Part of the “Digital Finance Transformation” series that provides a framework for CFOs to move forward confidently on the journey toward digital transformation
Successful digital finance transformation will be based on a common vision for the future that is supported by finance teams, company management, and other stakeholders.
It’s important to know where to go. Digital enterprises will define where the race will lead and which transformation path to follow. They understand how the environment will change and adjust the objective and operating model accordingly. They recognize that the path opens new possibilities that will materialize only when the big picture is in view. Successful leaders understand this paradox and are determined and open-minded.
There are five key elements to consider in a finance transformation:
- Scenario-based continuous improvement loops (agile approach)
- Operating model adaptation
- Digital innovation controlling
- Change management
- Digital improvement in marketing communications
Scenario-based continuous improvement loops (agile approach)
The following principles are critical to understanding the agile approach:
- Deliver value incrementally. This is at the core of agile methodology: building the minimal viable product and delivering value incrementally throughout the program. The goal is to shorten time to value.
- Plan time-boxing and focus teams in each iteration. The project team plans each increment by selecting items from the initial backlog, and then the team works throughout time-boxed sprints to deliver the selected items.
- Involve business users. The agile approach emphasizes the close involvement of business users throughout the project by bringing them into each sprint for review sessions and acceptance before completing backlog items.
- Use common language. With the agile approach, you will encounter terms like backlog, sprint/iteration, continuous delivery, built-in quality, product owner, scrum master, team, product owner, business owners, and many others. Whether these are roles, deliverables, or artifacts produced during the program, the right vocabulary ensures consistency throughout the program.
Operating model adaptation
On the one hand, there is strong cost pressure in every organization; on the other hand, there is also the need to deliver more insights and support the strategy. To achieve this, organizations need to adapt their operating models and make use of the latest innovations.
In the past and still today, finance’s main focus is on running the operational business. “Keep the lights on” is a term that is often used to describe the current situation. The finance department is still too busy with the daily work, as processes are not fully standardized and automated, and technology has not been completely leveraged yet.
Therefore, three major steps should be considered to move forward:
- Standardize and automate your finance processes.
- Make use of the latest deployment options (e.g., high-performance hardware either on-premises or in the cloud) and software innovations (e.g., more efficient software architectures and new opportunities like machine learning or artificial intelligence).
- Reskill your people to capitalize on new opportunities.
The goal is to support the corporate strategy by providing backward- as well as forward-looking insights, which is almost completely neglected nowadays.
Digital innovation controlling
Before starting on a transformation project, clearly define the project objectives, the results that should be achieved, and by when.
Consider the following key steps:
- Define relevant process KPIs.
- Measure the as-is situation.
- Define targets and state the target date for achieving them.
To ensure the success of the transformation, it is important to set up continuous measurement of KPIs throughout the different phases of a transformation.
Change management, first and foremost, is about the human dimension: internal customers, stakeholders, and the broader ecosystem within which organizations reside. No organization – business, government, or non-governmental – can realize a profound digital transformation without putting people first and having people on board. If things change too fast for people to adapt, or the plan does not consider the individuals who are touched and their concerns, this can be a recipe for failure and, on a broader scale, even resistance.
Change starts and ends with people. They are the lifeblood of your organization and the most important part of the change management process. This remains true for digital transformation.
Digital improvement in marketing communications
It is critical to publish change communications to announce and inform the stakeholders about the goals and value of the transformation. It is essential to leverage the opportunities of the new digital marketing and communication formats such as intranets, newsletters, podcasts, corporate broadcasting, and internal social media.