Part 4 in the Finance Automation series
Digital is the talk of the town no matter where in the business you go, and it’s no different for financial management. What you tend to forget, though, is that digital is about more than technology. It’s just as much about your processes, organization, and most importantly, about your people. That means change management must take center stage.
When we are exploring the topic of digital finance transformation, we are taking a truly holistic view. Previously we wrote about new ways of working to succeed in your digital transformation in “To Go Digital, Finance Must Work Differently.” But this time, we’re looking at all the factors that surround the transformation and are perhaps even more important to your success. Indulge us for a moment as we try to explain.
Someone still needs to operate the technology
Let’s expand on these three key elements that define the wider success of your digital transformation.
- Process: If your processes are broken or filled with waste, you’re not doing yourself any favors by digitizing them.
- People: As there’s no computer yet that can run a company on its own, at the end of the day, your people are still those who need to create successful outcomes.
- Organization: The way you organize must be different in a digital world, as it opens new business models and requires a fast response to change. If you’re too bureaucratic, you will lose!
We have previously written about how people should be the most important focus area in any transformation. Why should digital be any different? Very well, let’s try and go one step deeper into explaining why process, people, and organization will define how successful your transformation will be.
Just like back in the days when you implemented your ERP system, you need to be mindful about how you digitize your processes. The big problem for many companies was that when implementing their ERP system, they simply mapped their processes and then customized the ERP system to fit their process landscape. They didn’t fix any broken processes, they didn’t take out any waste, and they certainly didn’t consider that, by customizing the ERP system, they limited themselves from easy access to ongoing system upgrades, etc. We’re sorry to say, but it’s no different when going digital. You must first fix your broken processes and eliminate waste. Then you can consider how you might simplify or even improve your processes before digitizing them. Otherwise, frankly speaking, you’ll end up with a big mess that fails to deliver the ROI you expect.
Going digital will undoubtedly have a significant impact on your people. Jobs will go away and others will be created. There will likely be no match between the competencies needed to succeed in the old jobs vs. those needed in the new jobs. Looking at your existing workforce, without a doubt, some of them will lose their jobs while others can be retrained. You’ll also find yourself looking for a new breed of people who combine business acumen with tech-savviness. Oh, it’s the purple people that we’ve been hearing about since 2015. So, in short, you need to decide who’s in, likely with retraining, who’s out, and how you can hire some of those purple people. Without the right people, your transformation will fail. There’s no debating that thoughtful, systematic change management is critical.
We’ve already described how your organization must work differently to succeed with digital, but it goes way beyond simply working differently. Going digital could give you the opportunity to develop new business models, or someone else going digital could be the end of your business as you know it – for example, Netflix vs. Blockbuster. It’s important that you prepare your organization well for the opportunities that come with digital and make it agile to be able to respond fast. Otherwise, we guarantee you that someone else will.
We hope it’s clear that while technology is what people see and “feel” when we talk about digital and how companies and finance functions are digitally transforming, your success will be determined by something else. In fact, you can have a technologically superior product and still lose out to inferior competitors – for example, VHS vs. Betamax. Technology will define what digital becomes for you, but your processes, people, and organizations will determine how successful you will be.
As artificial intelligence takes hold, the organizations that gain a competitive edge will be those that can leverage The Human Angle.