Demystifying Digital Transformation in Finance

Finance faces many challenges

Finance professionals face a multitude of challenges in today’s fast-paced business climate — pain points that have grown only more acute during the pandemic-induced disruption and economic turmoil of the past few years. As the speed of business increases, the finance function must find new, faster and more efficient ways of performing routine, core processes.

In addition, organisations (and particularly their finance and accounting staff) are under increasing pressure to report results quickly and accurately while also being asked to be key contributors to the organisation’s formulation and execution of strategic goals. To adjust to changing conditions, business decision-makers can no longer wait until three weeks after month-end to review results. They need real-time reporting, and finance departments are now under pressure to close their books and deliver results within five business days of period-end. It’s no wonder that finance leaders feel like they don’t have the time to think about continuous improvement and long-range strategic planning. They are too bogged down in the routine tasks of their core financial accounting and reporting functions.

Finance leaders understand these challenges and are seeking fresh ways to address them. Fortunately, a commitment to digital transformation can go a long way toward alleviating these pain points. The key is in understanding that it’s not just about the technology.

Digital transformation drives value creation and performance improvement

Successful digital transformation goes well beyond implementing new technology. It’s about fundamentally rethinking how an organisation leverages people, processes and technology to pursue a series of objectives. Digital transformation is the engine that will drive value creation and performance improvement over the next decade.

Finance professionals must take a holistic view of the entire organisation and incorporate a series of critical factors into the transformation life cycle, which is a journey, not a destination. These factors include exploring new ways to build strong relationships with internal customers and external stakeholders; launching new, enhanced products and business models; exploiting enhanced data analytics and behavioral science to improve decision-making; and creatively using technology to improve operational performance.

To successfully instill a digital mindset throughout a finance function and make it stick for the long term, CFOs and their leaders must take a wide-angle lens to business performance improvement. Specifically, corporate finance and accounting teams should address change within six distinct pillars:

• Customers: Start with your customers. For finance and accounting leaders, this means your internal business partners, executives and the board — those stakeholders that rely on the delivery of financial results, projections and budgeting. A successful digital transformation is highly dependent on how well finance understands and accommodates their customers’ levels of digital literacy and preferred channels of engagement.
• Organisational strategy and leadership: As with all significant projects, support from the top is critical. True and lasting digital transformation begins when the organisation defines a set of concrete strategic objectives and incorporates digital opportunities into the business plan to achieve those goals. This should be a “way of life” not a one-time event or fad.
• External stakeholders: Finance must also consider the needs, expectations and digital maturity of the organisation’s external stakeholders, including company shareholders, the business’s end customers and the communities they serve.
• Processes: Ultimately, digital transformation is synonymous with business performance improvement. It’s about changing how organisations work and leveraging technology to improve processes rather than simply digitising them. Done properly, it enables the finance function to do its core work better, faster, more accurately and more efficiently.
• Technology enablers: Of course, digital transformation rests on a foundation of technology. Finance leaders must ensure that their organisation implements the best available digital tools to support their people, customers, stakeholders and corporate strategy.
• People and culture: Above all, successful digital transformation requires a change in culture. It’s about instilling a proactive, innovative mindset throughout the organisation that encourages people to seek out creative, efficient solutions to existing problems. In today’s fast-moving economy, it is no longer acceptable for anyone to be satisfied with how things have always been done. Leaders must ensure that they have a culture of innovation in place, and the training and resources available to support their team’s success. Developing and executing against a well thought out change management plan as part of your digital finance transformation will help ensure lasting cultural change.

The promise of digital transformation is that it will deliver a new, fast-paced and flexible approach to performance improvement. Financial leaders need to embrace change and apply the latest in digital technology to improve business processes, create efficiencies and inspire people to do their best work. In finance, where the mission of protecting the organisation is paramount, the key lies in balancing two competing priorities: successfully taking on new expectations while continuing to protect and steward the organisation’s assets. Today’s finance leaders are charged with fostering a culture of creativity that leads to innovative solutions and fully optimised business processes, while maintaining rigorous controls to protect against operational, compliance and financial risk.