Digital transformation is all around us. New technologies are revolutionizing how companies do business and engage with customers. They are also changing the way finance delivers services to its internal customers. Out are paper invoices; in are e-invoicing portals. Out are legacy on-premise applications; in are cloud-based applications. Out is manual reconciliation; in is robotic process automation (RPA). Big Data and advanced analytics are giving finance the power to support better business decisions about investment opportunities, cost savings, and new sources of revenue.
Cases in point
- At one telecom company, finance uses Big Data discovery and predictive analytics technology to help solve business problems. Finance set out to find out what kind of products customers in a particular area were looking for. Using Big Data and advanced analytics, the finance team came up with answers that help the business decide what to keep in inventory, increasing sales and reducing cost.
- A medical device company decided to overhaul its order-entry process by using RPA. The company needed a comprehensive automation platform that was flexible and accurate, provided a strict control environment, and could be easily and quickly deployed. It took 6 months to deploy 14 robots and completely change the processes and significantly redeploy headcount. This approach also improved accuracy, which, among other benefits, helps get cash in the door faster.
- At another company, an innovative cloud planning tool created a newly collaborative environment with self-service capabilities so that business units contribute directly to the forecasting and budgeting process. The new technology sped up the process while also improving data integrity.
- Finally, at one global company, artificial intelligence (AI) is helping finance improve its forecasting accuracy by pulling in third-party data based on social media conversations from all over the world. The third-party provider relies on AI to gauge the intensity of the conversation to predict social and political events that may lead to market disruptions.
Many finance organizations still lag in achieving the full potential of digital technologies. Our 2017 key issues study shows that finance executives almost universally expect digital transformation to have a significant impact on their performance and service-delivery model. But they rank their current execution capabilities as low. They’re also not taking big steps to correct this mismatch.
How to become a digitally savvy CFO
That’s why CFOs need to become digitally savvy. Their primary goal is to close the gap between the development and execution of a digital strategy for the finance function. The digitally savvy CFO is the evangelist and steward of the effort to bring new technologies and a digital vision to the finance team. This way, the enterprise can benefit from the premise of more technologically enabled processes, advanced analytics, and self-service solutions.
Here are steps the CFO can take to move the finance function to the digital era:
- Build a customer-centric digital process: CFOs must focus finance on serving internal customers more efficiently and effectively. This may involve streamlining repetitive processes by moving them to a global business services organization. Or it might involve using tools like RPA to automate parts of the process that are rule-based and can be handed off to algorithm-driven technologies, freeing up staff time to focus on more value-added tasks.
- Build a digital architecture: Finance should create a connected and agile technology platform that integrates multiple applications to connect vendors/suppliers, end customers, and internal customers. This platform should be able to leverage a variety of internal, external, structured, and unstructured data.
- Develop digital competency through centers of excellence (CoEs). CFOs should establish digital CoEs where technologies like RPA can be tested to discover applications with strong business cases for deployment in the finance function. The CoEs act as “virtual sandboxes” in which new technologies can be tried out on a small scale.
- Create digital value through data governance: CFOs should spearhead data governance efforts to make sure enterprise data is accurate and ready to be used. Master data management (MDM), which defines the way data is stored and managed, is an increasingly important area of focus. Without it, analytics applications cannot run effectively.
- Develop data “smarts:” Data is of no value unless it’s used to drive action. Going digital means merging data with sophisticated analytics that provide insight into what is going to happen and what to do about it. Finance must deliver the right information at the right time to the right people so the business can take action.
- Develop a digital workforce: Finally, digitally savvy CFOs must come up with a talent development strategy designed to support their emerging approach. A full 80% of participants in our key issues study believe that digitization will change the skills and leadership approach required to manage their function. But the study also found that very few finance organizations plan major updates to talent management programs and practices this year. Finance will have to take bolder steps if it is to retrain and reshape its workforce to become more strategic in nature, collaborate with the business, and provide higher-level analytics support.
CFOs must stay vigilant regarding new digital technologies, continuously educating themselves and encouraging their staff to do the same. They must keep abreast of what other companies are doing, learning about potential use cases that may hold promise for their own activities and educating other company leaders on these topics. Most important, they must make it clear that they are fully committed to digital transformation by assigning these projects the highest priority and rewarding staff for implementing new technologies and mastering new skills.
For more digital transformation strategies, see Your Digital Transformation Journey Begins Here.