The key question facing finance leaders is not whether to strengthen their digital capabilities. That's decided.
A new study from the AICPA and CIMA found that digital transformation is no longer about gaining a competitive advantage. You need to increase your value and ultimately survive. The CFO's energies must now be focused on ensuring that new capabilities are implemented effectively. This means building a constructive relationship with IT and data management.
The starting point is that digital transformation is a much deeper commitment than simply purchasing new IT products or upgrades. New capabilities brought to market impact the entire organization and its culture, so this concept must be front and center. You always want to use them to drive better ways of working and value creation.
Finance leaders have relationships with operational leaders, have data insights into the value chain across all operations of the business, and can use this data to improve decision-making. This unique position within organizations makes our profession ideally placed to lead the digital transformation.
Make automation work
Our research found that routine tasks such as data entry, invoice processing, account reconciliation, and payroll are being automated through advanced software and robotic process automation tools. Additionally, data analytics and machine learning algorithms make it easier to access large data sets, providing deeper insights for operational leaders and leading to better decisions across the business.
However, we found that there was a lack of collaboration between finance, data, and IT teams that hindered optimization of these technologies. This is a classic case of how siled work can hurt an organization's performance. CFOs need to utilize their convening powers to avoid this.
Successful digital transformation requires finance teams to have a “seat at the table” from the beginning. Often, they are only involved in costing and financing the project. Digital transformation projects rely on harmonizing processes and standardizing systems across different business functions. This requires the kind of end-to-end perspective that finance teams have but IT teams may lack.
Finance leaders need to ensure that automation reflects the value chain across all operations, and they need to do this in collaboration with their IT and data management teams. Working together with a clear, shared understanding of the insights needed to support better decisions will help realize the full potential of digital transformation projects.
Data and Analytics (D&A)
Digital technology has greatly enhanced the power of data analysis tools available to financial professionals. This will be one of the key drivers of our productivity in the future. As a result of this change, we need to strengthen our data strategy and play a leading role.
This cannot be left to data or IT departments alone. As outlined above, in order for finance teams to leverage data to maximize organizational value, they must be fully involved in all data processes and planning. Part of becoming a data custodian includes learning about data ethics, which we've been researching.
It is important for organizations to establish clear responsibilities and protocols around data ownership to ensure data integrity, quality, and compliance. To achieve this, finance leaders need to play a greater role in their companies' D&A governance, and that means better understanding the concepts that underpin it. This can be a considerable task, given the scope of data currently available, especially non-financial and sustainability aspects, and how it is distributed across the organization.
We found that while complying with data regulations in your jurisdiction is a necessary step, it is not sufficient. Stakeholders have expectations about how the organization uses and processes data, and high-performing finance teams recognize these and work hard to meet them.
This cannot be achieved by a single team alone. It requires cross-functional collaboration and establishing a good data culture to maintain. This is another example of how breaking down silos is a key part of succeeding in the digital age.
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