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For decades, changes in Financial Accounting have been measured, slow and only after considerable thought and reflection by numerous parties. However, recent events have triggered more than little discussion and potential action to make all kinds of processes more “digital” including Finance processes. The old business-as-usual is obsolete and new changes will bring Finance into a new future – a business-as-unusual world.
This is interesting as digital transformation was already a top discussion item within executive circles. But will the new focus deliver real transformation or sub-optimal, incremental solutions? Urgency may trigger some less than ideal, short-term solutions but what is the best long-term approach for Finance? It’s time for some thoughtful analysis as not all digital change is necessarily great. It’s time for Finance to develop some interesting plans if it wants to drive great future business outcomes.
Let’s dissect this…
Late last year, I published a book: Digital With Impact . In the 2 ½ years I spent researching it, I noticed large numbers of people calling one project or another digital or transformation but few really were. And, worse, the success rates for many of these efforts weren’t very great. The book even started with this caveat:
“The word “transformation” is suffering these days. Everyone seems to use it to describe even the most modest changes (e.g., “5 Ways Paint Can Transform a Room”). Sorry, but wall treatments alone aren’t transformational and neither are a lot of the technologies and projects that people peddle to “transform” businesses.
“Digital” has also suffered the same fate. Businesses were supposed to look at the amazing amount of data originating from many new sources (e.g., Internet of Things (IoT) devices, websites, smartphones, accelerometers, etc.) to create new offerings, new revenue sources and new insights. Unfortunately, the digital washing is everywhere and it has confused people as to its real promise.”
Recent events are showing a surging interest in new digital transformation efforts. But are these efforts really transformative and will they have lasting power?
Already, we see some firms simply automating a manual task and calling that a digitally transformed process. Whether it’s substituting one technology for another or acquiring some remote entry software to make an on-premises application accessible from a remote location, these are incremental, not transformative, changes.
In a recent Sloan MIT Review article, we find:
“However, maintaining business continuity through this crisis does not simply mean substituting digital work for analog work. Organizations are being forced to deal with a disruption to their momentum as well as financial and other crisis constraints, alongside a sudden need to change work practices and routines. It is not (digital) business as usual.”
In fact, change for Finance will come in many layers and flavors with much of the change dependent on a Finance organization’s starting point. Some of these efforts will be catch-up activities that merely make a firm competitive again. The more transformational efforts will be those that create all-new competitive advantages for the company (e.g., unique market insights, support for new business models, etc.).
Some organizations are way behind in their systems, skills and processes. Their work areas are teeming with paper, spreadsheets and poorly integrated applications. Where systems exist, they may be old, have a lot of technical debt and run on-premises. This environment is painfully out of sync with the dynamic, sometimes chaotic business world of today. Often, new systems were needed years ago but were not a priority for the firm.
Many firms may have automated large aspects of data entry functions but these may only work well when people are close to the systems and the paperwork they interpret before entering the information into the software. These are processes and technologies that were designed for offices to be completed by office workers. Many of these systems must either evolve or be replaced as the nature of work has shifted and must be capable of being completed anywhere an internet connection is possible.
Not content with modern, cloud-based (and multi-tenant) application software, forward-looking businesses are already looking for finance solutions with built in workflow and exception handling processing. These tools accelerate the flow of information, reduce customer and vendor status calls to Finance, eliminate lengthy and time-wasting routing of documents, etc.
Smart applications are the next step in the reinvention progression. Tools like machine learning, algorithm supported decision making, robotic process automation, etc., permit Finance team members to focus exclusively on anomalies and exception situations and not repetitive, mundane business events. These solutions move Finance from a largely clerical role to a high value-added strategic role.
Near the top of this evolution, we see Finance leaders reimagining how they can better assist the operational aspects of their firm grow top and bottom-line revenues. The insight to power this comes from the use of external and internal big data sets that can be coupled with powerful planning tools, new cost accounting approaches, critical analyses into revenues, supply chains and customers, etc. It is at this stage that Finance’s capabilities truly expand beyond the four walls of the function.
The Path Forward
For many Finance professionals, it’s time to rethink the nature of Finance work and how that work will be completed now and in the near future. They should not just rush out and implement a newer version of their current software (aka a package-ectomy) as it may not deliver the best value for the group and the employer long-term.
Instead, Finance team members should take some time to see what is the art of the possible. Assume your next solution will be several step changes ahead of the current technologies you use today. At a minimum, your starting point should include multi-tenant cloud solutions that were designed for a mobile-first world. Better still, look for solutions on new platforms that contain new technologies like chatbots, machine learning and more.
Look for solutions with modern architectures, robust platforms that scale, etc. And, most importantly, look for a vendor that exhibits great partner attributes. Avoid vendors that have adopted one-sided, overly complex, obtuse contracts as these may portend expensive problems down the road.
Determining how much change your Finance organization can accept is an important issue to ponder. While there is often a tendency for people to want the familiar, nostalgia is a poor substitute for a great strategy and new solutions. Get solutions designed for the future of your firm, not its past. If you don’t have some training, skill development and other issues to conquer with this effort, you’re not being ambitious enough. Don’t settle for incremental improvements – they’re expensive and wasteful.
- Some basic automation efforts today are, in a manner of speaking, long overdue. These catch-up efforts, though somewhat digital in scope are not transformational. Moreover, they may not be enough.
- There are other levels of change out there. One involves the acquisition of better, flexible and scalable technology. The other involves technologies and visions that support significant reinvention, new business models and outsized growth. Finance leaders should challenge themselves and their teams to break from the past and its constraints. Ideate new ways to work and create new value opportunities for Finance and its constituents.
- Finance needs to expend time and energy to uncover new capabilities and the art of the possible. Remember, the vendor (and integrator) that helped you with your last solutions 10-20 years ago may not be the best guide for your firm today.
- It’s time to say goodbye to business as usual and welcome in a new set of processes, capabilities, etc. You must have the courage to change and the dedication to see things through.
Good luck – your firm’s depending on you!