Digital transformation is already a disruptive driving force in all facets of business – and the accountancy industry is no exception. Depending on which survey you’re reading, there are different levels of maturity within the financial operation of every organisation, and so the immediate benefits can differ. Either way, digital transformation has become a necessity for all. Little wonder then that the focus of this year’s AccountEX National Accountancy Exhibition & Conference was ‘Digital Transformation within Accounting’.
If your finance function has yet to be disrupted, it won’t be long. You can be assured that if you don’t lead the change yourself, then someone else will – and in doing so I believe it is opening up the sector and creating opportunities for disintermediation. But what exactly does digital transformation mean and how can it enable businesses to reimagine their finance function?
Put simply, digital transformation is the use of advanced technologies, such as cloud computing and its consumption as a software-as-a-service (SAAS) model, to transform the way organisations operate and service their customers. There are big advantages such as increased control and efficiency and, at its most fundamental level, it helps businesses drive future success. The cloud can also drive down costs and create ‘connected’ finance teams to create and analyse much larger datasets of business information (not just financial) across the business. With the integration of the Internet of Things (IOT), it delivers context and data, with the potential of bringing to life a business and enabling transparency of supply chain and business performance like never before. This has the potential to promote greater transparency around budgeting, forecasting as well as spotting anomalies and trends more rapidly to stay ahead of the competition. In addition, technologies such as invoice automation can help companies to comply with different types of financial legislation. Automating basic transactions also gives accounting departments more time to spend on critical thinking, leading to better business decisions based on strategic insight.
So where are we in terms of the maturity levels of digital transformation? IT advisory and analyst company IDC suggests that two thirds of SMEs are already using new technology to improve their business through a digital transformation strategy. We are seeing the benefits first hand at Advanced, with customers like East Herts Council using technology to streamline their financial operations. We are seeing more and more accountants believe that in-depth knowledge of technology and automation will be critical to the success of the profession in the next three years.
A shift in attitudes to digital transformation
However, focusing purely on technology is a misconception with regards to ensuring success from digital transformation projects. Transformation also requires a change in culture, structure, processes and even personnel. To be fully digital, organisations need to ensure they are rethinking and refreshing their existing business models, but also the people they hire and the way they work.
Many employees may be wary of a digital shift coinciding with fewer jobs in the finance function – but they needn’t be.
Rather than seeing it as a threat to their jobs, digital transformation can positively impact the sector by allowing it to be more influential in both strategy and decision making. People should be freed up to work on higher value tasks, for example creating insight from ‘connected’ data with reporting that is (near) real-time, rather than waiting for month end.
Furthermore, a digital strategy shouldn’t mean companies get carried away with making digital technology changes for change’s sake. Companies should start with the positive impact they want to achieve in three areas:
• the functioning of their accounts team or accounting practice to save time or remove manual tasks
• the ability to provide organisational leaders with business and financial insight they need for better decision making
• the impact the financial/performance insight can deliver and how it can enable the business to stay one step ahead of their competition
This is where the CFO leading the accounts team needs to work hand-in-hand with the CIO/CTO – where technology and financial practices collide in the most positive, connected way – to agree, for example, what technology changes need to take place with what investment.
A journey, not a destination
Perhaps the best advice for any organisation attempting to go through digital transformation then is to remain focused on the outcome. Digital transformation does not mean going from one state to another in a single project. It’s more about getting to a state where a company can continually adapt as technology develops to remain agile and open to change.
The problem is, with the existing IT infrastructure of many companies, this isn’t possible. Archaic technology and processes don’t allow for companies to continually evolve. So digital transformation will require incremental changes. Simple shifts from moving from paper to using digital processes, using workflow software to prevent bottlenecks and breaking down the barriers of communication between different departments are just some ways businesses or accounting firms can make a digital transition. Whether hiring a chief digital officer or (re) empowering the CIO/CTO, someone must take the lead to oversee the digital shift in each and every function within the business.
What’s clear is that it’s no longer an option to incorporate digital technology into the organisation – it’s a necessity – and it will be the accountants taking the first steps now that will overtake their counterparts in the years to come.