By Mark White, Financial Performance Management Specialist, MHR Analytics
Now is the time for organisations to invest in and transform their finance teams.
New technology and the massive proliferation of data mean each organisation now looks to its finance team to provide ‘guidance’ both financially and operationally. The current economic climate is also driving change, demanding every department does more with less, using technology and data to achieve radical efficiency improvements.
For finance professionals, this necessary change can be very daunting. Here then, are some insider tips on how to achieve lasting digital financial transformation using technology in a way that does not cause huge disruption or upheaval.
- Vision and senior management agreement
It is important to set a vision for transformation and obtain the full agreement of senior executives. It is essential to understand the ‘art of the possible’ – what can be achieved. Our research shows that competition for funds for projects is fierce and will continue to be so in the near future. However, the influential role that finance has played during recent uncertain times provides strong evidence of the value that they can add to the organisation.
In all respects, the role and drive of the CFO is critical. Firstly, to sell the transformation vision to the C-level executives. Secondly, to empower and encourage the finance team and make them central to the journey. A growth mindset is necessary.
Accept that the purpose of transformation is not to take you to a defined end-point. Technology-driven transformation is a continual process of improvement.
- Begin with process improvement
Avoid the ‘sexy stuff’, such as artificial intelligence (AI), which requires lots of time and resources to set up. It is far better to choose a repetitive process and see how the solution transforms it. Productivity gains will then create the time to deliver more far-reaching change.
Review all finance tasks and whole processes to identify where productivity improvements can be made, quantifying where possible. Identify processes fit for automation because they are rules-based, consistent or template driven.
For example, processes such as accounts payable (AP), accounts receivable (AR) and expenses management remain manual and cumbersome. Robotic process automation (RPA) can automate these processes yielding significant productivity improvements.
Consider also these four key processes that are the foundations of finance:
- Financial close
- Budget, plan and forecast
- Report and analyse
- Disclosure
Financial close is a great place to begin here, as it is a combination of repeated tasks and processes. It is also easier to implement, being within the finance team and many benefits will be visible to the whole organisation.
Budget, plan and forecast, however, is the least mature of the four processes and the one that can yield the biggest benefit.
- Build on what you have
Excessive use of external consultants and resource is a high cause of failure in transformation projects. Utilise existing key finance team members by tapping into their knowledge and promoting buy-in to transformation. This allows team members to upskill and retrain for the new post-transformation environment.
This is also true when it comes to looking at your technology. A modern trend is to leverage legacy systems that cannot be easily replaced, integrating them with niche solutions to plug functionality gaps and improve productivity. This approach will reduce the cost of investment, increase ROI and the possibility of attracting funding.
- Look at cloud and SaaS solutions
The technology advances in this area have been a game-changer. The SaaS model has meant software is now available without the need for a large upfront investment.
Cloud technology has also accelerated projects as there is no longer the need to commission hardware or involve the IT team to the extent previously required.
Here, you will need to decide whether to invest in one platform or multiple solutions. A ‘single platform’, delivers everything a finance team requires in one solution. On the other hand, a ‘best-of-breed’ approach selects specialised solutions for each problem.
- Selecting the right technology and partner
Research shows that technology alone accounts for less than 1% of transformation failures.
Far too much time and effort is spent focusing on the technology and not on the implementation and delivery. Look for a partner (or partners) who you can trust. Again, this is an area where you may want to invest in external expertise to help you find the right technology and partner combination.
Remember, transformation is a journey of continuous improvement. As you improve and change, more time is created which you should use to stay ahead of the game.
Although the current difficulties of 2020 have created opportunities for the finance team to shine, tough decisions and choices will need to be made. Simply providing a finance team with new technology will not digitally transform an organisation. It is a combination of people, process, technology and data that need to work in harmony to deliver true transformation.
To ensure that the productivity of any resource is optimised for maximum value, investing in the right technology is essential.
