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Corporate Internal Auditing And Innovation For The ‘G’ In ESG; A Close Look At Honeywell’s Transaction Monitoring Platform, Based On Forge

Corporate Internal Auditing And Innovation For The ‘G’ In ESG; A Close Look At Honeywell’s Transaction Monitoring Platform, Based On Forge

Now five years into Honeywell CEO’s tenure, it is evident that Darius Adamczyk’s leadership has put the company on a new trajectory. The company, operating in many different and important market segments, has reflected on its CEO’s vision for ‘BTIs’, – Breakthrough Initiatives. The five publicly known BTIs share a common path: incubation of innovation and tech alongside substantial R&D followed by growth that reaches critical mass. How critical? All ‘BTIs’ must have a sales target of more than $100M within three years of entering execution, according to Honeywell.

One of those BTI’s revolves around ESG. But the category is not just about climate technologies and environmental or energy controls. In fact, the Governance component in ESG benefits directly from some of the most advanced technology developed at Honeywell, – Forge.

Over the years, I’ve been particularly intrigued and impressed by the company’s Honeywell Forge architecture, an Enterprise Performance Management (EPM) platform designed to help businesses streamline and improve operations within their facilities.

Last year, I had a great conversation with the Chief Product Officer of Honeywell Forge, David Trice. I was quite taken with his vision of a facility manager being able to keep a building (or many of them) up and running from the comfort of a coffee shop on a smartphone. It’s not IoT, but it is related—EPM does leverage data from IoT sensors. However, Honeywell conceptualizes EPM as something more akin to a digital transformation strategy for improving efficiency and streamlining operations across office buildings, manufacturing facilities and supply chain. It aggregates information related to facility performance, sustainability goals, energy optimization and much more and then presents it in a big picture format for executives and other decision-makers. I’m glad the company looks at it like that because, in the end, that is what matters most to customers.

That’s a cursory look at Honeywell Forge. Today, though, I’d like to drill down on something intriguing Honeywell has built, based on Forge, to aid in its own internal auditing and governance compliance through transaction monitoring processes. Honeywell’s Continuous Assessment Monitoring System, or CAMS, leverages AI to detect fraud across the enterprise. I talked with Amanda Sabates, VP of Corporate Audit for Honeywell, about the solution and wanted to share some takeaways from our conversation.

CAMS—what problems does it solve, and how does it work?

Like many large enterprises, Honeywell generates millions of data points each year. This scale is simply impossible to oversee manually, especially given the small percentage that ends up being suspect. Regardless, businesses are still on the hook for fraud detection and prevention in the eyes of regulators, and the penalties and fines for non-compliance are no joke.

This business process has long been ripe for digital transformation. The last time I did an internal audit, if I remember correctly, was during an internship in 1987, and I can attest I did not have the patience for it. CAMS resulted from Sabates’ frustration with the process after assuming her role at Honeywell. She went looking, thinking there would already be a tool on the market designed to address it. However, she could not find anyone making a tool quite like she had envisioned. She turned to the Forge team, who quickly built out the solution that would become CAMS.

At the heart of CAMS is data analytics. By running rule-based and machine learning algorithms on data gathered from multiple sources across Honeywell, CAMS can continuously monitor transactions, filter out extraneous data and focus on actual anomalies and risks. All the while, the Forge-based CAMS engine is constantly learning to stay on top of emerging threats. It offers real-time contract compliance monitoring capabilities, which operate at scale and deliver proactive alerts to Sabates’ team as issues arise. Lastly, it presents all this good stuff via a “persona-based intuitive user interface,” providing an executive dashboard view of the organization’s risk profiles.

Broader appeal?

Given how well CAMS appears to be working for Honeywell, I would love to see the company make it more broadly available to external customers. As discussed earlier, this is not a problem limited to Honeywell. I believe other large enterprises would jump at an application that promises to reduce the steep penalties and fines associated with compliance and fraud-related risks. Sabates can’t be the only audit professional to notice the shortage of options available.

In addition to addressing a common industry pain point, I believe it would also just be good business for Honeywell. While there are products on the market that cater to e-commerce and mobile fraud, the large enterprise space remains largely untapped. With the global fraud detection and prevention market currently valued at $17.33 billion (and continuing to grow), this seems like a no-brainer way for Honeywell to tap into the action.

Wrapping up

CAMS looks like another excellent example of the power of Honeywell Forge and its EPM capabilities. Fraud detection and prevention may not be the sexiest use of AI and machine learning, but it’s a very ripe niche for digital transformation. I believe CAMS represents one of the central promises of digital transformation. With the proper technology investments and upgrades, you can leverage the business data you’re likely already generating and transform it into better efficiency and savings. It’s hard to argue with that.

Note: Moor Insights & Strategy writers and editors may have contributed to this article.

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