching IT applications across various business sectors, including consumer finance, trade promotion, leasing, and other related services.

Challenges in banking technology development

Managing the development of solutions in the banking industry, with its stringent requirements for security and usability, presents several challenges. In this context, IBP suffered from some difficulties associated with its billing model and a heavy reliance on Excel in its internal management activities.

Therefore, the institution sought a system that could meet these demands, optimize workflow, and fully automate the billing process.

The selection of MyABCM to adjust the billing model

Among the various options available, IBP selected MyABCM, based on its cost-effectiveness and the positive experience of BPCE in implementing the software.

Choosing MyABCM provided IBP with scalability beyond what Excel allowed. Additionally, it benefits from an optimized workflow on the platform that promotes user collaboration. Other significant benefits positively impacting the organization’s routine include scenario simulation, previously impossible with simple spreadsheets, and the ability of each operational department to analyze results confidently and reliably. Implementing MyABCM also enhanced data management security, reduced the risk of errors occurring, and increased team productivity.

Using specialized software for cost and profitability management, IBP now has a clear understanding of its costs and the impact of its business activities, linking cost sources to corresponding activities. The management team also values the increased control over refund and traceability resources, which are now acknowledged as valuable business assets, and experiences increased production capacity within the team.

ChatGPT has become a topic of discussion, especially in the business world. Entrepreneurs and professionals from various segments tirelessly debate about how it will impact the labor market and how it can help organizations lower costs thereby increasing profitability.

But the truth is that ChatGPT is only the visible portion of a large and constantly developing field that has been already in operation among us for a long time. If we investigate the history of artificial intelligence as they are known today, we will find their origins in the mid-1950s, when technologies such as the Logic Theorist, developed by Allen Newell and Herbert Simon at RAND Corporation in the United States; and the Perceptron, created by psychologist Frank Rosenblatt in 1957.

While the first reproduced human reasoning and problem-solving, even proving mathematical theorems, the second was a network of artificial neurons capable of learning, being one of the main precursors of Machine Learning, which is now the driving force of mechanisms such as ChatGPT.

Who is ChatGPT in the universe of AIs and what else is there beside it?

ChatGPT is a technology based on natural language processing (NLP), which enables it to understand text in multiple languages and generate natural language responses, without the need for specific programming to perform each task. In other words, it literally speaks our language.

And this is part of the reason it causes such a stir. Besides optimizing Web searches (posing a threat to powerful representatives of Big Techs, such as Google), promotes a conversational experience with the machine, without requiring the user to know any programming language. With the liberated access to its technology, those who are not feeling like the protagonist of a science fiction movie are living in the past.

But countless Ais work daily in other functions. In the financial market, for example, there are systems not only based on NLP but also on machine learning, fraud detection systems, as well as robo-advisors and trading algorithms. The latter two stand out because they act directly on transactions.

While robo-advisors offer automated investment guidance based on information provided by investors (being great allies for beginners in the financial market and for those who don’t have time to monitor the scenario), trading algorithms employ market data obtained in real-time to make critical decisions to buy and sell financial assets. This is possible because they are programmed to identify price patterns and market trends, enabling traders to make data-driven decisions and execute trades with much more agility and confidence.

And those who think this is new are wrong. The use of AIs in the financial market began in the 1970s, with systems like INGRES (Intelligent Graphic Reinvestment System). Developed by the investment company Dean Witter Reynolds (now part of Morgan Stanley, a world leader in financial services) it was a pioneer in the industry. By applying neural networks (in a Perceptron-like fashion), it analyzed transaction data and predicted market trends.

INGRA is no longer in use, but today systems like Sentieo, Kavout, Kensho, and Acorns are some of the AI technologies in application in stock buying and selling and investment advice.

What can we expect from the participation of AIs in the financial market and business environment in the coming years?

Amidst so many fears about information security (and even a possible machine revolution), it is difficult to predict exactly where these technologies will go and what role they will play in our daily lives soon. However, the market expectation is that their use will become more and more massive, as a tool to boost results and reduce costs in the medium and long term.

According to research by Market Data Forecast, the AI market in the financial sector is expected to grow at a compound annual growth rate of 41.2% between 2020 and 2027, jumping from $6.7 billion to $15.8 billion over the period. This is in line with research by Tractica, whose estimate is that by 2025, AI-mediated e-commerce transactions worldwide will exceed $36 billion.

This growth is a result of the increased efficiency produced by these technologies. Nasdaq itself applies AI algorithms to accelerate and reduce trading costs, taking transactions to a new level.

Of course, such an advance would not be restricted to the financial market. Research indicates that the use of these technologies can also benefit companies and that this is why they will also play a greater role in the corporate environment.

According to Accenture, the AIs applied to business management can reduce costs by up to 30% and increase revenue by up to 38% in 16 different segments, such as Education, Food Service, Hospitality, Healthcare, Wholesale, Retail, and Manufacturing, among others. A true springboard of profitability for organizations that invest in these tools.

And businessmen are already keeping an eye on this trend. From a complementary perspective, data from Forbes indicates that by the end of this year, business process automation with AI systems is expected to grow by 57%.

Looking beyond ChatGPT, it is easy to note that the use of Artificial Intelligence has already become a giant competitive advantage aggregator for businesses across all industries. Thus, it’s up to CEOs and CFOs to be on the lookout for ways to get ahead in this race, investing in solutions that can make their businesses stand out from the competition.