Connect with us


Digital transformation for Finance teams: crossing the great divide



Digital transformation for Finance teams: crossing the great divide

By Paul Morrison, Global Lead for RPA and Smart Automation,The Hackett Group

Next-generation technologies such as Robotic Process Automation (RPA), Artificial Intelligence (AI), cognitive processing and advanced analytics are top of mind for many CFOs today, and not without reason. They offer the promise of improved efficiencies, lower costs, redeployed talent, smarter and more strategic decision-making, and enhanced customer experience.

The benefits of technology optimisation and broader digital transformation present a radical shift in how companies operate. The latest research from The Hackett Group observes that companies can cut Finance costs by more than 40 percent through comprehensive digital transformation.  Staff spend less time on transaction-oriented activities such as number-crunching or data entry, shifting their attention to higher value work such as finding new opportunities to enhance business results, driving innovation, improving agility and customer experience, and identifying and avoiding risks.

The findings are similar in other business services areas such as Procurement, HR, and IT. The Hackett Group’s research shows that digital transformation can reduce operational cost levels to below those of top performing ‘world class’ organisations in these areas.

The big divide 

It’s a reality that virtually all corporate finance leaders have significant aspirations in terms of smart automation and digital transformation, but most have only dipped their toes in the water. The ‘expectation gap’ between corporate aspirations and actual adoption rates is enormous. Many companies have run RPA pilot programmes to automate more labour-intensive transactional activities, but have stopped there. This has created ‘pockets of excellence’ that have not been standardised or extended across the organisation – generating only limited benefits. Few Finance teams are using these technologies to impact end-to-end processes significantly, relying solely on longer term, slower moving investments in core systems.

Yet business units in many organisations are jumping in with both feet, as demonstrated by the winners and finalists of The Hackett Group’s Digital Awards. HP has been automating Finance processes by leveraging Robotic Process Automation (RPA), advanced analytics, and artificial intelligence, among other emerging technologies. This has enabled HP to lead in digital innovation and positions Finance as a forward-looking strategic adviser. This Finance function is noteworthy for its strong vision, effective eco-system, and best-in-class culture creation. HP has deployed a significant number of robots, significantly increasing process efficiency and accuracy.

Other digital leaders are making dramatic progress outside the area of Finance. Vodafone, which was a finalist in The Hackett Group’s Digital Awards Analytics category for 2018, has revolutionised its procurement function with automation and AI, training a large number of users across the company to use data visualisation tools to spot trends, and RPA to simplify tasks. This reduced time to market by 20%, cut procurement process costs by 11%, and the purchase order rate is now near perfect – having been less than 75% previously. IBM, another Digital Award winner identified by The Hackett Group, is relying on its new Cognitive Support Platform to manage support for more than 7,000 products across 170 countries. The platform is used to prioritise cases and manage workloads, and also utilises chatbots to resolve issues via self-service. Oil and gas giant Shell, another 2018 Digital Award winner, has created an analytics network of 1,600 people, supported by the right data and technology, and is addressing a host of business opportunities; for example, they now optimise spare parts ordering, delivering millions of pounds in savings.

With such impressive gains, what’s holding finance teams back? 

Not knowing where to start is undoubtedly one factor that is making it harder for finance organisations to move ahead broadly with digital transformation. Smart automation is also a new technology area, and momentum is still building. To find staff with the appropriate skill set is challenging too, and companies must manage conflicting priorities. Some processes and problems are much easier to address with digital transformation than others, so opportunity assessment is also crucial. Moreover, digital transformation often involves the integration of technology from multiple vendors, so it’s not as straightforward as simply selecting a single, large technology vendor as in the past.

In The Hackett Group’s view, behind almost all high impact digital transformation today are three megatrends – the ‘3 As’ of automation, analytics and AI. Whilst these are not new concepts, The Hackett Group is seeing the breadth and depth of their deployment increase significantly – most of all when they are deployed together to magnify and reinforce the impact of digital transformation.

To get this right requires careful planning and a complex blend of skills, as automation, analytics and AI are interlinked but distinct disciplines. Expertise is required to build the right mix of these three areas to address the total digital transformation opportunity. And each can require different skill sets to design and implement. Automation requires process reengineering and systems integration capabilities. Analytics is focused on data and statistics.  AI draws on the latest in computer science such as machine learning and Natural Language Processing (NLP). Marshalling the right skills and capabilities can be difficult and this explains why so many Finance functions struggle to scale up their digital programmes. Most importantly, any technology implementation must be part of a broader transformation effort that also looks at people and process optimisation.

Maturing technology opening up new possibilities

The greatest lesson to learn from companies leading the charge towards digital transformation is that it should be treated as a comprehensive change initiative – complete with business cases and detailed implementation planning. For the transformation to be successful, IT must forge solid partnerships, both with Finance and more broadly, to prevent business units from ‘going rogue’ and doing things on their own.

Digital transformation is a process, and companies are slowly discovering how to extract maximum value from these new technologies. While the initial focus was on operational environments with high-volume transactions and customer-facing applications, RPA and other technologies are now maturing. The disruptive power of analytics and AI is also being embedded in specialist Finance ERP and best of breed software. This is opening up the potential of digital transformation in a much wider range of areas like risk management, fraud identification, and commodity pricing forecasts. As well as targeting efficiency, companies are targeting other business outcomes such as improved cash flow, risk reduction, and improvements to procurement and supply chain effectiveness. Digital transformation is not just cutting costs, it is helping companies to make smarter decisions.

Editorial & Advertiser disclosureOur website provides you with information, news, press releases, Opinion and advertorials on various financial products and services. This is not to be considered as financial advice and should be considered only for information purposes. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third party websites, affiliate sales networks, and may link to our advertising partners websites. Though we are tied up with various advertising and affiliate networks, this does not affect our analysis or opinion. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you, or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish sponsored articles or links, you may consider all articles or links hosted on our site as a partner endorsed link.

Call For Entries

Global Banking and Finance Review Awards Nominations 2021
2021 Awards now open. Click Here to Nominate

Newsletters with Secrets & Analysis. Subscribe Now

Newsletters with Secrets & Analysis. Subscribe Now

Newsletters with Secrets & Analysis. Subscribe Now