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  • Writer's pictureEdwin and George

Subject: 2021 - Time to get Digital

Memo: To Senior Finance Managers

From: CFO

Subject: 2021 - Time to get Digital

Dear Team,

The disruption of 2020 has presented us with an opportunity:

Seize the momentum for change. Arm yourself with the right tools and knowledge. Upskill your team and transform to deliver great value to your organisation. (1)

Finance transformation is a tricky subject.

Whilst finance teams have enthusiastically (or sometimes not so enthusiastically) entered into transformation projects, the results have been mixed.

Driven by the introduction of ERP systems (such as SAP or Oracle) CFOs may be excused for asking what they got for their money.

But, project failures aren’t down to systems – poor process design and change management stand accused. A study by McKinnsey, for example, found that ‘70% of change programmes fail to achieve their goals due to employee resistance and lack of management support.’ (2)

We know the results:

  • Installing expensive finance systems - and then balancing month end using spreadsheets.

  • Running system generated reports – and amending them to fit user needs.

There are many more examples. We need to learn from the mistakes.

In the present business climate, finance transformation isn’t as high as we thought on the to-do lists of CFOs.

A recent survey by KPMG Australia found the current priorities of CFOs include:

  • Supporting staff working remotely – 60% of CFOs said that since the start of the pandemic the health and wellbeing of their teams has been top priority

  • Protecting cash flow and funding in difficult times

  • Managing costs across the busines

  • Supporting the recovery from the crisis

  • Improving management reporting – you are now expected to produce data relating to sales, order fulfilment, supply chains, customer demand, business performance as well as real-time industry and market statistics

  • Exploring finance process simplification, rationalisation and automation

  • Developing future-oriented activities such as forecasting and scenario planning

  • Resolving issues with customers who are under financial duress. (3)

With so many ‘business-as-usual’ responsibilities, finding time and resources to plan any serious finance transformation is low on the list.

Also, there are few proven business cases of digitisation in finance and few best practices to draw from – so some CFOs are content to let colleagues in IT, marketing, or other functions go first.

But life is slowly getting back to normal and CFOs need to think forward as there are issues about to grow in importance:

  • How to simplify finance systems and processes

  • How to add more value - be key in driving the strategic direction of the business

  • In short, how to increase automation and digitisation.

Your role was changing before the pandemic hit – and the challenges of COVID-19 have accelerated the pace of this change. Finance transformation will become more urgent as companies face up to the new realities of business.

CFOs themselves say they want to spend more time on the application of digital technologies to finance tasks. But they’re unsure where to start; the rapid arrival of innovative technologies plus a general shortage of top technology talent won’t make it any easier.

But, if you haven’t started the journey, you must begin to experiment or risk falling behind other functions in your company and other companies in the industry whose digital transformations are already under way. You might lose a golden opportunity to help drive the business agenda. (3)

A good start is to work with your senior-leadership team to systematically identify tasks and processes within the finance function that would most benefit from digitisation. You can then locate and invest in the technologies and capabilities required to improve these areas. Being clear about where your company wants to go and how finance can be a guide on the journey (and what the obstacles might be) will help digital transformation get off on the right foot.

Digitisation of the finance function is now a realistic goal – great advances will be made in 2021.

So what will it be?

  • AI and robotics to improve processes – cutting out manual tasks which drive inefficiency and risk

  • Data visualisation to give end users access to real-time information

  • Improved reporting to drive decision making across the company

  • Analysis of large data pools to gain better insight

  • Advanced analytics for business operations to uncover hidden growth opportunities.

You may decide to pursue investments in one or all of these areas. Much will depend on your company’s starting point—its current strategies, needs, and capabilities and its existing technologies and skill sets. It’s important to note that digital transformation will not happen all at once. (4)

And, when digitisation is done well there are wide ranging benefits.

This isn’t solely about benefiting the business – it benefits the people too. Remember, automation replaces tasks, not people. Digitisation is a win-win for everyone. If you focus on upskilling people and giving them skills to remain relevant in the future, they will continue to do more value-adding work for the business. (5)

When it comes to digitisation, finance is ideally placed to lead by example. Instead of waiting for others to disrupt your workflow, now’s the time to forge ahead to transform your finance function by embracing new technologies, leveraging data and embedding new ways of working.

Go to it, Finance teams……

  1. Finance Evolution Post COVID-19: KPMG October 2020

  2. Change Change Management: McKinsey February 2005

  3. Finance Evolution Post COVID-19: KPMG October 2020

  4. How CFOs Should Drive Digital Transformation: McKinsey February 2020

  5. 5 Leadership Takeaways for Digitising Finance: PWC December 2020

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