Five Digital Business Capabilities to Accelerate Finance Digital Transformation

By Nilly Essaides, Sean Mullane, and Gerhard Urbasch
April 7, 2021

Despite a growing business case for digital transformation – according to our recent analysis, the return on investment could be as high as 600%[1] – progress has been measured. Until last year, that is. The pandemic triggered the digital wake-up call that many organizations needed. Companies made massive changes to maintain business and operations through digital channels because they had to. Now, we have to maintain that momentum while working from a proactive rather than a reactive position. The way to do that is to focus on building five core digital capabilities within your finance function.


The mandate has strengthened

The experiences of 2020 underscored the value of a digital operating model and solidified perspectives about the role of digital transformation in the next normal. In our 2021 Key Issues Study, approximately 73% of respondents said they expect acceleration of digital innovation to be a permanent characteristic of the business environment after the return to stability, and 72% expect an enduring shift to digital delivery channels.

Not surprisingly, enterprise digital transformation catapulted to the No. 1 priority for 2021, up five spots in the ranking from the previous year. Furthermore, digital transformation will be critical to advancing many of the goals on the 2021 finance agenda.


A framework for accelerating digital transformation

Today’s finance technology landscape is broad, with rapidly evolving tools and players, and ambiguity that still surrounds the potential benefits and return. With the stakes high and investment dollars limited, how can you be sure you are making the right moves?

We have found it effective to focus on building five essential digital business capabilities (Fig. 1): digital engagement, digital workforce and organization, digital service optimization, digital ecosystem, and analytics-driven business insight.

FIG. 1   The Hackett Group’s Digital Acceleration Framework

To illustrate these digital business capabilities and the technologies that enable them, we gathered examples from across our work with various finance leaders.

  1. Digital engagement

A flood of technology innovations has transformed the way finance engages with customers, suppliers, partners and other stakeholders – and the field is still rapidly evolving. These technologies can optimize stakeholder experiences by digitizing and integrating interactions across channels and leveraging data. Broad-based capabilities for digital engagement encompass front office automation, customer self-service, e-commerce and social media platforms.

Development of digital engagement capabilities should emphasize knowing the customer across the journey, customizing interactions, enabling customers to access services or information in different ways (web, phone, app, email, etc.), ensuring consistent interaction across channels, and providing analytics and insight in real time.

Examples of the digital engagement capabilities that finance organizations are developing

  • Omnichannel service offerings
  • Personalized interactions designed around users’ needs and roles
  • 360-degree view of customer interaction across channels
  • Customer profiling for pricing, profitability, risk, promotion analysis or segmentation
  • Interactive dashboards and automated reporting
  • Security provisions with access relevant to roles
  • Narrative reporting that goes beyond presentation of data to include extraction of insights

Enabling technologies

  • Chatbots/intelligent agents
  • Self-service analytics and reporting
  • Data visualization tools
  • Cloud-based finance application suites/enterprise resource planning
  • Natural language generation
  • Machine learning and predictive analytics
  • Cloud-based best-of-breed solutions


  1. Digital workforce and organization

Technology has changed the nature of work by automating routine tasks, digitizing workflows, connecting co-workers in virtual teams, and untethering and empowering knowledge workers with personal productivity tools. These capabilities use digital tools and platforms to maximize productivity, intellectual property creation, and the value contribution of both individual workers and the teams in which they work. Most of today’s digital capabilities enable workers through remote access to applications and self-service provisioning: knowledge management tools; workforce collaboration platforms such as Microsoft Teams, Zoom and Slack; and other means of communication and engagement.

The next wave of digital transformation will have an even more profound impact on the workforce than traditional automation and, for many roles, will change the nature of work beyond recognition. This will be the result of a perfect storm: the entry of a digitally native generation into the workforce, the mass adoption of traditional technologies that eliminate most repetitive tasks, and the rapid maturation of cognitive technologies.

Examples of the digital workforce and organization capabilities that finance organizations are developing

  • Seamless access to enterprise data
  • Common, easy-to-use communication, collaboration and creativity tools
  • Access to structured enterprise intellectual property
  • Access to analytical tools
  • Automation of tasks to free up capacity
  • Employee listening tools and interactive feedback loops

Enabling technologies

  • Cloud-based finance application suites
  • Cloud-based best-of-breed solutions
  • Virtual collaboration tools
  • Online performance evaluation
  • E-learning for finance
  • Intelligent workflow/orchestration
  • Business process management tools for automation


  1. Digital service optimization

Historically, business process automation has never fully lived up to its promise due to the inherently dynamic nature of business processes and operating models, and the inability of business applications to adapt to changes at the speed at which business operates. Without a major overhaul of technology platforms and upgrade of information technology (IT) capabilities, this agility gap will only widen. Digital service capabilities center around the use of content and process digitization, business process management, automated workflows and approvals, robotic process and cognitive automation to maximize the efficiency and effectiveness of finance services, and the execution of underlying processes.

To optimize digital service, finance will need to apply smart automation technologies – both to run traditional, rule-based processes and enable the efficient delivery of new services such as decision support insight. These tools must be faster to implement, easier to configure and more intuitive to use than tools finance has used in the past.

Examples of the digital service optimization capabilities that finance organizations are developing

  • Distributed, location-independent finance service delivery
  • Intelligent automation to eliminate manual or transactional work
  • Autonomous decision-making based on artificial intelligence (AI)
  • Smart financial close
  • Automated or embedded control and risk management
  • Automated report/dashboard production, refresh and delivery

Enabling technologies

  • Cloud-based finance application suites
  • Cloud-based best-of-breed solutions
  • Robotic process automation
  • Intelligent workflow/orchestration
  • AI
  • Self-service analytics and reporting


  1. Digital ecosystem

Traditional organization structures and value chains are evolving into networks of digitally connected resources, service providers, and consumers. The business-to-business (B2B) networks, knowledge networks and internet of things (IoT) are examples of emerging digital ecosystems. Within a knowledge network, companies may, for example, crowdsource innovation, collaborate with strategic suppliers to innovate, or incorporate customer feedback into product development. An ecosystem based on the IoT may enable entirely new business models, products or service offerings.

Using digital pathways to build links with other internal and external customers enhances the value finance can bring to the organization. By connecting directly with external customers and vendors, finance can augment process efficiency and improve user experience in order to develop stronger and deeper relationships with these stakeholders. By leveraging enterprisewide systems, it can access and share information with business units and/or other functions.

Examples of the digital ecosystem capabilities that finance organizations are developing

  • Connected internal and external data management
  • Transaction processing that optimizes efficiency through reduced manual intervention
  • Automated links to financial institutions to simplify cash management
  • Streamlined third-party services such as cash pooling or virtual accounts

Enabling technologies

  • Supplier/vendor portals or B2B marketplaces
  • Customer portals/automated interactions
  • Virtual collaboration tools
  • Application programming interfaces and other integration tools
  • Blockchain
  • Cloud-based best-of-breed solutions


  1. Analytics-driven business insight

Superior ability to mine data for business insight is an important – and for many industries, the most critical – competitive differentiator. Digitally native companies like Uber, Amazon, Facebook and Google optimize their service offerings almost in real time based on analytics-driven insight. Established industrial age firms like Caterpillar, GE and Bayer are redefining their business models, generating analytics-based revenue streams. Consumer packaged goods giants like Unilever and Procter & Gamble compete based on the analytical capability of their marketing functions.

Finance has always been at the center of the enterprise analytical capability and must up its game to develop cross-functional predictive analytics and big data capabilities. The pressure to deliver better insight to help the business formulate strategy – and then monitor and assess performance against that strategy – is driving finance to adopt more sophisticated tools and look at rich datasets across functions. By modernizing data management platforms, managing data as a strategic asset and applying new analytics solutions, finance can speed up the insight discovery process.

Examples of the analytics-driven business insight capabilities that finance organizations are developing

  • A single data repository with consistent definitions and governance
  • Integrated business planning
  • Real-time data access and visibility
  • Provision of prescriptive and predictive analytics for better decision-making
  • Analytics-driven, touchless forecast that leverages both internal and external data

Enabling technologies

  • Smart data capture
  • Automation of data science
  • Master data management tools
  • Advanced analytics/AI
  • Self-service analytics tools
  • Data visualization tools
  • Driver-based simulations

 Of course, your specific priorities for developing digital business capabilities will depend on unique enterprise and functional business strategies and objectives. Also, keep in mind that these capabilities are highly interdependent, with business insight as the thread that ties all of them together. Therefore, you cannot decouple and approach them as discrete concepts.


Fast-track your procurement digital journey

While finance organizations are increasingly becoming the owners of their digital journey, you will still need to work closely with the technology organization to ensure that system/tool selection is consistent with the overall enterprise direction. You will also need to make sure your own organization develops and maintains adequate capabilities to execute its digital business strategy. This includes capabilities for identifying and prioritizing opportunities, implementing new solutions at speed, and optimizing digital functionality following deployment.

The following steps can help you mobilize quickly yet intelligently for digital transformation:

  • Segment finance digital capabilities into the five categories described above.
  • Determine the baseline maturity of these capabilities using an established maturity framework.
  • Identify the key gaps and opportunities within your finance processes.
  • Develop a heat map that prioritizes areas for digital innovation.

From there, you’ll begin to see a clear picture of the direction you need to take.



[1] Our analysis of benchmark data projects that a $10 billion company, with business services organizations operating at a digital world-class efficiency level, spends $15 million more on technology than the typical organization of its size, and it has a $106 million lower operating cost.