How digitally mature is your finance function?

by | Aug 24, 2021 | Insights | 0 comments

HOW DIGITALLY MATURE IS YOUR FINANCE FUNCTION?

It is imperative to adopt a sustainable drive towards digital transformation in a world full of uncertainties. Following the COVID-19 pandemic, a growing number of companies found digital transformation not only necessary but as a business imperative. These unprecedented events made us all realise that we cannot let outdated routines and mundane work bog down our employees.

A majority of companies worldwide have commenced the journey to digital transformation. However, the reality is that most of them operate in a hybrid department. A handful of departments combine digital and manual processes to the workflow.

The lack of progressive innovation is evident within finance departments because of the impression that this transition can get costly. However, becoming digitally mature can provide optimisation opportunities leading to efficient cash flow. On top of that, digital transformation on both A/P and A/R teams can instate collaborations to help the company succeed.

A Competitive Finance Team Through Digital Transformation

One of the most crucial business processes is the efficiency of cash flow. This ongoing process’s critical nature makes a smooth digital financial transformation essential. A digitally mature finance department can face complex payment processing challenges, fraud, cash visibility, and compliance. Leveraging technologies and digital solutions can prepare you for what’s to come. You never know when the next chaos or great opportunity comes, but it is best to come prepared.

A digitally mature finance department incorporates automation to handle mundane, repetitive tasks, leverages data and technology such as AI and deep learning to perform predictions. As a result, the organisation increases its accuracy in planning and risk management while providing the workforce plenty more time to focus on value-adding tasks.

But how do you know if your finance department is digitally mature?

Assessing Digital Maturity
When a finance team considers its Digital Maturity, they must observe several pillars or risk a costly transformation failure.

How good is the data you work with? – Do you have constant rework issues or lack of confidence in forecasts and reporting because you do not trust the data or processing leading to reporting?

Do you have all the data you need? – Is the data used for planning and budgeting limited to your ERP data, or do you also incorporate data from other operational systems and external to the organisation, such as market trends, sentiment, and supply chain details?

Are your people working effectively? – Are your people open and capable to move from manual data collection and reporting to automated processes with more focus on analysis and recommendation development? Is your finance team change-oriented? Do they embrace or shy away from change and complexity?

Do you have the right tools? – Do you have the right technologies, processes and practices in place to help our team be more responsive and deliver better decisions faster? Will the existing tools drive your function into the future?

Are you partnered with the right service providers? – Do you have the right advisory/implementation partners that align their success to yours? If your finance department rated less than optimal on the points above, don’t worry. You are definitely not alone.

How good is the data you work with?

The challenge with poor data quality throughout the process of transacting to reporting, is that someone always needs to fix it before reports go out, leading to a substantial wasted effort. The aim of the finance team should be a focus on maintaining high data quality as a culture. This is extremely difficult to do when the initiative starts off, but the behaviour will follow the incentives as with many things in life. Once data quality is planned, measured and incentivised, there will be an overall improvement in time.

Do you have all the data you need?

The question might seem obvious, but we have found many clients answering yes, and when asked whether the finance team could do their driver-based planning, performance reporting and analytics without the very active support of IT, the answer changes. Although there will always be the need for specialist support or exceptional data, the finance team should have the data to serve their needs ready to go to make timely iterative planning and rolling forecasting a reality. The team should be able to seamlessly source the required external data and load it into the systems.

Are your people working effectively?

Finance teams are often confronted by massive crunch times during budgeting and financial close periods. Much of the work done during this time could be resolved in preparation for these periods. Examples include predictive inter-company eliminations and automated account matching. When finance teams move away from finance operations to focus on financial performance improvement, they could be considered effective. More often than not, finance teams have not embraced agile forms of work, thus depending on sequencing work and not identifying opportunities to work in iterative ways in finalising budgets and forecasts.

Do you have the right tools?

When executives hear ‘tools’, they immediately consider software, the next big thing that will solve all their problems. Without a doubt, many powerful software solutions were introduced in the market to solve complex problems. For example, cloud-based Corporate Performance Management, Robotic Process Automation and Automated Analytics suites will grow in importance in the business landscape as new use cases are incorporated. The problem is that technology does not complete the toolset required. It is imperative to revisit processes, and business rules and practices followed in the finance space as these will still be required when implementing any new technology.

Are you partnered with the right service providers?

Generally, consultants and systems integration contractors are incentivised to prolong the problem. Companies are inundated with unsolicited proposals and requests for work. Although this is par for the course for getting into an account, very few consultants end up delivering constant and growing value to be the trusted advisor and to move the discussion from ‘what will this cost me?’ to ‘what are we improving next?’. This is possible in consulting projects that follow a modular approach by delivering tangible value to the bottom line on a regular and measurable basis.

Once you have contemplated the points above, we recommend you have substantive discussions with your team and partners on both the vision and the road to get there.

If you feel you would like to have an open discussion on how we might help you on this path, please feel free to contact us.