By Nick Felton, Chief Sales Officer, MHR Analytics
Over the past 18 months during the pandemic, digital technologies and how businesses use them have had a critical role to play in keeping UK businesses up and running. A global survey from management consultancy firm McKinsey has shown that most companies have accelerated the digitisation of operational processes by three to four years and the share of digitally enabled products in their portfolios has accelerated by seven years.
This rapid pace of transformation and available funding for digital initiatives has taken many organisations by surprise. As businesses begin to navigate the ‘new normal’ technology will have a strategic role to play in driving the business forward and help them remain competitive in the new economic environment. However, while many parts of the organisation will now be looking at moving their digital agenda forward, finance appears to be acting more cautiously.
Earlier this year, we performed our own research with the finance community to find out more about the impact the pandemic has had on their digital transformation journeys. While the majority of finance admitted that digitising certain processes would help them to respond more quickly in a crisis to minimise business risk and act on new opportunities, when it comes to making this change, finance is just getting started. The findings showed that a quarter are still working on their transformation vision; 17% are looking for C-level buy-in, while 11% are working on their business case. For those that are already underway with their transformation initiatives, 28% are working on aligning people and processes, while 13% are looking for the right technology platform.
Finance’s slow start may in part be due to its difficulty in developing a business case for digital transformation ahead of other business priorities. Its usual approach would be to develop a cost/benefit analysis of the tangible benefits – but quantifying these benefits can be challenging especially as they are difficult to measure. However, our research also revealed the impact of not making plans to transform digitally. 70% of respondents claimed it would hinder finance’s ability in the future to increase productivity; improve levels of strategic insights; shorten reporting deadlines; maintain levels of accuracy; and even retain and attract talent.
Time for change
Many of finances processes including budgeting, planning, and forecasting, and accounts receivable were affected by the pandemic. And the research showed that this was a concern for finance as it made them realise that they need to be more agile and resilient to respond quickly in the event of a future business crisis or to take advantage of a new opportunity.
Despite falling behind the rest of the organisation on digital transformation, finance is no stranger to the benefits of technology. Many organisations are using Corporate Performance (CPM) platforms or planning solutions. And, aside from Excel, our research shows that Business Intelligence and analytics software are the most widely used and financial consolidation and financial close software are also becoming increasingly common place as finance seeks to improve its productivity.
To build a case for digital transformation, finance should first look to use all the functionality on offer from their existing platforms to maximise their return on investment. It then needs to consider the amount of time it spends on the slow and laborious tasks that could be automated and compare the time and cost of resource against the investment in technology. They should also consider the impact on retaining high performing team members who spend far too much of their time performing manual data entry tasks. If they decide to leave, what will the associated cost be if they need to be replaced?
Finance has acknowledged the need for change to increase productivity and agility, and the majority of the finance professionals we spoke to are keen to lead on digital and data literacy initiatives in their departments to help them successfully navigate business change.
Taking a digital first approach and learning new data and skills take time, but it’s vital that finance continues to push for digital transformation. Adopting technologies that can help boost productivity, improve data accuracy, and achieve better business insights will not only help finance to become more agile and resilient, but it will also enable them to deliver greater value add to the entire business.