Bridge the Gap: Expert Tips on How Finance Leaders Can Approach Digital Transformation

Imagine if your Finance team had an extra dollar in your budget for every time someone said “digital transformation.” You would probably have enough surplus to give everyone a tidy end-of-year bonus AND a socially-distanced pizza party. Digital transformation can be a catch-all phrase for any kind of organizational change that involves technology. But for Finance, it’s more than just a shiny buzzword — it’s a very specific way forward that builds a bridge to the future of the Finance function. We recently conducted a survey of over 500 Finance leaders to see what those at the leading edge were doing — and how far behind everyone else was. We found that there are gaps in capability, culture, and technology that separate the leaders from the rest. To help Finance teams on their road to digital transformation (add another dollar to the jar), we compiled our survey results along with advice from some of the top minds in the business. You can find the complete guide on our Digital Transformation in Finance page. Read on for selected insights from our panel of experts.

What Does Digital Transformation Mean for Finance?

Tom Hood, EVP Business Engagement and Growth, Association of International Certified Professional Accountants I talk a lot about ‘Digital Transformation’ in Finance and to me it means you are re-writing your own history by anticipating the fast-arriving future and choosing to transform (inside out) versus being disrupted (outside in). Transformation is also about magnitude, it is not incremental change, rather it is creating something brand new versus changing what is. Often this involves significant upgrades to the cloud, increased capabilities, and restructuring the finance organization.

Culture: How to Ensure Buy-In for Cross-Departmental Budget Planning

Andy Burrows, BSc, BFP, ACA, CEO, CFO and Founder at Supercharged Finance Buy-in requires good relationships to start with. So you need to be operating always with a business-focused mindset. Then seeking agreement involves, first, showing understanding of the priorities and needs of other departments, in the context of working together in the strategic direction of the business. Then you need to be able to describe the objectives of your proposed change in a way that clearly shows that you would be working together on something that will help the business make progress. Sometimes, asking yourself those questions will lead to you changing or ditching your proposals.

Culture: Overcoming Obstacles to Zero-Based Budgeting

Janet Schijns, CEO, JS Group ZBB requires leaders to base their budgets on business need and achievement of business strategy and goals, which in a fast growth and changing environment can be difficult to implement. The “start from zero” basis results in a more disciplined and thoughtful approach to allocating funding, which can challenge leaders to rethink their processes, procedures, and ultimately, their investments, which is a challenge for many leaders who have never functioned in this environment. As a result, the adoption rate has been much slower than you would anticipate given the potential positive impacts. Many companies find the process too daunting for their budget leaders who then continue to use dated budgeting approaches due to their fear of change. Managing through the culture and driving the needed ZBB changes is therefore the largest obstacle.

Capabilities: Rolling Forecasting

Gary Boomer, CPA, CITP, CGMA, MAcc, Visionary & Strategist, Boomer Consulting Inc. It's all about the future. You can't change the past. A rolling forecast and budget are an integral part of digital transformation. All businesses, regardless of size are impacted by cash flow. More businesses fail due to cash flow issues than profitability and financial reporting. The tools and skill sets are available, mindset is the biggest challenge. The future is about predictability and prescription while the past is focused on accuracy and reporting. Both are important, but predictability and prescription is the differentiator in sustaining success and remaining future ready. Jack McCullough, President, CFO Council Historically, forecasting has been an annual exercise. In the fourth quarter of a year, finance and accounting would work with other groups to forecast the coming year, hopefully issuing a financial plan prior to the start of the new fiscal year.  This worked fine in most cases. However, in today’s competitive and unpredictable environment, this approach no longer works. There is more pressure than ever on executives (finance and otherwise) to make faster, more accurate decisions. This is not possible with traditional forecasting approaches. The need to have flexible, rolling forecasts is no longer a nice-to-have. It is a business imperative. Dawn Brolin, CPA, CFE, CEO, Powerful Accounting, LLC If your business is growing and evolving, your method for projecting your business finances needs to keep up with it. This is when using rolling forecasting can be beneficial to help you gain a more accurate picture of your business. Three tips to make this approach more effective are to:

1. Align it with your key business goals
2. Identify the revenue drivers for each objective which relate to your end goals
3. Use these data points to create better-focused financial plans.

Tech: Why Cloud Is Indispensable for Finance Transformation

Kimberly Ellison-Taylor, Author & CEO, KET Solutions LLC Unifying and standardizing the budget process in the cloud will add resiliency and continuity of operations as well as improve analysis and reporting. Further, configurable workflows that are informed by other FP&A customers will reduce the implementation time, while AI-driven processes for rolling forecasts, zero based budgeting, and scenario planning will highlight performance. The ability to forecast accurately for multiple timeframes — from a few months out to over a year — is just the icing on the cake of leveraging technology. With the additional time saved, the FP&A could work on other high value areas like Business Partnering. Modern technology will also help attract and retain team members. WIN, WIN and WIN.

Tech: Automation and Data Analytics

David Chase, CEO and Managing Partner, Amplēo We are in the era of big data, which in the context of finance means that the quality and quantity of data to analyze has increased materially. Digitally transformed finance teams are those that one, are actively automating low value add transactional activity or repetitive tasks with software, bots or AI, and two, are implementing tools that aggregate and analyze data in ways that display data in new and meaningful ways.

Bridge the Gaps and Transform

Where are the gaps in your Finance team’s approach to digital transformation? Is it culture, capabilities or technology that’s missing? The three are interconnected; it’s hard to develop new capabilities without the technology to support them, for example, or if the executive team isn’t bought into the necessity for change. Check out the full Digital Transformation in Finance page for more resources to help you through the process, including in-depth reports on the key capabilities Finance teams need for a successful transformation.