By Nick Felton, Senior VP at MHR Analytics
In this day and age, Finance Transformation, Digital Transformation and Digital Finance Transformation are hotly debated topics in the finance world; often dominating the conversation on social media or at conferences. As such, despite the more immediate economic and cash-based concerns of the current pandemic, future transformation is never far away from finance discussions.
However, there is still a degree of uncertainty around Finance Transformation and how it can be successfully deployed within businesses. With pre-conceptions of over-complexity or vast expense surrounding the idea of Finance Transformation, many SMEs believe that it is only relevant to larger organisations. However, this isn’t the case; it is entirely applicable to organisations of all shapes and sizes. And with the right strategy, Finance Transformation can be cost-effectively implemented in line with each individual enterprise’s vision for a successful financial future.
Working in balance to drive transformation
Historically, change projects have been based on the ‘People, Process and Technology framework’, with these three components working in harmony to facilitate business transformation. However, in an increasingly digital world, companies are beginning to shift focus to the benefits of Digital Finance Transformation. Defined as a technology-enabled change and improvement in the performance of the Finance Team, this change in focus has prompted a change in the traditional change project framework; expanding on the original people, process and technology components to incorporate data. Using this vital information, finance teams can identify actionable insights which then work to truly drive organisational change.
When it comes to the current interest in Finance Transformation, there are two major influential factors. The first is the growing organisational drive to proliferate, mine and use data to gain a competitive advantage. In order to add insight and value to their operations, finance teams need to remain at the forefront of making sense of this data to utilise it effectively going into the future. As such, finance is taking a prominent role in data governance in many organisations.
The second factor is the recent rapid technology advances, such as Cloud technology and Artificial Intelligence (AI). With fast platform availability, disparate data source connectivity, unlimited storage and processing capacity and remote accessibility, Cloud is fast becoming the future of a collaborative workforce, particularly when it comes to facilitating business-as-usual operations in times of crisis. In particular, this is relevant to situations such as the current pandemic, where enforced home working has the potential to negatively impact on access to vital systems, productivity levels and team alignment. By deploying Cloud tools, staff members can benefit from easy remote access to the central systems they need, from home. Rather than forcing staff to work on individual, localised files, which are rife with inefficiencies and the potential for misaligned work, these tools enable collaborative working by keeping files centrally available and visible to all.
AI has also become more common in finance in recent times. In particular, Machine Learning (ML) has become increasingly prevalent, with the sophisticated capabilities and intelligence of this technology allowing teams to automate time consuming manual processes and streamline operations. This is especially useful in departments such as Accounts Payable, where automated processes take labour-intensive admin tasks off employees – freeing them up to focus on higher-value tasks and reducing the risk of human error. Not only does this machine input increase accuracy, but automating certain monotonous processes can dramatically improve the overall productivity of finance teams, allowing staff to undertake more engaging tasks and truly add value.
Of course, when it comes to implementing these latest-and-greatest technologies to mitigate against the effects of a crisis, there are other factors to consider. ML undoubtedly brings enormous benefits to finance operations, but with the constant cost pressure and increased demands on the finance team in times of crisis, there is an expectation that employees must do more with less. With the lower upfront cost and faster set-up capabilities of Cloud platforms, this minimised cost of entry makes it a first port of call for finance teams when disaster strikes.
As such, all these factors, along with the ongoing uncertainty and financial pressures surrounding the crisis, is truly driving the desire for Finance Transformation within organisations.
Preparing for future crises
Whilst it’s understandable that businesses are currently focused on surviving the here and now of the pandemic, eventually, the realities of this current crisis will prompt businesses to take mitigating action in case of a repeat event.
As organisations prepare themselves for a future crisis, planning will begin to focus on the medium and long term, and Finance Transformation is set to be front and centre of the priority list. As businesses battle to deliver what the organisation needs now in terms of data and planning, the importance and need for Finance Transformation will become increasingly clear, if it hasn’t already.
Because Finance Transformation can be used to describe any initiative or set of initiatives that change and improve a finance team, there should be no barriers to entry when looking at transforming a team. Finance Transformation is not solely reserved for large organisations, and it does not necessarily have to comprise a large, complex or hugely expensive project In fact, some of the most successful transformation projects are based on a series of small steps rather than a big bang, and internal resource can be just as effective as external consultants. It’s all about individual business needs.
For more information about how to drive Finance Transformation visit mhranalytics.com.