Part of the “Digital Finance Transformation” series that provides a framework for CFOs to move forward confidently on the journey toward digital transformation
Everyone is talking about digital transformation these days, and it is on the mind of most executives. They recognize the need to decide how to manage digital change – and the important role of the CFO in providing strategic leadership. However, they often don’t know where to begin or how to put a structured plan in place.
The cornerstone: a digital foundation
In our work supporting numerous digital transformation initiatives, we have come to appreciate the importance of establishing a digital foundation. Laying that foundation requires an initial deployment of digital tools that can make a measurable impact on improving the organization’s performance and efficiency and increasing its value.
The very first step is to develop a clear digital vision and establish a culture by communicating that vision throughout the enterprise. In our experience, the companies that are most successful start early with change management, preparing everyone involved for the digital metamorphosis. The best practice here is for IT and the business to work together closely with all other stakeholders, such as partners, to drive the transformation together hand-in-hand.
There are many other points to consider, recognizing that digital transformation in detail will look different for every company. The specifics are influenced by many factors: industry, competition behavior, company culture, innovation affinity, existing and emerging digital technologies, digital readiness, and so on.
A proven four-step approach
With this blog, we aim to provide CFOs a starting point and overview plan in the form of an iterative four-step transformation approach that has been proven to work in a range of different companies.
This is the beginning of a series of blogs that will dive deeper into the individual steps to help CFOs start their journey toward digital transformation.
Step 1 will set the foundation by defining the digital vision, the digital strategy, and the business value case to justify the investment. Step 2 encompasses the definition of the digital operating model for finance transformation. Step 3 defines the resulting transformation roadmap that will be realized in Step 4.
With the four-step approach, we suggest that successful digital finance transformation will be based on a common vision for the future finance organization that is supported by the finance team, corporate management, and other stakeholders. It’s important to know at the outset the destination of the digital journey. Digital enterprises will define where the race will lead and which transformation path to follow.
In general, these four steps run on two levels. The digital foundation with digitalization vision and strategy provides the long-term big picture for digital finance. The finance operating model, based on the digital technology foundation, provides strategic structures and guidelines, including improved finance service levels. The short-term level focuses on digital innovation and opportunities, delivering added value for finance and the enterprise – in practice, delivered with agile project approaches.
In summary, the approach follows the “think big – start small, start now!” paradigm.
Not time for the status quo
Beyond that, it’s a cultural change that requires organizations to continually challenge the status quo, experiment often, and get comfortable with failure. This sometimes means walking away from long-standing habits and underlying business processes in favor of relatively new practices that are still being defined.
Building and leveraging the digital technology foundation for finance requires that finance does things it never could before. One result? An expense-control, spreadsheet-driven accounting and reporting center will evolve into a performance management organization – a predictive analytics powerhouse that creates business value.
For more on this topic, please read New Study: Finance Is Set To Gain Digital Transformation Momentum.