Digital transformation at a glance
Digital transformation is changing entire organizations as it opens the doors for many opportunities. Numerous market forces are driving the need for digital transformation. Many companies have embarked on complex digital transformation journeys, encompassing all aspects of their business to redefine how they operate. Digital transformation is not just about implementing more and better technologies: it involves aligning culture, people, structure and tasks. Strategy, not technology, drives digital transformation. In order to survive in the current digital world, businesses must see things differently, do things with a different perspective and deliver things disruptively. Therefore, companies must set their digital ambition regarding digital transformation which in turn must be aligned with the vision and corporate mantra.
The content of the digital maturity model is constant, but the level to which an organization needs to be mature in each area is dependent on their business strategy, business and operating model.
It is imperative that top management focus on the following six core aspects:
- Market and Competition
- Organization, Culture and Strategy
What about digital transformation within finance?
Innovation is the name of the game for businesses trying to stay two steps ahead of their competitors. Regardless the type of business you run, accounting and finance is a critical source of operational innovation and competitive differentiation in the various sector of the economy. Digital transformation opens the door for many opportunities within finance and accounting. Nowadays, finance is asked to essentially set the course for years to come. Therefore, below you will find two possible scenarios for the future.
In the year 2024, finance as a core thread, has significantly reduced in many areas, and standardization and automation have taken place. Many processes and workflows have been automated deficiently through robotics (RPA). Finance consists of a small team of specialist for small topics such as IFRS, Corporate Taxes, Assurance, Risk Management Compliance, Regulation, Valuation and Financing Mechanisms among others. Processing and preparation of financial statements is now fully automated and the operational responsibility for the closing process is now own by IT, business decisions are primarily taken based on information derived from operational functions, marketing and sales as well as technology departments invested early in big data and analytics and are now jointly leading the center for analytics; finance has lost its leading role and is no longer involved in important strategic decision- making, instead it concentrates on contributing special expertise where needed. The responsibility for planning and forecasting has shifted completely towards operations set up on big data which are based on a prediction model. Within their divisions the role of finance is limited to planning of financial mechanisms, taxes as well as currency and consolidation effects. Finance has become a mere center of excellence that is limited to providing highly specialized financial expertise upon request.
Year 2019: Finance missed the opportunity to claim and shape new digital trends and actively build a future vision for themselves, finance was overrun by digitalization and lost its role of being part of the strategic development of the entire organization.
Year 2019, finance decided to become a leading pioneer of digitalization; finance analyzed digital trends for themselves and developed a target vision for the future, the goal was to act not react and develop a common vision, upon this foundation new opportunities were identified and as result a newly formed roadmap has been developed define specific actions for years to come.
An interdisciplinary team coordinates analytical topics and combines deep business competence with technical Know-How. Finance was the driver for building the Center for analytics, information from various sources are combined in real time, the planning and forecasting process has been automated to the highest degree possible with modern statistical methods in big data, a forecast preparation is done by a push of a button and Finance is able to focus on the development of new insights. From day one all finance executives have been involved in the development of the target vision, finance now combines strategic competence with in-depth business know-how, new skills in the area data modeling and analytics have been built up and used successfully. Finance focuses on cross functional and interdisciplinary cooperation.
YEAR 2024: Standard processes have been fully automated, finance has gained time and capacity to consider and work with analytical related questions, finance is the copilot in the context of strategic development and appreciated as a business partner for operational functions.
Now it is time to define your future in the digital world, ask yourself what is the scenario that best suits your expectations and the one that you are planning to recommend to your clients.