The digital goal post continues to move forward rapidly, and finance must speed up its progress to catch up.
The news so far has not been great. Only 42% of finance organizations in The Hackett Group’s Digital Transformation Study (2018) reported they are meeting management progress and business-impact expectations. Only one in five finance executives said they have a mature functional digital strategy with associated initiatives in place.
The journey to wholesale transformation can be a multiyear effort. In fact, it is never-ending, as new technologies and business model pop up all the time. But there are steps finance can take right away to more quickly realize the benefits of digital.
- Don’t hold-off until you have a mature strategy. While it’s imperative that finance develops a holistic roadmap that is aligned with the enterprise’s digital agenda, that process should happen in parallel with the launch of targeted initiatives that address known business pain points. For example, RPA can be deployed in the closing process, within weeks to significantly shorten reconciliation cycle time. Or, advanced analytics can be quickly implemented to augment the accuracy and insight quality of a forecast.
Many of the executive attending The Hackett Group’s 2019 Best Practices Conference (#HackettBPC) last week told us they have already gone live with robotics projects, specifically in finance operations. We also heard from a consumer goods company about how it overhauled its data structure and analytics process to deliver more accurate insight – faster — to decision makers. These projects took weeks, not months. And they have yielded measurable results.
So, while your finance team is working to evolve a digital vision, it should start to experiment and pilot immediately.
- Get IT to the table on Day 1. A lot of finance executives have suffered heartburn from the lack of support from their company’s IT department. Only a quarter of finance leaders in The Hackett Group’s 2019 Key Issues Study reported they have adequate IT support.
That is partly because IT has not prioritized finance technology needs. But our IT research shows the function is pivoting toward a much more customer-centric delivery model. So, the news about the future is very encouraging: Over 70% of the finance executives in the study forecasted they will have adequate support within 2-3 years.
But lack of IT attention is only part of the reason. The tension with IT has also existed because finance, perhaps sometimes out of frustration, has gone “rogue” and proceeded to launch its own projects without IT involvement. That’s a sure path to failure. At one of our clients, finance was full steam into an RPA pilot, when IT found out about it and basically shut it down.
It’s therefore critical to have IT at the drawing table from the very start of any initiative. They are the ones in charge of the enterprise strategy and can be very helpful in defining the art of the possible and selecting best-in-breed tools. They can also see across functions and transfer emerging best practices.
This is not to say IT should lead the finance digitization process. Increasingly, new technology projects are business led, as those closest to the end-user are best suited to build use cases and figure out the right interface for their people. (You can build it, and they will not come.)
- Build a data overlayer. Fragmented ERPs are endemic to many organizations and can present a huge stumbling block for the aggregation of real-time, cross-enterprise data to support finance processes. Ideally, companies would consolidate their disparate ERPs. But in practice, that’s often not feasible technologically or from a budget perspective. One of presenter at our Best Practice Conference reported that its company has 70 ERPs across the globe, and aims to lower that number to 20-30 in one-to-two years, The same is true for many complex, large multinationals.
But that does not have to slow-down finance’s progress. Digital technologies make it possible to automatically and rapidly assemble data from many different source systems, using cloud-based centralized data solutions. These virtual data warehouses pull information from across the enterprise into a central repository. Thus, the information is easily accessible to all business applications.
Sure, it sounds like a band-aid solution. But today’s band-aids are not like yesterday band-aids, which were hard-coded, bolt-on interfaces that broke every time something changed. With cloud-based intelligent data capture, the connectivity is fluid, upgrades happen at a steady and automatic cadence, and the CapEx is dramatically lower. It may well be the primary path for many organizations seeking to realize the most critical improvements in process efficiency, effectiveness and customer satisfaction.
The digital opportunity for typical finance organizations is massive. Hackett analysis shows technology optimization can reduce finance cost by 42%. While that full journey can take a while, by embracing smart automation, like intelligent data capture, RPA, and Cognitive, finance can accelerate its path to digital “nirvana” by 13% within a very short timeframe.