By Tim Wakeford, vice president of product strategy, Workday
First the good news. Businesses in the UK and Ireland (UK&I) are world leaders when it comes to the digital transformation of finance. According to new research from Workday, nearly half (49%) of organisations surveyed in the UK&I have already developed and deployed a digital finance strategy, compared to the global average of just 35%. A further 44% of UK&I businesses surveyed are currently in the process of developing a digital finance transformation strategy and have even run pilots over the past two years.
This really is positive news for the UK and Ireland, as it will provide businesses in the region with a broad range of significant benefits. And given the difficult economic conditions organisations are facing the world over, any such advantages will be welcome. According to our study, the perceived benefits of digital finance include value-adds such as automating the reporting of non-financial data; improving procurement; and streamlining financial close, consolidation, and statutory reporting.
Conversely, while UK&I businesses are taking great strides forward into digital finance, there are business challenges that are holding back progress. If these challenges are not tackled, businesses run the risk of leaving benefits of digital transformation unrealised.
The Three Barriers to Furthering Digital Finance Transformation
One of the most significant challenges to further progress is a lack of cooperation between IT and finance teams. Nearly half (49%) of the finance and IT executives we spoke to said that their business functions are only sometimes or rarely aligned with each other on objectives, and that they never collaborate, or only collaborate on an ad hoc basis. Equally worrying is that just 34% of respondents say that IT regularly advises on emerging technology and leading platforms for finance – well below the global average of 53%.
The second barrier relates to the perennial skills gap challenge. For all their success, UK&I’s finance and IT leaders have relatively low levels of confidence in their organisation’s approach to digital finance skills and systems. Just 39% believe that they have the skills needed to keep pace with new and emerging finance technology, below the global average of 47%. Only 44% are confident that their finance team can run critical reports without IT oversight. Understanding employees’ skills is essential to operating a business and imperative for the future of work. Companies are increasingly adopting a skills-based approach that widens the talent pool and finds workers with skills that thrive in dynamic environments.
Lastly, a critical barrier to further digital finance transformation is outdated legacy systems. Perhaps surprising, given that so many UK&I firms say they have already developed and deployed a digital finance strategy, is the fact that just 33% of UK&I’s finance and IT leaders describe their organisation’s current finance technology as “durable.” For some (38%) dealing with day-to-day IT support issues leaves no time for strategic finance transformation, while for others (33%) limited time, budget, and/or resources are hampering their ability to simplify legacy finance systems and eradicate technical debt.
Freeing the Path to Further Progress
While many finance and IT teams are frustrated that their digital transformation initiatives are stalling, the positive news is that all these barriers are surmountable. By acting now, CFOs and CIOs can put their organisations back on track. We recommend four immediate steps:
- Invest in technology to improve procurement. Prioritising investments in this area will help accelerate the necessary move away from legacy systems, freeing time for IT teams to work with finance on strategic transformation initiatives.
- Automate high-stakes tasks. Where finance teams struggle to run critical systems without oversight from IT, automation can play a crucial role. By masking technical complexity, automation can unlock the benefits of digital transformation without putting an undue strain on IT team resources. Automation also buys time for companies to put in place our third recommendation.
- Provide training to finance teams in key digital skills. While organisations should look to hire the necessary talent, it may not always be possible to fill every role given the high demand for digital skills. Businesses should therefore place an equal focus on upskilling finance teams in close collaboration with IT.
- Put in place structures to better align finance and IT. 44% of respondents say that the CIO does not join key finance meetings. Organisations should look to implement formal meetings and workgroups to ensure IT and finance work hand in hand.
For many businesses in the UK and Ireland the fruits of digital finance transformation are tantalisingly within reach. In the face of the remaining barriers, the important thing is for organisations to maintain momentum. By overcoming these challenges, and completing their transformation journey, finance teams in the region will be better placed to focus on what matters most: analysis and action that drives better business outcomes.