Corporate finance organisations are counting on digital transformation to improve customer focus, enhance strategic value and reduce costs, according to the 2019 Finance Key Issues research from The Hackett Group.
However, the research also found that finance organisations’ progress toward digital transformation has been slow, due to difficulties in adopting and implementing digital technologies. With finance expecting to see another year of cuts to budgets and staff, it must find ways to close the execution gap and harness digital transformation to improve productivity and effectiveness.
Adoption of new technologies
Digital transformation enhances finance’s ability to meet enterprise objectives. Digital tools such as robotic process automation (RPA) and cloud-based applications can drive down operational costs, while technologies like advanced analytics enable finance to fulfil its strategic mandate. Adoption rates for these tools are expected to increase dramatically over the next two to three years.
RPA in particular is quickly gaining traction among large finance enterprises, where the scale of business processes exceeds human resources. Adoption of RPA is expected to more than double from 38 percent to 86 percent in the next one to two years, with broad adoption skyrocketing from 3 percent to 55 percent. This suggests that finance is now making a concerted effort to eliminate errors and manual work and unlock capacity for knowledge-based activities.
Ultimately, the digitisation of finance operations is not just about improving efficiency, lowering error rates and shortening cycle times. It’s increasingly about restructuring the information value chain to produce more accurate data and deliver quicker insights.
The digital transformation gap
The question of whether finance will realise its goals in 2019 will be significantly impacted by its digital transformation progress. According to The Hackett Group’s research, digital transformation will have a substantial impact on finance’s talent needs, performance and service delivery model, as well as its ability to meet enterprise objectives.
However, progress towards digital transformation has been impeded by difficulties in setting a mature strategy aligned with the wider enterprise, an absence of adequate internal IT support, and a lack of resources. The introduction of new technologies associated with digital transformation is also causing a spike in cyber risk such as fraud or theft. But new digital technologies are still seen as enablers of streamlined business operations that boost competence.
Finance’s ambitious agenda
The Hackett Group’s research asked finance executives to rank the importance of business objectives that finance must support in 2019. Ninety one percent of finance organisations ranked digital transformation and cost-structure improvement as critical or highly important objectives.
Digital transformation is expected to have a significant impact on finance performance; nearly 90% of finance respondents also rated improving enterprise data and analytics capabilities as a critical or highly important goal. Businesses continues to demand timelier, more relevant and more predictive insight from finance to drive enterprise growth.
In the next two to three years, finance anticipates narrowing or closing the current gap between the maturity and alignment of its digital strategy. It will dramatically enhance its execution capabilities, and finally receive the critical IT support it requires. According to the research, finance is optimistic about its ability to overcome barriers to digital transformation. The Hackett Group is being engaged by organisations that are committed to making rapid progress and navigating these challenges.
The Hackett Group’s 2019 Finance Key Issues research, “2019 CFO Agenda: Building Next-Generation Capabilities,” is based on results gathered from about 150 executives in the US and abroad, most at large companies with annual revenue of $1bn or greater.