Defining “Digital Transformation” for Finance & Accounting Leaders

By Fred Hargrove, Kim Strumwasser, Perry Menezes.

Let us start off with a simple comparison involving electronic transformation and IT transformation.  Electronic transformation entails considerable changes to an organization’s use and software of technologies (and other functions of the business), although IT transformation involves substantial alterations in the IT expert services, composition, and components and program provided by the corporation.

As a fundamental analogy, contemplate going from a handwritten shopping checklist, to building your shopping checklist on your newly procured cell device, to eventually sharing your browsing listing (by means of shared notes operate) with your relatives members enabling actual time updates. The changeover from paper to cell machine is the IT transformation.  Nonetheless, advancing your use of the mobile telephone to share a live buying listing is the digital transformation that supports a favourable consumer expertise, efficiency, and authentic-time view of transforming knowledge in a safe fashion

For finance and accounting (F&A) teams, digital transformation is optimizing the use of technology answers to interact, communicate and collaborate with stakeholders pretty much. This subject is prime of brain throughout all business leaders. From a new poll we executed, 43% of 450+ company leaders shared that they will go after digital transformation initiatives in 2022. Based mostly on our knowledge supporting companies across industries, we identified the subsequent digital enablement initiatives that are trending in the F&A purpose:

• Decoupling the inefficient and functionally limited legacy units that aid crucial features from individuals programs that aid quickly-relocating, usually customer-experiencing interactions
• Automating finance-specific procedures such as accounts payable, accounts receivable, consolidations, regular close (to try for zero-day close), and non-economic metrics (e.g., carbon footprint, moral sourcing, etc.)
• Creating portals for consumer self-assistance (e.g., supply buyers the ability to obtain present-day and historical statements and invoices, and upload current tax exemption certificates)
• Investing in artificial intelligence or innovative analytics for real-time operational and financial assessment and automatic arranging and reporting
• Migrating business purposes (e.g., ERP, CPM) to the cloud for enhanced agility, accessibility, collaboration throughout groups, and visibility of real-time facts, all with the advantages of a managed surroundings (e.g., cloud company manages patches, updates, protection)
• Producing robotic method automation (“RPA”) systems to build workflows, perform information gathering and processing ensuing in significant enterprise insights

Persons, process, safety, and technologies implications will have to be regarded as and cautiously evaluated when prioritizing digital-centered assignments that enhance and evolve the finance and accounting functionality.  As an instance, the next thoughts should be incorporated in this analysis:

• The place is there most company-danger (e.g., attrition, safety, inability to combine, competition’s advanced offerings/interfaces, consumer demands) and how do we mitigate the chance?
• Which projects will outcome in the greatest and most sustainable business impression?
• What accounting procedures are the most labor-intensive and current the biggest hazard of human error and attrition?
• How do we concentration on innovation while maintaining essential operations?
• What are the quick and lengthy-expression fees in optimizing software features and/or rationalization?
• How can we maximize innovation devoid of sacrificing working day-to-day functions?
• What capabilities and techniques does F&A require to produce?
• What original and ongoing instruction, interaction and motivation is needed to aid the implementation of systems and educate the F&A groups on sophisticated strategic analyses?
• What are the envisioned initiative outcomes and the connected performance indicators to measure success?

Criteria for Finance and Accounting Leaders

And, before a roadmap is made for the various initiatives, it is necessary to put into action a system for creating or optimizing networks that connect devices, units, and people – and that give potent stability. The F&A purpose supports and interacts with teams and folks across the business, and with suppliers, fiscal associates, and consumers. F&A has a critical part in identifying business pitfalls and perspective on exposure. Delicate knowledge is usually included in these interactions and, for that reason, electronic transformation ought to be meticulously mapped, analyzed and optimized to assure constantly strengthened and managed stability.

With digitization comes new threats, especially cyber-assaults. Any electronic transformation tactic must get cybersecurity into account. When choosing new technology, companions, platforms and sellers, their respective cybersecurity standards and accountabilities need to have to be evidently comprehended.

With GDPR (General Details Defense Regulation) and a heightened concentrate on details privacy, F&A leaders are in search of a smarter and more demanding method to shielding sensitive info. Lots of are harnessing technologies, hosted fields, and portals to streamline knowledge processing and eliminate the need to have for their groups or companies to tackle delicate facts.

Final Views Looking at Urgency

Speedily changing situations in the surroundings, stakeholder pursuits and laws are influencing the F&A leaders to safe rapid, actual-time, and correct information for brief and strategic decision producing. Cloud-centered technologies, automation, digitization, and synthetic intelligence assistance assure that high-top quality and genuine-time facts is instantly available.

Advancing initiatives to digitally remodel makes it possible for F&A groups to aim more on company technique, rising systems, details and analytics storytelling, and critical areas impacting the global economic system, these as ESG (environmental, social and governance).  ESG initiatives, together with variety and inclusion (D&I), are expanding as major small business priorities across all industries, geographies, and enterprise dimensions. F&A groups require to employ solutions to monitor and report on non-money knowledge (e.g., carbon footprint, stakeholder encounter, social impression, diversity of distributors, leaders, and staff members).  

The evolving expectations linked to ESG additional encourage F&A leaders and their corporations to turn out to be as agile as probable, which is largely supported by electronic transformation. Furthermore, technology can assistance corporations enhance people’s lives and advantage society. For instance, visually impaired staff members can be supported with IT purposes that make use of speech interfaces.

The soaring need to accessibility and analyze true-time operational, financial, and non-economical info gives an option for F&A leaders to grow to be visionaries.  Launching a very carefully created digital transformation tactic enables improved conversation in between technologies and humans for producing immediate and intelligent enterprise choices.

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Fred Hargrove is managing director of Data Management & Technology at MorganFranklin Consulting. Kim Strumwasser is handling director of Texas Company Alternatives at Vaco. Perry Menezes is partner and managing director of Technological innovation and Cyber Threat at MorganFranklin Consulting.