The pace of digital transformation is accelerating across all industries, creating technological disruption and a risk of being left behind. It’s crucial for business leaders to think through how to make the most of digital technologies — especially within the finance function — and prepare for the resulting, foreseeable changes.
Creating sustainable value through digitization requires a strategic investment in the right technology and a cultural shift across the whole business. There are five crucial considerations for organizations when designing and implementing a smart, value-driven digitization strategy for their finance function.
Taking an agile, customer-centric approach to innovation is imperative for a successful transformation.
Consider applying start-up methods to foster innovation in the finance function. Think about setting up digital innovation teams within a workforce, designed to incubate new ideas in a protected space that is alongside day-to-day operations.
Together with fostering creative environments to develop use cases, organizations can take an entrepreneurial approach where individual teams pitch and compete for the best digital use cases.
These routes can strengthen a culture of experimentation that is based on a constant process of learning, unlearning, and relearning. Such a culture creates first-hand experience to identify and push innovative solutions that ultimately create value for the organization.
Above all, organizations must remember that innovation is about solving their internal and external stakeholders’ most pressing issues. A “customer-centric” approach must drive the input and output of any innovative programs.
Once it has been decided to take an agile approach to innovation and the critical path to take is agreed upon, teams need to “go big.”
The scalability of digital solutions has to be a key part of decision-making. Transformation is not about the initial hype that comes with implementing individual technologies in small-scale applications. Truly revolutionary transformation is delivering these at scale throughout the organization.
That’s even more important for large organizations that have to cut through layers of complexity due to diverse businesses, inorganic growth, heterogeneous IT landscapes, and regulatory requirements.
It’s also important to consider the finer detail. For example, across the finance function, automating manual account reconciliations, which may seem to have a minor impact for the individual entity, can have a huge efficiency impact when rolled out to all entities within a group.
The timing of digital investment is a key success factor. Being a “front runner” can bring significant benefits, but it can also be a costly endeavor.
Some organizations might be better off by adopting a “fast follower” strategy. Blockchain, for example, was touted as a solution for the financial services sector, yet it is the automotive, health-care, and supply chain industries, as well as governments, that are using blockchain to a much faster effect today.
Being an innovation leader across all technologies might not pay off and organizations should carefully evaluate whether they want to pay the price that comes with being first out of the door.
It is worth thinking about how changes to the finance function feed into broader requirements facing businesses, such as the need to undergo external audits.
As businesses look to get more insight from their audit process, they are investing in technology that enables auditors to deploy their own digital platforms such as data analytics. The use of data analytics audit procedures is often affected by the availability and quality of the underlying data.
Companies and their auditors are both undergoing digital transformations. Such parties sharing information with one another about their digitization efforts can support better planning and allow each group to maximize the value and benefits of their investments.
When these steps have been taken, and a digitization strategy has been rolled out, organizations must also look at how to evolve their talent models. The right people are needed to drive the strategy and harness its outcomes.
When adopting a customer-centric approach, it is important to leverage the experience of teams working on the frontline of a business. Such people can identify how technology could improve existing processes and are amongthe biggest contributors to a digitization strategy. Without aligning transformation and talent strategies, digitalization can lack impact.
Considering and executing on these factors requires a change in how leaders think, behave, and operate.
For operational functions such as finance, being agile is important when adapting to this change. An agile approach enables organizations to pull the right triggers at the right time and to maximize the benefits of digital transformation.
For the finance function, these benefits can include increasing quality and productivity, and improving its relevance in supporting the future direction of an organization. Technology must ultimately be applied in a way that provides a real, meaningful contribution to business success.
Hermann Sidhu is global assurance digital leader at EY. Thomas Spannagl is EY’s assurance partner for Germany.
The views reflected in this article are the views of the authors and do not necessarily reflect the views of the global EY organization or its member firms.