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HARNESSING THE DIGITAL FINANCE REVOLUTION

18/01/2019

By Neil Everatt, CEO at Selenity

 

Spending on digital transformation technologies was expected to hit nearly $1.3 trillion in 2018 and as we enter the new year, it still remains a priority for many business leaders. However, the adoption of digital transformation initiatives isn’t always widespread across an entire organisation. More often than not, the finance department is somewhat removed from these efforts, even though they own and manage much of the relevant business information that feeds into these initiatives.

 

With the rest of the business pushing ahead, CFO’s and finance teams can be left to tackle issues such as productivity and efficiency alone. While digital finance is an emerging concept, finance teams are well positioned to utilise real-time data as tools to drive the business agenda. With key information at their fingertips and a vast array of cloud technologies, the finance function has the ability to push past traditional working practices and guide business strategy.

 

Let old habits die hard

Typically, finance teams tend to be more reliant on paper processes than their business counterparts and with this in mind, it’s easier to see why digital transformation can be a big hurdle to jump. With a heavy reliance on manual processes it can be difficult to see where and how cloud technologies can make a difference. Interestingly, Gartner suggests that on average it costs between £4 and £25 to manually process an invoice and in some instances as high as £50. With spreadsheets and paper processes still in use, many finance departments are losing money and efficiency gains when compared to their digitally native competitors.

 

However, it’s not just manual processes which hinder digital transformation, siloed systems are also a contributing factor. For departments who have already jumped in and invested in digital technologies it can be disheartening to use disparate systems, which aren’t connected – especially when finance professionals find themselves replicating information from one system to another. The real key driver for successful digital transformation lies in the interoperability of systems, helping finance departments to pull together data and utilise it to gain new clarity of areas such as expenditure and debtor management.

 

Expenses management is one such process which is especially suitable for digital transformation and moving to a cloud-based system not only addresses the problems associated with storing paper-based receipts, but also the costs associated with doing so. In this case switching to a digital system not only decreases the amount of time that employees wait to be reimbursed for claims but also alleviates the administrative burden of physically checking paper claims and receipts. On top of that, cloud based systems allow finance professionals, particularly CFO’s, to gain greater visibility into areas of expenditure. Alongside valuable insights into spending patterns and adherence to travel and expense policies.

 

Promoting a culture of change

There are a number of reasons why digital transformation initiatives fail but one of the most prominent stems from a lack of c-suite leadership. Changing the way an organisation operates requires a certain amount of cultural change that needs to be cascaded from the top down. If business leaders and members of the c-suite fight against new and improved ways of working, then it’s likely that digital transformation projects won’t get off the ground or be successful.

 

With research from Forbes indicating that 7 out of 8 digital transformations fail, it’s

important that business leaders work with CFO’s to identify tasks and processes which could benefit from digitisation. Once selected, they can then invest, implement and champion technologies which drive improvement. However, this needs to be followed up with adequate training to ensure that staff feel comfortable using new technologies. Opting for intuitive and easy to use cloud-based solutions should ease this process and make onboarding much simpler. Additionally, look to suppliers who offer ongoing support and have a clear roadmap of upcoming features, you want the technology to grow with the demands of the organisation.

 

While technology clearly plays a significant role in changing an organisation’s finance function, it’s important to remember that this needs to be coupled with a supportive culture which champions new technologies and ways of working. There are many areas of digitisation open to finance departments, whether it be automating manual processes or reducing time spent on tasks such as scanning invoices and receipts. All in all, to achieve true digital finance the entire organisation and senior business leaders must be on-board and leading transformative initiatives which match the level of innovation seen across the entire business.

 

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Finance Derivative is a global financial and business analysis magazine, published by FM.Publishing. It is a yearly print and online magazine providing broad coverage and analysis of the financial industry, international business and the global economy.