It looks like finance is about to turn a digital corner. To date, many finance organizations have approached digital transformation with caution and have been challenged by a lack of financial and human resources. However, the results of The Hackett Group 2020 Key Issues Study reveal that the function is prepping to amp up the pace of its digitalization. Read the complete report.
Evidence #1: Incremental investment
Seventy-four percent of finance respondents to our study projected increased spending on technology in 2020; a fifth expect a significant rise of 5%-10% (while the overall finance budget is set to contract by 3%-4%). The uptick disrupts a decade-long trend during which technology cost as a percent of budget has been flat or even contracting. Plus, after spending time simplifying their IT architecture and decommissioning legacy systems, finance organizations foresee growth in the percentage of funds dedicated to developing new capabilities.
Evidence #2: Extensive experimentation
Current large-scale deployments of technologies like advanced analytics, next-generation ERPs, robotic process automation (RPA), and data visualization remain modest. But our research indicates that finance organizations are getting ready to scale up, based on the extensive degree of experimentation with new tools through pilots or small-scale implementations. For example, 69% of finance functions are already using RPA on a limited basis and 58% are trying out cloud-based ERP and advanced analytics solutions.
Evidence #3: Delivering on business expectations
This frenzy of activity foretells broader adoption ahead. One important reason is that finance’s forays into digitalization have often yielded positive results:
- 73% of executives report that they have met or exceeded their business expectations for RPA.
- 71% have seen success in the initial adoption of cloud-based ERP solutions.
Evidence #4: Aggressive YOY growth rates
The clearest indication that finance is accelerating its progress toward becoming a digital function is in the significant year-over-year growth expectations in the adoption of several digital technologies:
- 26% increase in the adoption of data visualization tools
- 20% expansion in the use of RPA and next-gen ERP solutions
- 18% rise in the implementation of advanced analytics solutions
At first glance, these numbers may not look super aggressive. But it’s important to remember that they represent short-term growth rates. Long-term expectations indicate a much sharper increase in digital adoption over the next three years.
Delivering on a dual mandate
The push for increased spending on smart automation technologies is not happening in a vacuum. It is aligned with the enterprise demands on finance this year. While the top enterprise “ask” of finance in 2020 is supporting enterprise cost-reduction initiatives (86%), a close second (82%) of our respondents said they are also expected to help the company achieve its growth objectives. By automating a greater share of finance processes, finance can lower process cost and free up staff time to work on higher-value activities such as decision support.
Join the second SAP Intelligent Finance virtual event on Tuesday, Feb. 11, and explore the new reality driving finance transformation and the type of solutions companies are using to support it. Register now.