Digital transformation is now a necessity for all facets of business. If your finance function is yet to be disrupted, it won’t be long before it will and if you don’t lead the change yourself, someone else will. But many are still grappling with what exactly digital transformation means and how it can enable businesses to reimagine their finance function.
Put simply, digital transformation is the use of disruptive technologies – such as the cloud, Artificial Intelligence (AI) and automation – to transform the way organisations operate and service their customers.
The cloud matters
The cloud is a real dealbreaker. It gives visibility and control into key business processes which, with ongoing Brexit talks creating a level of uncertainty, will help finance teams to track and manage spend more effectively in an ever-changing business landscape.
It can reduce data input and improve reporting accuracy with automatic ledger updates as well as enable users to conduct varied and detailed financial analysis of items, jobs, projects and departments. The cloud can even give CFOs visibility across the entire business to refine strategies and reduce operational costs. This addresses the painful issue of entire departments working in silos and improves collaboration as well as support for other key departments that rely on up-to-date and accurate data to help them make better, more timely decisions.
The analysis is delivered in real-time and with easier access from any location, at any time. It helps users instantly access, store and share financial information across multiple devices and platforms, reducing the over-reliance on spreadsheets and other ‘systems’.
AI applications, on the other hand, can automate repetitive and mundane tasks, freeing people to deliver more valuable roles while driving productivity and efficiencies. And automation helps businesses recharge the value in their organisation by introducing intelligent process efficiencies to enable staff to focus on value-added activities such as analysis around trends, forecasts and developing creative new solutions and services. It can also help companies comply with different types of financial legislation.
It’s these disruptive technologies that are changing the role of the CFO – freeing them from administrative tasks and giving them the opportunity to drive digital transformation.
People matter too
Emerging technologies have been adopted in some areas of the business but, according to a report by Deloitte, only 42% of CFOs said their finance team is knowledgeable about them. Focusing purely on technology is a misconception with regards to ensuring the success of digital transformation. It also requires a change in culture, structure, processes and, critically, personnel. To be fully digital, CFOs need to ensure they are rethinking and refreshing their existing business models, but also the people they hire and the way they work.
Many employees may be wary of a digital shift coinciding with fewer jobs in the finance function – but they needn’t be. Rather than seeing it as a threat to their jobs, digital transformation can positively impact finance teams by driving productivity and allowing them to be more influential in both strategy and decision making. People should be freed up to work on higher value tasks, for example creating insight from ‘connected’ data with reporting that is (near) real-time, rather than waiting for month end. Furthermore, a formal digital strategy shouldn’t mean companies get carried away with making digital technology changes for change’s sake.
Companies should start with the positive impact they want to achieve in three areas:
- the functioning of their accounts team or accounting practice to save time or remove manual tasks
- the ability to provide organisational leaders with business and financial insight they need for better decision making
- the impact the financial/performance insight can deliver and how it can enable the business to stay one step ahead of their competition.
This is where the CFO or financial leader of the accounts team needs to work closely with the CIO or CTO – where technology and financial practices collide in the most positive, connected way – to agree, for example, what technology changes need to take place with what investment.
Armed with so much data at their fingertips, the ‘connected CFO’ is in prime position to provide the rest of the board with meaningful and insightful data analysis and act as a key adviser to the CEO. CFOs that rise to the challenge will be able to help operations make better decisions fast and, through automation, their time will be freed up to redeploy smarter ways of working.
Taking the lead
The bottom line is that digital transformation is a journey, not a destination. It does not mean going from one state to another in a single project. It’s more about getting to a state where a company can continually adapt as technology develops to remain agile and open to change.
However, with the existing IT infrastructure of many companies, this isn’t possible. Archaic technology and processes don’t allow for companies to continually evolve. So digital transformation will require incremental changes. Simple shifts from moving from paper to using digital processes, using workflow software to prevent bottlenecks and breaking down the barriers of communication between different departments are just some ways businesses can make a digital transition happen successfully. Whether hiring a chief digital officer or empowering the CIO or CTO, someone must take the lead to oversee the digital shift in every function within the business. That someone can and arguably should be the CFO, leading the way to make the finance function digital.
What’s clear is that it’s no longer an option of whether to incorporate digital technology into the organisation – it’s a necessity and the question is when to make it happen. CFOs must now rethink the role of their finance department. Take those first steps now and they’ll overtake their lagging counterparts in the years to come.