If 2020 and the coronavirus pandemic taught us anything, it’s the importance of digital transformation of organizations across industries. And this was applicable, no matter the size of the organization or its operations.
Working from home and giving employees the support infrastructure has been a key area of focus. This also led to increased employee engagement. This can be looked at as a time to power through and survive. But it is also a great opportunity to turn the tide for organizations and make futuristic changes for long-term benefit.
Some digital transformation initiatives were already on the agenda but were tabled for more reactive measures to compensate for the unexpected. But 2020 showed us that it was time to take that bullet point on the agenda seriously and execute even faster. Many finance leaders are faced with a need for digital catch-up — doing what they should have done before — and building back differently as a strategy to help them emerge from the crisis in a better position than when they started.
The difference between pre-COVID initiative and post-pandemic, especially in the field of finance, is that it is no longer a choice to go digital. Almost every aspect of the supply chain has been hit and markets have been disrupted globally.
And the most important issue facing managers in this difficult economy is how to make more money from the existing business and capacity without costly new initiatives.
In the last year, firms have been forced to take major tech leaps to stay afloat. But after 12 months of survival, it is time to look at how the same technology can be used for companies to thrive.
That responsibility falls on the shoulders of CFOs across the board. Digital transformation was a conversation that was already underway in the world of finance. But now, leadership must build business models that can be used in multiple use-case scenarios so that their organizations can uniquely benefit from the post-pandemic learnings.
And it is up to the CFOs to demonstrate that they can juggle innovation while maintaining cost efficiency, if not gains. This is also a great opportunity for the leadership to look at long-term value creation in the processes of their companies and efficiently manage the performance levels of their employees.
The world of finance has its ups and downs on a daily basis, which makes it more susceptible to adverse changes. This means that those in leadership positions must be able to predict upcoming turbulent trends and make adjustments before they are hit.
Unless you are the Oracle from the Matrix movies, you will need a little help with these kinds of forecasts. Analysts do a fine job but if they are fed with more data, your investment flexibility and your chances at ducking dangerous trends multiply.
So, what is the mandate for the leadership to keep the boat sailing smooth and successfully emerge from these turbulent times? It all starts with embracing the right technology to achieve desired business outcomes. It’s time.
The Mandate on Digital Transformation
Digital business initiatives are accelerating in finance and across the enterprise thanks to the havoc caused by COVID-19. Digitalization is rightfully on top of board agendas with a focus on accelerating growth across the business while preserving the financial health of the organization.
The idea is to keep delivering value with a flexible strategy. This involves taking real-time risks and assessing them in a timely manner to mitigate losses. The leadership must also be better informed so that they are able to take quick decisions. Hyper-automation is a key part of that strategy.
Hyper-automation is a strategy in which any process in the organization that can be automated should be automated. And this is not limited to individual processes that are typically referred to as process automation.
The idea is to bring artificial intelligence and software robotics together to enable automation for any process or task that is a repetition of itself.
Some of these techniques are also capable of identifying processes that need to be automated, creating and assigning bots to carry out the tasks. This is precisely what makes hyper-automation one of the top 10 tech strategy trends to incorporate.
Robotic Process Automation (RPA)
Thanks to robotic process automation, better known as RPA, there are a variety of tools that work with employees and subject matter experts. Process automation is known to bring speed and efficiency but it is also a great way to do cost optimization in finance.
That is why organizations have been shifting towards it for a while now and there has been a rise in the use of RPA. But to reap the complete set of benefits, the leadership must focus on building the required infrastructure for it, like chatbots, machine learning and artificial intelligence technologies.
It’s a great value add to an organization of any size and enables the leadership insights into key business drivers like analyzing consumer behaviors to predict pricing.
At the heart of this automation strategy is the coexistence of humans and artificial intelligence instead of replacing humans with AI which is the popular misconception. It is also a bad strategy to adopt.
Digital Twin of Organization (DTO)
There is a part of hyper-automation called the digital twin of the organization or DTO. This is a process where interactions between functions, processes and key performance indicators are highlighted so that businesses can do better in terms of leveraging the resources at hand.
The more you understand the flow of operations, the better your chance of enhancing performance. Now, what DTO does is highlight the little details that are lost in the system that was previously manually supervised.
With the added advantage of these insights, the leadership can create new opportunities for their employees and respond quickly to crises and competition.
A big part of the discussion on digital forecasting is raw data. This is a goldmine for insights that can change the entire agenda of an organization. This is one of the top-most needs for finance leaders. Analytics has taken a very important space in helping the leadership pivot strategy and create value.
Now, it is important to note that new entrants in this space are also drowning in numbers and that does not help very much in making decisions. Depending on the focus area, deciphering the analytics at hand can be a complex process that makes it hard to understand and respond to it.
That’s why, there is still a great deal of demand for analysts to explore this data and report back with specific long- and short-term insights. This also means that finance leaders must invest in helping stakeholders understand the processes and the corresponding analytics so that everyone is able to use the data to make educated operational decisions.
Some Stats on Digital Initiatives
When start to adopt new technology, untested in your organizational environment, there is a certain amount of risk involved. There is also expectation and sometimes that can be unrealistic too which means the results might discourage you to keep at it. So, let’s look at some statistics that can help give you the real picture.
Unfortunately, when it comes to finance, specifically, the digital transformation progress rate has not been too impressive.
By 2025, the data in the world is expected to reach 175 zettabytes. This is an annual growth of 66 percent from 2018.
- Only 39 percent of the leadership in this area say that their past efforts led to expected profits.
- Only 36 percent saw tangible benefits.
- 76 percent of CFOs have reported that technological investments have not resulted in the return on investment as per their expectations.
- Only 24 percent believe that they can solve problems with digitalization.
If the finance department wants a competitive edge, this rate of growth must be maintained if not improved upon. This is a challenge considering the complexity of the data at hand.
But the analytics do provide insights that are actionable. And while incorporating new technology can cause major disruptions, the good news is that the pandemic is providing businesses an opportunity to grow and redesign their internal structures.
And a lot of this is the direct result of the economic crisis caused by COVID-19. The key to getting the desired results is to bring in tools that end users are comfortable using. And, in the process, companies can create a roadmap not just for themselves but also be trendsetters in their industry.
- 64 percent of the general leadership says they will incorporate digital initiatives in their strategic planning, according to a survey by Gartner.
- 69 percent report that these digital initiatives are on the growth as CFOs are shifting their business models to an “everywhere, everything” customer approach.
- Only 41 percent of the respondents in finance said that AI-based expense auditing and invoice processing is automated.
- 44 percent of the companies take an average of a week to process invoices, according to the CFO survey report.
The same survey also points out respondents claimed that reducing time consumption by eliminating manual work is a priority.
The last statistic reveals that manual interference is a key problem to solve when it comes to the lack of efficiency, especially in finance. If solved, this can maintain continuity while increasing the resilience of the organization.
One way to do this is for all the stakeholders to be hands-on in understanding the tools and solutions without relying on IT to configure the tools for them. This gives the employees and the leadership the chance to get better involved with processes.
And with the data they get from the automation tools, they will have a better understanding of the roadblocks and even be able to anticipate and mitigate them before disaster strikes.
And the upside to having all of these statistics is that 93 percent of the leadership in finance is committed to fewer employees and more digital data-driven functioning, according to the survey.
A Post-Pandemic Priorities List for CFOs
This is one of the most important features when it comes to innovation. You can’t invest in technology that does not deliver return on investment for you. And with several new variants in the market, you need to be able to figure out which one suits which process in your organization.
The easiest and also one of the most effective ways is to engage in cost-cutting. Now, this is nobody’s favorite idea but it is a sure-shot way to recover from the losses (if any) caused by the pandemic. According to a study by PwC, 86 percent of leaders in finance are going to take steps towards cost containment in 2021 alone.
Some of these steps are already in progress and reducing the scale of operations is, of course, the first move. And automation certainly has a role to play in this reduction of operations.
Return to Growth
The global economy has taken a big hit because of the COVID-19 pandemic. At least seven months of 2020 were spent in shut down which has made CFOs be cautiously optimistic about growth and revenue.
This is an unfortunate turn of events and few expect to see any increase in revenue. But, as companies settled into the situation and understood the implications better, they have been able to come up with strategies to minimize the impact of the pandemic on their businesses.
At the beginning of the pandemic, many CFOs made moves that unlocked revenue streams that helped keep their businesses afloat. 28 percent of the CFOs said in October that they expected the revenue to increase in the upcoming 12 months. This was a great near future plan to get back on the growth train.
In the coming few months, CFOs must focus on rebuilding lost revenue, improving customer strategies to fit the new world order and plan for scenarios that will give them the chance to make a strong comeback this year. The idea is to make tweaks to services and products along with making changes to pricing strategies. This is expected to increase revenue in 2021, as anticipated by half the CFOs. Automation and using data analytics more to their advantage is expected to drive said growth.
One of the big changes in 2020 was the stress factors caused by economic and social unrest, the defining US Presidential election and the general divisiveness that was witnessed in the country. These factors have a huge impact on the well-being of employees, no matter the industry.
As schools and offices have turned to virtual ways of living, lots of individuals have to manage their boundaries with families while being devoted to their job during working hours.
Getting used to this new environment has not been an easy task to accomplish. After months of stress, there has been an expected—even if—an alarming rise in mental health crises.
Anxiety and burnout were on top of that list of working individuals with or without families. And many have said that during these trying times, they did not get the necessary support from their employers. This has a direct impact on employee morale and in turn, affects productivity.
Looking ahead, those in leadership roles must recognize that the present environment is not conducive to the needs of their workforce. Lack of efficiency directly impacts consumer needs and leads to the cropping up of newer issues. As it is, consumers have had several problems navigating the new world.
Now, federal stimulus packages and increased support for mental health are the first steps every organization should focus on. Exploring better childcare options is also a good strategy.
It is also a good time to re-evaluate the benefits a company offers to its employees. Consider offering caregiver support, decreased work hours and working around temporary leaves of absence.
To understand the immediate needs, CFOs must work with human resources and devise employee support programs that fit this new normal. This does not mean compromising the work or its value. The key is to look at long-term benefits for the employees so that morale is maintained.
A lot of places are experiencing the next wave of the virus because the restrictions were relaxed too soon. This means employees who are coming back to offices are at risk.
So, before taking this step, it is important to ensure that the workplace is a safe environment. Checking internationally accepted safety standards and erring on the side of caution is a good way to keep things uncomplicated and operations flowing without unwarranted interruptions.
Explore contact tracing apps, rework the layout of the office, make working hours flexible and put protocols in place in case someone exhibits symptoms. Even in this focus area, technology can come in handy.
How? State-of-the-art technologies based on artificial intelligence have been very helpful in preventing workplace accidents if and when there have been breaches of security. These programs have algorithms that can help with preventive measures.
Computer vision is an excellent example. It is a branch of artificial intelligence that uses deep learning to emulate human sight with digital images and videos along with learning models to classify objects and react to them.
For instance, if it is being used in the public sector, the computer can understand the physical environment of assets (like infrastructure and equipment) that the government controls. This can aid any agency in analyzing their equipment and taking a call on their maintenance needs.
It can also be used to make sure policies and regulations are being followed. How is it done? CV can be put to good use in the process of discovering contraband and alert the system to a possible safety violation. This can be implemented in any building. So, the technology enables you to make sure that everyone in the building is in compliance with the guidelines put in place.
Flexible Working Schedule
If safety is not a concern just yet, you have the unenviable task of maintaining operations with your team scattered all over the town. We are talking about the discomfort of having to coordinate with several individuals who are working from home.
Remote work is only seamless when the employees have access to their data virtually. This means, for your business to just be functional, you need to deploy the best possible remote working systems.
When the pandemic began, not everyone was flexible about letting their employees stay back in the safety of their homes. But now, this is the new normal and it has forced many in leadership positions to make accommodations for their team members.
About 74 percent of organizations are now planning to stay in the remote working environment even after the lockdown comes to an end, according to a Gartner survey of CFOs. They are planning to keep almost 20 percent of their field employees in permanent remote positions. This is possible only by embracing technology.
With the right vendor and the right size, many key finance activities can be managed rather successfully. But to support imperatives, the leadership needs to carefully scale the processes.
This calls for expertise from cloud service providers and especially for organizations that handle large volumes of data. Because along with storage and access of that information come challenges of data security.
So, it is up to CFOs to find the right vendor for the right price to give them the private cloud solutions that they need. And this must be done while keeping both speed and trust in mind.
The Impact of Digital Transformation
The pandemic has moved almost every aspect of life into the virtual world. This means customers have different needs but their expectations are the same.
It can put some companies in a tough spot, especially if they are reluctant to embrace new technologies. Digital payments and investments are touted to take over our lives at an unprecedented scale. And it’s already happening.
Companies must keep this in mind so that they can meet these shifting customer demands. That is to be a key factor when devising revenue strategies. With entire teams working remotely, meeting these challenges can be achieved only by embracing the tools and services that are cropping up thanks to the industry’s demands.
So, while you are looking into customer needs, keep the needs of your workforce also in mind. Both these boats must learn to navigate these tricky waters together.
That is why CFOs are focusing on digital initiatives in 2021. This is applicable to both growth and operational efficiency. Large bets are being placed on analytics, automation and cloud computing. And companies are wisely doing this one quarter at a time instead of devising annual strategies.
Shorter windows of implementation can help predict long-term patterns. That data can be used to make tweaks so that employee operations are uninterrupted while consumer needs are also being met.
Going digital is a good way to make your organization leaner and in turn more resilient. Because regaining financial agility is at the top of everyone’s list post the 2020 economic uncertainty.
The Bottom Line
The CFOs have a lot of work to do. But gearing up for a digital upgrade is the key to maintaining operations, regaining revenue and plotting growth strategies for the future.
Many leaders have been at this for at least a few months now and have made good progress with their goals. Artificial intelligence, intelligent automation, in-depth data analytics have all played a huge role in this process.
These concepts, when deployed accurately, increase the availability of your service to your consumers. They can also help increase efficiency and reduce costs. And finally, they can also help identify and fill staffing gaps that might make all the difference in the world to your operations considering all the new variables in place.
So, if an automation tool can predict the upcoming problems after you deploy a particular workflow, you can avert the disaster before even approaching it. You can also introduce automation to help your employees avoid redundant tasks and ease the burden on them. They have enough going on already thanks to work from home.
Getting acquainted with new technologies is also a great way for CFOs to accelerate digital transformation to expand their own horizons and keep the stakeholders’ faith in their operations.