Digital Transformation In Finance: How The Whole Corporation Benefits

Thomas Zipperle

Digitization is changing the world at a dizzying pace. Fueled by data, technology, and billions of online connections among people, partners, devices, data, and processes, companies of all sizes and industries – whether they know it or not – are engaged in a continuous cycle of reinvention. Digital business models are disrupting entire markets. Industry boundaries are expanding across adjacent spaces. Consumers demand commerce experiences that are frictionless, seamless, and easier. Even product consumption, enabled by technology, is evolving from traditional ownership to shared, pay-as-you-go models.

Success in this increasingly digital economy depends on a company’s openness and ability to reshape itself digitally. Everyone sitting around the executive boardroom table certainly needs the insight and expertise to take advantage of the opportunities that this data-driven, hyperconnected environment offers. However, the spotlight is shining brightly on the office of the CFO because the finance function and its ERP systems must be at the heart of every digital strategy.

Surrounding evolution brings opportunity to deliver more value

Over the last five years, my finance organization, which focuses on our Southeast Asia operations, has gone through a series of changes. Simplification of our core ERP system decreased our data footprint globally from 7.1TB to 1.2GB as we pulled our finance information into a single ledger and eliminated data aggregates with an in-memory database. Real-time reporting from the highest level of aggregation and down to the individual invoice document is making it possible now for the company to run on live data and one single source of truth

All of our efforts proved to be incredibly successful when CFO Innovation recently awarded me the “CFO of the Year 2016: Excellence in Technology Award,” which shows how well SAP is leveraging its own technology in its finance organization. However, it’s not only large multinational companies like SAP that need to go to such lengths in digitizing their finance processes.

While many CFOs know digital transformation can make the finance function more productive, there is still one thing of which many are unaware. Digital adoption helps the finance organization simplify and improve its engagement with the rest of the company and drives direct benefits – no matter the size, industry, or region it serves.

Here are four cases that demonstrate how digital transformation in finance provides a platform for delivering greater business value for the whole enterprise.

1. Direct access to real-time data for everyone

The adoption of an app-store-like report repository allows every employee to see what data is available within the company and can help them complete their daily tasks or make decisions. This effort significantly streamlines access to information and empowers employees to run real-time reports in an easy-to-understand format that matches the business need. However, to limit access to those who have a real business need and restrict access to confidential and insider relevant information, a state-of-the-art access-control system has been put in place to ensure all access is appropriately approved.

This approach removes the risk of finance teams becoming the bottleneck to information or creating outdated and irrelevant reports and decks. Rather than churning out regular or ad hoc reports, finance teams can now focus on their role as a business partner and information broker and help ensure that the right high-quality data is available at the right time.

2. Accounts payable automation

 The optimal state of an accounts payable organization is no-touch with error-free invoices and no queries back to suppliers. While most CFOs view this scenario as just a dream, today’s invoice automation technology can make this possible. Through cloud-based end-to-end invoice management solutions and procurement networks, finance organizations can digitize 100% of their invoices to accelerate billing approval, improve compliance, and achieve new levels of processing performance.

After procurement sends a purchase order (PO) to the vendor providing the best quote, the buyer approves goods receipt, sends an invoice, and triggers payments automatically or after any approvals are given. Finance employees are no longer involved in the accounts payable process. Instead, POs and invoices are matched automatically, and no paper-based invoices are processed.

As the process becomes more productive and efficient. The rest of the business is better equipped to make more strategic purchase decisions and quickly take advantage of supplier offers.

 3. A convenient, accurate, and compliant travel and expense system

 A cloud-based travel and expense solution can provide employees with a fully integrated experience. This approach starts with the planning and booking of a trip and ends with reporting and submitting incidental expenses, all of which can be done on a mobile device. All ticket and hotel expenses are automatically added to a trip, and incidental expenses can be added by taking a picture of the receipt with a mobile device. There is no need to sort through piles of receipts or stick them to a piece of paper.

This process can easily reduce the amount of time employees spend on this nonproductive task by 50% and increases transparency on travel spend across the corporation. A fully cloud-based solution even makes it easy for CFOs to outsource the auditing process, which provides additional economies of scale and enables moving this task to low-cost locations.

4. Lower DSO with increased partnership between finance and sales

Receivables managers are under constant pressure to keep days sales outstanding and bad-debt write-offs low while maintaining a high level of customer service. While the receivables team is critical in reaching this objective, account executives (AEs) who deal with the customer daily play a key role; they are likely to be aware of any issues long before invoices become overdue.

To support this, all AEs have direct access to the accounts receivable situation of their assigned customers through an easy-to-read customer financial fact sheet. This allows AEs to see the customer’s payment history, payment terms, or any unpaid invoices. It also allows them to directly interact with the accounts receivable team in case any disputes or issues arise.

Staying ahead of the digital curve

While past innovation in finance was rather limited to analytics (especially during the last five years), software vendors have brought solutions to the market that target the administrative processes of the organization. CFOs and their finance teams must be at the forefront of understanding and adopting technologies around cloud services, Big Data, the Internet of Things, and business networks to leverage their potential.

Because finance systems are at the core of each enterprise, CFOs not only need to evaluate these areas in terms of increased transparency and efficiency in their own function. They also must help ensure that systems are highly integrated with any other systems and processes to leverage the full benefits and avoid the creation of a disparate landscape across the company.

To learn more about how finance executives can empower themselves with the right tools and play a vital role in business innovation and value chain, please visit the SAP finance page for additional research and valuable insights.

For more insights from other organizations on the benefits of the latest technologies, download the infographic and read the report, Making the Business Case: Real CFOs Discuss the Benefits of SAP S/4HANA Finance.

Learn how SAP S/4HANA Finance can help your business Run Live.

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Thomas Zipperle

About Thomas Zipperle

Thomas Zipperle is CFO for SAP South East Asia, based in Singapore. As a business partner to the South East Asia management team, he supports SAP’s strategic growth in these emerging markets, provides them with relevant information on the state of the business, as well as decision support using SAP’s latest analytics tools. In his role, Thomas is also a distinguished speaker at many customer conferences, CFO roundtables, and events, where he shares his view on these latest innovations and showcases how SAP runs SAP. In 2016 Thomas was awarded the “CFO of the Year Award for Excellence in Technology” by CFO Innovation. Thomas has nearly 20 years of professional experience in Finance and Operations and holds a master’s degree in Business Administration from the University of Mannheim/Germany.