Why digital transformation is key for finance in the age of COVID-19

By Robert Douglas, Europe Planning Director at Workday Adaptive Planning

Unexpected events can happen that force an organisation to change financial plans and recalibrate business strategy. But, in 2020, this happened on a global scale as finance teams worked tirelessly to guide their businesses through the original economic shock accompanying comprehensive lockdown restrictions to counter COVID-19 and the now very uncertain long-term outlook of the global economy.

Digitally prepared

What has become evident over the last several months is that not all businesses are equally prepared to quickly restructure their financial plans in the face of a crisis. No one could have predicted COVID-19 at the start of the year, but some enterprises that previously shifted away from static planning and legacy technologies were at an advantage when the pandemic hit. This is because they had made the transition to more agile and digitally sophisticated processes, informed by continuous planning and complex forecasting based on live data.

The digitalisation drive within finance is not new, with the ever-increasing use of modern, cloud-based financial technologies increasing steadily in recent years. Yet despite the recent advances, many finance teams had not yet progressed. A recent CFO global survey shows that 54 percent of CFOs have implemented some aspect of finance digital transformation projects, defined as moving IT infrastructure to the cloud, automating nonstrategic tasks, establishing a ‘single source of truth’ through data optimisation, and/or using predictive analytics powered by artificial intelligence. That leaves nearly half of the finance teams managing through the biggest Black Swan event of their careers without the benefit of newer technologies and processes.

Confident agility

This “divide” of digital accelerators (those that have completed some finance transformation projects) vs. digital laggards (those that have not completed any projects) proves to be important, especially in our current business climate. When looking at the digital accelerators, 73 percent feel confident about their two-year profit and loss forecasts, and almost four out of five (79 percent)  believe their teams are proficient in efficient planning, reporting, and financial close. Lastly, 70 percent were confident in their teams’ ability to respond to change. The number of ‘digital laggards’ who express the same level of confidence and efficiency for their teams is at least thirty percentage points lower across all three areas.

For teams that have the benefit of newer technologies, pivoting strategy—from hiring to suppliers to marketing spend—proved easier. For example, many finance teams were reforecasting the business at unprecedented levels in March and April, in some cases 30X more than pre-COVID-19 levels. This is challenging when planning is done in static spreadsheets and further complicated by most teams working from home under quarantine guidelines. Teams operating with cloud-based technologies and automated processes had an advantage, which is why 34 percent of CFOs say they will prioritise digital finance transformation projects in the next year.

Involving the team

Contrary to what many might think, the reason for finance leaders not prioritising digital transformation projects is not budget, according to the survey. Rather, it is the prospect of having to upskill the workforce and counteracting cultural resistance to change that most cite as roadblocks. While most tools today can easily be adapted to the specific needs of a specific finance team, finance professionals clearly must change their way of working to maximise the benefits of the new tools as well. This second part of the process is proving to be difficult for many.

Yet instigating change clearly falls within the CFO’s remit and there are some relatively easy steps to take. Importantly, CFOs need to lead by example by identifying and experimenting with new technologies and encourage all employees to do the same.

Through both upskilling and hiring CFOs can begin to add the necessary skills to manage new technologies and applications. Collaborating with Human Resources on objectives and milestones can help align the team to the required composition.

The future is bright

Now, more than ever before, organisations need to boost productivity and plan for an uncertain future. While it is never simple to transform the way a business function operates, it is becoming increasingly easier for finance to begin—and continue—to adopt critical new technologies and processes to help guide the business in our changing world.