We all get caught up in the frenzy about the seemingly limitless potential of digital technologies. We get excited about how robotics and artificial intelligence (AI) will drive down finance costs and make finance a better business partner.
But let’s not forget that finance excellence is not just about technology.
Even the most sophisticated automation solution won’t fix a broken process. And an advanced analytics tool won’t produce actionable insight if it does not draw on the right data, or if finance professionals are not trained to use it.
Preparing the Ground
While our 2018 Key Issues Study found the there’s nearly universal agreement that digital transformation will bring step-change improvement to the finance function. However, transformation must happen within a broader context. Here are five critical issues finance must keep in mind:
- Start with the basics. Before launching a digital technology initiative, finance must optimize its existing processes and refine its service delivery model. Some processes can be improved without the addition of fancy tools. Plus, a lot of new solutions come with built-in best practices that require finance to not just “lift and shift” existing ways of doing things but revise its approach and make processes fit the new technology.
- Optimize the service delivery model. It’s also important to determine where within the finance organization various finance activities should take place. Increasingly, finance is shifting standardized activities into global business center (GBS) organizations. It’s concentrating specific knowledge work in centers of excellence (COEs). We also see a trend toward greater reliance on outsourcing and offshoring. The optimal finance delivery model will determine which technologies are needed where.
- Build the right foundation. Another critical step is to rationalize the existing technology infrastructure. Ideally, finance should consolidate disparate. Plus, it needs to improve data management so that new tools can rely on data integrity when pulling information. New data marts must cut across functional silos and contain internal/external, structured/unstructured information to fully support digital transformation.
- Leverage new implementation methodologies. Digital transformation happens quickly. To keep up, finance cannot rely on the old ways of implementing technologies. Historically, IT implementations followed a linear approach (called the “waterfall” methodology).That long cycle time is not feasible in this fast-moving digital era, where new technologies are introduced all the time. Smart technologies are implemented using an “agile” approach, which relies on short bursts of implementation followed by rapid testing. New tools are often piloted in a “lab” environment to get user reaction and then rolled out quickly to a broader audience.
- Don’t underestimate the impact on people. Finally, often, the introduction of new tools brings entirely new ways of doing things. That’s a hard transition for many finance professionals. Some technologies, like RPA eliminate the need for human intervention, rendering some jobs obsolete. Before starting a new project, companies must come up with a comprehensive change management program. The program needs to include elements like a change readiness assessment,active stakeholder management transparent communication.Most important, management must make it very clear how it intends to prepare staff for the new way of doing things through redeployment and comprehensive training and development programs.
We all get caught up in the excitement about shiny new tools. They are rapidly changing what’s possible and how finance can become more efficient and provide valuable insight to senior management. But before adopting new solutions, finance needs to make sure it’s got the basics covered. It must optimize processes. Rationalize its technology base. Improve data management, and make sure its staff is ready for change.