By Emma Hitzke, Oracle and Shagun Goyal, Deloitte Consulting. Initially published on the Modern Finance Leader blog
Everywhere you look, disruptive technologies are reshaping the future of finance. From robotic process automation (RPA) and artificial intelligence (AI) to machine learning and blockchain – new digital tools are offering CFOs unprecedented opportunities to streamline and automate back-office operations.
AI and machine learning, for example, can analyze massive amounts of data, finding patterns that a human would never see and distributing data-driven insights throughout the organization. Process automation and touchless transactions can automate mundane tasks, freeing up the time and brainpower of every finance team member. Rather than spending the majority of their time on traditional responsibilities like internal controls, compliance, and closing the books, finance leaders can focus on uncovering new insights and opportunities to help drive top-line growth.
Now more than ever, finance is equipped to become a true strategic partner to the business, supporting decision makers with precise, real time reporting, planning, budgeting and forecasting. With digital technology, the close is no longer a monthly event—it now has the potential to happen every day. And finance can drive innovation by establishing a culture of data, insights, and foresight.
Yet despite the abundance of opportunities offered by digital finance, many organizations remain on the sidelines, preferring to focus on traditional ways to improve cost efficiency and effectiveness. What’s holding these organizations back from modernizing? A lot of common roadblocks come into play, but the combination of highly customized legacy systems, disparate systems with multiple versions of the truth, and a finance workforce trained in traditional, transactional skills are largely to blame.
Digital technologies delivered in the cloud can help address these challenges and make finance more automated and efficient – and therefore, more effective. What’s exciting for CFOs is that many of these digital technologies fall squarely into the charter of the finance function.
Blockchain, for example, promises to revolutionize the management of financial assets, cross-border settlements, exchange of business-critical transaction data across the ecosystem, as well as supply chains, health care networks, and other value chains. Machine learning is now automating many routine finance tasks, from fraud detection and internal audit to account reconciliations and other tasks associated with the finance close. Then there’s AI, cognitive computing, predictive analytics, and data visualization – technologies that provide finance teams with insights about how to compete and win in the digital economy.
Six strategies for leveraging digital technologies
How can CFOs harness the power of these emerging digital technologies? Here are six strategies to help your organization gain a competitive advantage in the digital age of finance.
1 - Deepen your understanding of the digital landscape
Now is the time to review the potential of digital technologies, including process automation, and share the expected benefits with your entire team. Show the rest of the company you’re doing your part to reduce costs while freeing up time for more valuable work.
2 - Study both the digital leaders and the laggards
Learn who’s leading the industry and who’s falling behind. Digital leaders consistently pursue automation and innovation and invariably outperform laggards in key performance measures such as income growth and profitability. Research from the Association of International Chartered Professional Accountants and Oracle —including a digital-first, cloud-first mind set—and examines why the laggards continue to fall behind.
3 - Conduct a business readiness assessment
Adopting digital technologies can be a transformational change for your organization, so you’ll want to conduct an assessment of business readiness and create a roadmap of your migration journey. It might be helpful to focus on one area to pilot, such as record-to-report, and map where you are now to where you’d like to be in the future.
4 - Enhance your finance talent model
Running a digital-age finance organization requires new types of skills and talent, with a premium placed on data scientists, business analysts, and storytellers. Make sure your new hires represent the future you’re striving for. Important qualities include a strong customer service orientation, flexibility, and good collaboration and partnering skills.
5 - Take a “start small, start early, scale big” approach
Prepare for your digital journey by taking time to look at the pros and cons of different implementation paths. But don’t hesitate to dive right in. You might begin by looking at your business processes and standardization, assigning a global business process owner to simplify and standardize the transformation. You can also use a value-and-complexity framework to identify use cases that have a good chance of success for initial deployment.
6 - Focus on “operate to innovate”—one key to sustainable growth
Perhaps a better overall theme for this journey is, “operate to innovate” to develop a technology-enabled foundation. Innovation should be the primary strategy for moving to the cloud, not simply operational cost cutting; the rate of innovation delivered in the cloud, where providers update the software several times a year, is many times faster than with on-premise systems or hosted ERP. Focusing on innovation will be key to supporting sustainable business growth in an increasingly digital world.
Change is now
The Digital Age of Finance is upon us, and the changes we’re witnessing in finance organizations are just getting started. Deloitte predicts that by 2025 finance will focus less on booking accounting entries and reconciling data and more on delivering value and services that drive improvements across all business activity.
Whether you’re focused on talent, technology, analytics, or any other part of finance, the end game is the same: business leaders want finance to deliver better insights faster, so they can make smarter decisions with less risk. Finance transformation in the digital age can help the business meet these expectations quickly and efficiently.
To learn more about how finance organizations can leverage digital technologies to compete better, get Deloitte's pathbreaking report, The Digital Age of Finance.
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