Why does it makes sense for finance departments to spearhead the digital transformation push?
As the fourth industrial revolution rapidly becomes a reality, Australian businesses are pouring hopes, dreams and billions of dollars into digital transformation.
Like their counterparts around the world, they’re driven by the promise of increased efficiency and profitability. There’s also the fear that not taking action will render them uncompetitive with more nimble rivals, which are re-engineering their infrastructure and processes for the digital era.
Managing transformation is typically viewed as the remit of the ICT department but there’s a case to be made for having the finance and accounting team play a central role in spearheading the drive towards digital.
Getting with the program
Digital transformation is likely to add an estimated $45 billion to Australia’s GDP by 2021 and will increase the country’s growth rate by 0.5 of a percentage point annually, according to 2018 research produced by Microsoft and IDC Asia Pacific.
Benefits cited by businesses include improved profit margins and productivity, reduced costs and increased revenue from new products and services.
The deployment of emerging technologies, such as artificial intelligence, as part of wider digital transformation initiatives is predicted to accelerate growth still further.
Local businesses are getting with the program – or planning to. Seventy-one per cent of Australian organisations said digital transformation was core to their business strategy, according to a survey published by IDC in early 2018.
Of those, four per cent claimed to be already enjoying greater market share and profit margins, courtesy of aggressive expansion. The remainder expected to begin experiencing benefits within two years.
Which way forward?
The case for change and the end game are both clear. How best to get there – and how much to outlay in the process – is another matter. Enterprise-wide digital transformation programs can demand seemingly unlimited resources – in late 2017, for example, big four bank NAB announced plans to spend an additional $1.5 billion over three years – without the guarantee of immediate returns.
Amid an environment of uncertainty, the finance and accounting team has much to offer. Why? Because producing detailed, measurable and trustworthy results which can be used to inform business decision making has always been their raison d’etre. Following the adoption of digital technologies within the finance department – end-to-end process automation and robust reporting and analytics tools – data-enabled insights can be delivered in real time, not days and weeks after the information is amassed. Just as importantly, the skills acquired in the process – along with the data manipulation expertise the finance team is likely to already possess – can be put to use elsewhere in the enterprise.
The case for collaboration
Opportunities abound for financial teams to share vital data and process automation knowledge with other business units. In the operations sphere, for example, the finance team can partner with IT to evaluate the cost of new technologies against performance and risk metrics. The investment in new technology and human resources which digital transformation can call for means these calculations are likely to be critically important.
Upstairs in the C-suite, CFOs can expect to be called on more frequently to lend a data-driven risk management perspective to a gamut of matters, ranging from the planning of new facilities to diversification into new markets.
Marketing initiatives may also benefit from access to the plethora of data, and the assistance to interpret it, which a digitised finance department can deliver.
Being open to future use cases
While awareness of digital transformation has grown enormously in recent years, it is yet to occur in a significant fashion in many Australian organisations. As the movement gathers pace, and data analytics tools and technologies become more advanced, finance teams will find a variety of new ways to use them to help the enterprises they work for optimise their performance.
Professional services consultancy McKinsey recommends CFOs explicitly define the leadership roles they wish to play in ‘translating burning business questions into use cases for advanced analytics: whether to optimise pricing, identify customer churn, prevent fraud, manage talent, or explore a host of other applications’.
Being able to demonstrate the success of their own department’s digital transformation exercise will see CFOs and their teams well-placed to play a pivotal role in helping the rest of the enterprise exploit the possibilities of the digital era.
Claudia Pirko, ANZ Regional Vice President at BlackLine
Eliot Hastie is a journalist at Momentum Media, writing primarily for its wealth and financial services platforms.
Eliot joined the team in 2018 having previously written on Real Estate Business with Momentum Media as well.
Eliot graduated from the University of Westminster, UK with a Bachelor of Arts (Journalism).
You can email him on: [email protected]
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