Digital transformation is a phrase that’s heard in nearly every board meeting and executive retreat. What is it, though, and why’s it such a big deal? There are a lot of definitions, but a nice, simple one comes from George Westerman, principal research scientist with the MIT Sloan Initiative on the Digital Economy: “Digital transformation is when companies use technology to radically change the performance or reach of an enterprise.”
“Radical change” may sound like a catchphrase from the ‘60s or ‘70s, and not one that is very applicable to CFOs. The somewhat frightening reality is CFOs are not only being asked to undergo this radical change, they’re being asked to lead it for their organization. CFOs are practical folk and demand specificity; that is, they want to know what digital transformation looks like for them and their finance team.
On a high level, it means having the technology and processes in place to provide “great detail and insight” on a timely basis. On a more granular level, digital transformation requires CFOs to:
- Understand and access the financial KPIs that drive each departments performance.
- Implement tools that are agile to allow them to quickly adapt to change.
- Spend more time and energy on analysis and less on transactional processing.
- Become more technically savvy to empower the rest of the organization.
Rather than “spending time on routine activities,” Susan Parcells, finance transformation director at BlackLine, says finance pros “can now focus on actual analysis; they have the opportunity to work with business leaders and influence important strategic decisions with the best information available.” That’s a far better use of a CFO’s genius and time.
What’s holding CFOs back from digital transformation
Radical change is easy—and fun—to say. However, change on an departmental not to say organizational level is stunningly difficult at best. One of the biggest obstacles is the human factor, experts say.
“Overwhelmingly, in an age of unprecedented change, we aren’t struggling with the technical system but the human system, and what IT [and financial] leadership requires is the ability to unlearn and relearn, to forget what we think we know and learn from what is working,” Greg Bledsoe, managing consultant at Accenture, told CIO. “…. The ability to move with the times and question our own foundational beliefs about how we manage the work and the people is the most important skill.”
For many CFOs, their organization’s technology is as outdated as is the way of thinking. A survey of 157 senior finance executives by CFO Research found:
- A combined 63% of respondents describe their finance function’s technology as “inefficient,” “silo-constrained,” or “not linked to decision-making.”
- Only 12% “strongly agree” that their current technology has the agility and flexibility “to support business-strategy and business-model changes over the next two years.”
- Only 11% strongly agree that “their finance function uses technology to support new business-innovation initiatives.”
Not surprisingly, then, digital transformation is also expensive, requiring investment in the right technologies and talent. This presents a significant problem for finance departments, who are expected to tighten their belts by 1.3% in 2018, according to The Hackett Group’s Key Issues Study. Indeed, only 35% “believe they have the resources and competencies to execute in their digital transformation strategy.” CFOs appear to be putting digital transformation high on the priority list; finance executives are starting to reallocate resources that will enable fuller adoption, according to CFO.
How to digitally transform with the cloud and Trustantial
Finding the right human talent as well as funds to embrace digital transformation is no easy feat. And on the technology side, there’s quite a laundry list of digital tools, according to Deloitte research.
One of those tools is cloud computing, a wise use of limited technology dollars. Cloud solutions deliver critical services such as financial management over the Internet. Instead of a huge upfront investment in infrastructure, you get a secure, highly scalable foundation to support your journey to digital transformation. What’s more, cloud-based accounting/ERP systems automate time-consuming transactional tasks, freeing your finance team to be more analytical and greater advocates for “radical change.”
Best of all, you don’t have to go it alone. The pros at Trustantial are cloud experts, and will help you implement smart tools like Sage Intacct financial management software that can make finance a digital transformation pioneer in your organization. Give us a call to start your digital transformation today.