Transcript | Achieving Digital Maturity in Finance – with Chelsea Black and Kizzy Gift

Hello. This is Kevin Donahue, a senior director with Protiviti, welcoming you to a new edition of Powerful Insights. Today’s topic is digital maturity in finance — or, more specifically, how more finance organisations are employing ERP systems, moving to cloud-based systems and going to analytics, and, with that, understanding the talent, management and risk management needs required with these major changes. I had the pleasure of speaking with two Protiviti experts on this topic: directors Chelsea Black and Kizzy Gift.

Kizzy is with the Business Performance Improvement practice at Protiviti. She specialises in finance transformation and change management within this solution. She works with global clients on finance and operational process improvement, project management, and change management. She has over 15 years of financial services knowledge, as well as expertise in other industries, including manufacturing, HR, healthcare and insurance.

Chelsea has spent the last eight years in the Business Performance Improvement practice at Protiviti. She has more than 12 years of professional experience. She partners with clients to improve overall operations, focusing on organisational, process and technology enhancements. She’s a subject matter expert in shared services as well as project and change management in the finance transformation space. Chelsea, thanks for joining me today.

Thanks for having me.

And Kizzy, great to speak with you. Thanks for joining us.

It’s a pleasure. Happy to be here.

I want to start our discussion with the current landscape in terms of digital maturity, including automation and finance. Where do finance organisations stand today when it comes to automating manual processes and capitalising on the capabilities of their ERP systems?

One of the biggest trends I’ve seen this year is implementation of ERP systems. From Sage to NetSuite to Oracle Workday, so many companies have reached out to us — all sizes, across all the industries, which is the crazy part because it seems as if COVID-19 really pushed companies to take this leap, get the budget, start these projects in implementing new ERP systems. That’s been the biggest trend I’ve seen in 2023. And there’s been a heavy focus on supporting systems like Blackline. And Blackline is a cloud-based system, and a lot of companies are finally switching to that cloud-based solution.

A few years ago, there was a lot of hesitation. People were uncertain of whether cloud-based solutions were going to provide that security. But you’re now seeing that a lot of companies are implementing Blackline. And Blackline is a system that automates and streamlines the reconciliation process for financial close activities. That’s what’s trending: Blackline and ERP.

In addition to that, we’re seeing companies take a deeper look at what their current workforce looks like. In addition to ERP systems and the focus on implementations and upgrades, we’re seeing finance leaders challenge the ways of working today. They’re taking a deeper dive at what their talent strategy is right now in their back-office finance space: Do they have scalability? Does their current environment, from both an organisational standpoint and an ERP standpoint, have the ability to transform their back-office finance team into what the strategic vision of the company is?

Usually, when we say digital or digitisation, we synonymously think of ERPs. But there’s a greater focus that also goes back to, what is the workforce? What does our talent pool look like today? We’re seeing an increased focus on that lens as well, which is beyond ERPs, and what are our ways of working today? Do we have the right people in place?

Talent is such a huge topic today in any function, so it doesn’t surprise me at all that finance organisations are looking at talent transformation in how they engage more of a digital mindset. Kizzy, let me ask you a little more about cloud-based accounting systems. We know they hold a lot of promise. What do you see as the advantages of these systems versus one that’s on-premises?

The cloud-based solutions offer organisations more flexibility overall versus having your local server that’s on-premise. For example, if you need more space or bandwidth, the cloud can meet that need very quickly, almost instantaneously, instead of going through a complex, time-consuming process because you’ve got to figure out the configurations. And those are sometimes costly upgrades to an IT infrastructure. As companies are growing and scaling in an effort to meet global demands, this is an important feature to be able to increase space and bandwidth, as well as a cost-effective feature, because you pay only for what you use so you don’t have to have a big bandwidth and you’re not utilising it. That’s one of the cost benefits of using the cloud.

It also allows for better decision-making and collaboration across the organisation because there’s mobility — employees can access the data more effectively everywhere and collaborate on that data. And as I mentioned earlier, security was a concern — it’s always a major factor going both sides of pros and cons — but the cloud has shown consistently over the last few years that it is a pro. Many executives have concerns of how secure the data is in the cloud, especially at the beginning. It’s often the number-one concern, and arguably, the cloud solution’s full-time job is to consistently and continuously monitor security, so it’s a lot safer than in-house systems today. They’re added security features like data encryption and disaster recovery that are not as easily included in some of those in-house systems. There are a lot of pros.

That’s a great rundown. Chelsea, I want to shift gears and have you talk about reporting. That continues to increase as a priority for CFOs and finance leaders with needs that go beyond financial reporting to include areas such as ESG and human capital. How are data analytics and reporting evolving to include such areas?

When we think basic data analytics or reporting, we typically think financials: How are our clients reporting month-end, quarter-end, year-end numbers? But the reality is, leaders in that space are looking for more robust data points on what their current workforce looks like.

I touched on this earlier, but what is the talent pool? Over the last several years — again, as a by-product of COVID-19 — leaders in finance have been challenged with retaining and finding the right skill set of folks to support back-office finance spaces. Whether that’s accounting roles or management or VP-level positions, right now, the talent pool is proving to be lackluster and organisations are struggling on hiring folks to fill those positions.

But how does that tie back to data analytics? We’re seeing the ask from our clients and from leaders on, what are trends in the market? What are our attrition issues? Do I have an HR platform right now that gives me analytics on, how am I able to retain folks? How long do folks stay at the business? What’s our current turnover rate? Anything that they can use to support the numbers, especially on national or global clients, it gives them visibility into, where are our potential gaps or issues when it comes to human capital? That’s a very big point that often is overlooked because they say, “I don’t know what’s going on in my organisation today.” It goes beyond the softer skills, and it’s more analytical: What are my numbers? How are my people supporting transactions today?

Another trend we’ll see related to human capital is, am I overstaffed? Am I understaffed? Tell me where we’re seeing trends from my competitors or folks that play in the same space in our industry: Where do they stand from a human capital perspective? Where do they staff up, or where are we missing or misaligning our resources to support the finance functions?

These are huge challenges for CFOs and finance leaders. Based on what you said, Protiviti has a great resource that provides data on some of these trends and insights in our Global Finance Trends Survey, in which we poll CFOs and finance leaders around the world.

For my next question, I want to dive into the role of the CFO and senior leadership in advancing the organisation on the digital maturity scale. Things like talent management and understanding your skills are going to play a big part in that, but the first step is establishing the right tone at the top.

This topic lends itself to how our finance team is impacted by overall change management trends. Tone at the top is critical, and finance leadership sending a strong and consistent message is something that’s going to foster a culture that embraces a digital transformation. When you think typically, how are key messages rolled out to the organisation, you’re often going to be faced with different strategies and different goals. And that’s not to say that leadership is misaligned within finance. It’s saying that there hasn’t been a consistent message developed.

Things that are critical that we’re seeing include making sure that they’re highlighting the benefits of whatever the digital finance transformation is. Take it back to an ERP implementation or an ERP upgrade. The messaging, regardless of whether you are in finance or IT, needs to be consistent to the folks that are being impacted. The second that there starts to be different messaging or room for interpretation is where folks start to fall off in buying into the idea of adoption.

Another thing that we encourage in change management as it’s related to digital strategy or digitisation and finance changes is encouraging leadership to create an environment that encourages their folks to be innovative and go the experimental route to the extent that they can. You’re changing the way of working. The more you introduce new technology, any new ERP changes, the more folks are saying, “I want to make sure I understand how my day-to-day is being impacted.” The biggest piece of support that our leaders can do within this space is have consistent messaging and be an advocate for the change along the way.

I definitely agree with what Chelsea just said. Change isn’t always easy, as we know. Changing an ERP system is certainly not just a plug-and-play. It can change the way you function. It can change the way you process information. It will change the way your processes flow and the key activities and how you communicate internally within the organisation and even externally with customers. Management needs to empower change champions and process owners to drive that digital transformation. It’s not just an IT-driven change, and that’s one of the ways management can set the tone at the top, by empowering the business to have a seat at the table.

In the minds of the CFO and top management, what are they looking for in terms of governance and defining what success looks like? Stated another way, what sort of reporting and/or communications does the finance organisation need to provide to these leaders on a regular basis?

The C-suite wants to ensure that risk is being managed across the organisation. They want to make sure they’re not exposed from a technology standpoint, in financial compliance or even from an employee perspective, as some of the areas Chelsea went through — employee retention and employee skill sets, knowing that they have the right talent. Success can look different for every organisation, especially based on their strategic objectives and priorities.

But what I’ve seen remain consistent for CFOs has been reporting: They want clean, quick and accurate reporting to make decisions. That’s all they want. And they always say that even after they’ve implemented new systems. It continues to be a priority for them. A lot of these reporting and metrics are driven from KPIs tied to their goals and objectives. From that standpoint, that’s how they manage risk. And that’s why reporting remains one of the key priorities for CFOs.

Chelsea, is there anything you want to add?

You hit on the main points. Another thing that they’re looking to drive is the formality of policies and procedures around data governance. The data quality and the data governance processes are absolutely top of mind. But how are they formalising that process and ensuring that from a controls perspective, that stays in place within their organisation? It’s developing a formal policy procedure and making sure that it’s adopted within the business. That protects them at the C-suite level.

Kizzy, you mentioned risk management. I want to circle back to that point and have you provide more color. Risk management is important when employing new digital tools and technologies. What are some of the risk-related considerations that come into play here?

With any implementation, there are going to be risks, but one of the two most overlooked risks by management is not having a dedicated role for the implementation. Sometimes, the C-suite thinks that people can fulfill their day-to-day tasks as well as the implementation. And this often leads to a lot of oversight, especially during that design stage, which is a critical stage of the implementation.

This leads me to the second most overlooked item, which is rushing through that design stage. Most people just want to get to the system and the implementation. They just want to get to the cool part. And there are a lot of key activities, roles and functionalities you want to capture in that design stage, making sure that it meets your business needs as well as your customer needs, as well as your internal needs. Not giving yourself enough time here can lead to a cookie-cutter system being implemented, and your system is only as great as your process design. These are the two biggest risks and often most overlooked risks by CFOs. 

This has been a fantastic conversation. I want to thank you both. I have one more question to pose to you, Chelsea, and Kizzy, feel free to chime in on this as well. I want to have you talk about integration and connectivity. Organisations grow and change through acquisitions, divestitures, business-unit combinations, and ERP system upgrades and implementations, as we’ve been talking about, and more. What are some of the steps finance groups need to take to keep pace with these changes? And where does automation and digital maturity fit into this?

These are hot topics we are seeing trending and have seen trend over the last several years — acquisitions, divestitures, shared service centers, need for centralisation — and at the crux of that is the topic of integration connectivity when it comes to financial data, ERPs. This topic, I’ve discussed at length with a number of clients: As we are growing, how are we ensuring that our finance and accounting departments can keep up and not act as separate business units? Where are opportunities for centralisation and standardisation? It starts with data and processes within the technology.

What we’re seeing right now is a lot of companies looking for opportunities with ERPs as they’re going through acquisitions to say, are there opportunities for us to get on a single platform? Are there opportunities for data integration? And that is what they’re looking for — to gain efficiencies, centralised processes. As we’re seeing companies grow through these types of transactions or their organisations are shifting to divest certain businesses, the question becomes, where do we have opportunities to grow and become scalable in an optimised finance process?

The only thing I’ll add is metrics and reporting, which we touched on earlier. That helps the organisation benchmark and see where they need to make these upgrades or where they need to scale. That is the one key activity or area where finance groups can keep up to date with these changes, because metrics and benchmarking is going to help them see where they are against the industry, where they are against themselves from the prior year and where they need to get to their desired future targeted state.

My thanks to Chelsea and Kizzy for joining me today in this highly informative conversation. Several things really stood out for me: First, the cloud is definitely the way to go and seems to be the future when it comes to finance organisations moving forward and becoming more digitally oriented. Second, digital mindset and digital maturity is not just about the technology tools. It’s also about embracing that approach from the top down and having the people and the skills necessary to achieve that transformation long-term. And, as part of that, effective communication and organisational commitment — again, from the top down — is paramount.  

For more information on these topics, I encourage you to visit the Protiviti website, among other resources. You can read our latest Global Finance Trends Survey, which includes views and perspectives from CFOs and finance leaders around the world. And finally, I encourage you to subscribe to our Powerful Insights podcast series and review us wherever you get your podcast content.