There is still a lot of hype surrounding digital transformation and many business leaders are looking at initiatives as a way to transform their organisations. However, with spending on digital transformation technologies expected to hit nearly $1.3 trillion this year, it’s somewhat surprising that the finance function often gets left behind. This leaves the department to grapple with cost, efficiency and productivity issues, while the rest of the company pushes ahead.
As the gatekeepers of key business data, it’s only right that the finance department should be utilising real-time information in order to drive the business agenda. Not only do cloud applications improve productivity but they also enable finance professionals to support the decision-making process and play a greater role in business strategy. However, digital finance is still an emerging concept and it appears that many CFOs are unclear where to start. With digital transformation well underway in other business areas, it’s time for finance departments to look more closely at the digital strategies which could make a difference to them.
Driving transformation though the finance sector
With the finance department more reliant on paper processes than most other business functions, it’s easy to see why digital transformation initiatives are sometimes lagging. Although there is a variety of cloud technologies available, the uptake amongst finance professionals is not as quick as it should be. Largely this is down to a heavy reliance on manual processes, which holds up the department’s ability to go digital. Interestingly, research by Gartner suggests that on average it costs between £4 and £25 to manually process an invoice – in some cases it can be as high as £50. With spreadsheets and paper processes still in use, many finance departments are losing money and efficiency gains when compared to their digitally native competitors.
Processes such as expenses management are particularly ripe for digital transformation and moving to a cloud-based system would not only address the problems associated with storing paper-based receipts but also the costs associated with doing so. Switching from a manual system not only helps staff claim reimbursements quicker but also alleviates the hugely time-consuming job of physically checking paper claims and receipts. Additionally, a digital system allows the finance function, in particular finance directors, to drill down into areas of expenditure and gain valuable insights into spending patterns and evaluate adherence to travel and expense policies.
However, it’s not just manual processes which hinder digital transformation, siloed systems also play a part. For those who have taken the plunge and invested in new technologies it can be disheartening to face disparate systems, which don’t talk to each other – especially when finance professionals find themselves replicating information from one system to another. The real key driver for successful digital transformation lies in the interoperability of systems, helping finance departments to pull together data and utilise it to gain new clarity of areas such as expenditure and debtor management.
As with any digital transformation strategy, organisations should not rush into deploying technology for the sake of it. Instead it’s important that the technology is carefully evaluated and process challenges are identified. By doing this, departments will establish whether technology can ease the burden and deliver a worthy return on investment.
Driving transformation from the top down
Transforming the way a business operates requires an element of cultural change that comes from the top down. One of the main reasons that initiatives often fail is because of poor leadership from the people who head up the business. If business leaders and members of the c-suite fight against new ways of working, burying their heads in the sand – then it’s likely that digital transformation projects won’t see the light of day.
According to Forbes, seven out of eight digital transformations fail. It’s true that change can be challenging for businesses, however, for progress to made, management needs to embrace digital strategies and incorporate technology into everyday business practices. There must be a consensus in the boardroom around what the transformational strategy will achieve – uncertainty will only lead to the feeling that a project hasn’t delivered on its promises.
It’s also important that employees are trained on how to use new technologies and encouraged to find better ways of working. Although keep in mind that good cloud-based solutions shouldn’t require any significant investment in staff training, so be wary of any providers that recommend this approach and look for software which is intuitive and easy to use.
Technology clearly plays a major role in transforming an organisation’s finance function, but without creating a supportive culture around transformation projects they are doomed to fail. Introducing digital initiatives takes more than just looking at a single department in isolation. For the finance function to succeed in its transformation efforts the whole business, especially senior management needs to be on-board. There are many exciting technologies that finance teams could utilise so it’s important that process pain points are identified and the technology is applied in an open-minded and collaborative way.