This article originally appeared in Strategic Finance Magazine, and is part 1 of this blog series. View the full series here.
Finance and accounting functions are creating their digital roadmaps. CFOs are looking for leaders within their organizations to drive change because their priorities are changing―and the expectations that CEOs, the board, and lines of business have for Accounting and Finance are changing, too.
In a recent study, McKinsey found that over 40% of a typical CFO’s time is now spent on activities that fall firmly outside the traditional role of accounting, controlling, and budgeting. CFOs are dedicating more time to strategic leadership, organizational transformation, and performance management.
It’s precisely these areas where digital finance transformation initiatives are often focused―applying automation to unlock accounting efficiency, which enables the organization to be more strategic and use data to achieve clear visibility into both financial and operational performance.
Accounting & Finance Must Be Ready to Drive
Successful transformation first requires fully unlocking the automation dividend. We’re already seeing accounting teams who fully embrace this, and are spending 80% less time on daily and period-end accounting activities, like account or transactional reconciliations.
Finance transformation also requires cutting the ongoing burden of managing controls by applying the latest technology to automatically certify account reconciliations and perform balance sheet and P&L fluctuation analysis. Streamlining the management of risk and control matrices (RCMs) and PBC (provided by client) lists, and orchestrating the segregation of duties and approvals is essential as well.
Tomorrow’s finance and accounting organization will focus increasingly on planning, analytics, and advisory—this we know for sure. Achieving the full value of automation to enable this structural change requires the organization of tomorrow to not only change technology, but also challenge and reimagine hardened accounting processes.
Success necessitates engaging every level of the organization to embrace digitization rather than fight it, reallocate where personnel spend their time, and develop a new talent mix from within the organization.
Why Is Change Management So Important to Digital?
The road to digital finance starts with automating core accounting processes and controls to enable efficiency, reduce risk, and ensure standardization. The good news is that the technology is already proven and experiencing mass adoption.
For example, Gartner forecasts that in less than four years, 60% of midsize and enterprise companies will deploy cloud-based applications to digitize their accounting processes, with ready access to the latest close, intercompany, reconciliation management, Robotic Process Automation, Artificial Intelligence, and analytics.
While the cloud has made powerful technology more accessible than ever, technology is only part of the puzzle. Reaping the full value, and reinventing processes rather than just migrating them, requires pairing new technology with a strategy for change management.
In many ways, change management is about motivating and incentivizing people to be open to embracing new possibilities. It’s about encouraging every level of the accounting and finance organization to both rethink and be open to replacing hard-wired, often decades-old work routines with new processes and applications.
It also requires empathy—understanding that people can sometimes feel threatened by change—and a plan, so that everyone can see the full benefits and even detractors turn into promoters.
“All change management projects comprise ‘hard’ and ‘soft’ components, and it is a failure to understand the latter that can scupper the plan.” — Alison Young, ACCA Think Ahead
Without a strategy around change management, organizations face several risks to successful digital transformation:
- Merely running the same legacy workflows and processes on a modern finance technology stack often means underutilizing its capabilities―and a missed opportunity
- Limited buy-in and training for employees who will use the new applications risks lack of adoption
- Applications that aren’t continuously adapted and configured by accounting and finance stakeholders to reflect ongoing needs risk eventual misalignment and irrelevancy
Read this CFO Playbook to learn more about how you can chart your course to finance transformation.