Digital Transformation for Finance: How To Get It Right

We started with the process basics. It is now time to look at systems and technology. These days, they usually fall under the heading of digital transformation. There are many digital aspects of Finance Transformation, but there is a great deal we can look at before getting concerned with robotics and artificial intelligence. Automation, for example, covers many solutions, and digital transformation goes far beyond automation. That, however, is a subject for a later post! Everything we do to make an activity or task less manual is a kind of automation. It is rather obvious when stated like that, but these more straightforward approaches often get forgotten in a rush to meet the latest trends.

What Drives Automation?

It has been a long time since accountants used an abacus. Even that was a form of technology in its day. Unsurprisingly, then, most finance functions will already have a degree of automation in place. That automation can range, for example, from using excel models to ERP systems with varying levels of sophistication and analytical capabilities.

The challenge often is that the organisation may have installed the existing solutions before an explicit process model. Alternatively, the process model has evolved, and the organisation may need to revisit the process objectives. Sometimes, a system or technology may have outlived its useful life and need upgrading or replacing. Often, data definitions are weak, and data owners are not in place.

All these and more can be the starting point for transformational activities. However, whatever the current state, we should first refer to the strategic positioning on cost and differentiation. Being clear on the remit of Finance within the organisation is essential before making decisions on technical solutions.

Digital Transformation: Getting it Right, First-Time, On-Time

Selecting a product that meets the process, data and people objectives is only the beginning. Even if the solution is as simple as humans using fire to cook rather than eating raw, getting it right, first-time, on-time, and on-budget will always be welcomed.

To avoid implementation issues, you should complete a thorough solution gap analysis and, after that, accurate testing procedures. Throughout deployment and cutover, a rigorous approach is critical, of course. In addition, organisational readiness is vital, but often, the project team do not give it due attention. Sadly, it is something that we have seen all too often.

It is often the case that the person who previously operated the process – either manually or with an earlier technology – will be the one to operate the new one. However, the longer that person has been doing things “the old way”, the more challenging it can be to take up new behaviours and do something “the new way”. What happens subsequently is that the new, often expensive system only gets used at the bare minimum. As a result, the organisation scarcely realises the potential to exploit new functionalities. In these cases, the return on investment is marginal, at best. At worst, an organisation can be looking at a negative return.

Attention to detail and expertise properly applied is critical in reducing those costly – time and organisational reputation – issues. Furthermore, the more cutting-edge the solution, the more implementation expertise is likely to be needed. Whatever the digital aspect of the transformation, overlooking the people involved’s skills, behaviours, and motivations will undermine the return.

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