Financial Automation
Finance Transformation Guide in Modern Businesses
Many businesses today are looking to cut costs and increase profits through a combination of automating repetitive processes and taking advantage of new data analytics opportunities. Finance transformation can help your organization do both.
What Is Finance Transformation?
IBM defines finance transformation as “the combination of processes, systems, and organizational change across a business, which is implemented through new technologies, training, and analysis.”
This financial transformation involves reimagining the finance function within an organization, moving beyond traditional roles of managing books and spreadsheets, financial reporting, and ensuring compliance. The goal is to become a catalyst for business decisions and innovation.
Companies that successfully undergo a finance transformation can reduce costs, experience faster business processes, reduce errors, increase productivity and efficiency, and have greater confidence in their data.
The Importance and Impact of Finance Transformation
Rapid technological advances and shifting market dynamics characterize the modern business world. In this environment, businesses need agile and strategic financial planning more than ever.
Finance transformation helps increase business value by becoming agile, cost-efficient organizations. Transforming finance processes allows the business to enhance accuracy in its financial forecasting, improve decision-making capabilities, and increase efficiency in its operating model. The ultimate goal is to turn the finance department into a strategic business partner that manages risk and profitability and drives the company toward future growth through real-time insight, analysis, and data-driven strategies.
A Gartner study indicated that 79% of CFOs rank leading finance transformation efforts as a top priority, driven by the necessity of reducing costs and improving business insights. Yet 69% of finance transformation projects are progressing slower than projected.
Despite these challenges, we believe finance transformation is still a worthwhile goal. Accounting and finance organizations just need a clear roadmap to get there.
The Pathway to Transforming Your Finance Function
Here are several strategic steps for successful finance transformation projects.
Step 1: Align Your Vision and Strategy
Begin with a clear vision of what finance transformation means for your organization. Align this vision with the overall business strategy to ensure that finance can effectively support and drive key business objectives.
For finance transformation to really take hold, finance teams need to be seen as strategic partners across the organization rather than just the finance function operating at the corporate level. When all organizational structures see finance as business partners, organizational leaders are more likely to turn to them for accurate data that can inform decision-making and improve the bottom line.
Step 2: Optimize Processes
Streamline and standardize financial processes to eliminate inefficiencies and take advantage of cost savings opportunities. This may involve redefining roles and responsibilities within the finance team to better manage resources and focus on strategic areas in the workflow.
Because finance processes impact virtually all other business functions, process improvements made by finance teams can have a positive impact on overall company strategy and other departments, such as human resources, IT, and procurement.
Step 3: Develop Skills
Finance professionals will need to develop their skills as robotic process automation, machine learning, artificial intelligence (AI), and other technology initiatives automate more aspects of finance operations.
Invest in training and development programs to equip your finance team with the necessary skills for modern finance roles. This includes competencies in data analysis, scenario planning, regulatory requirements, technology utilization, and strategic thinking.
Developing these skills allows finance employees to provide greater value to the CFO and other senior finance leaders.
Step 4: Integrate Technology
Technology is critical to a successful finance transformation as it can boost operational capabilities, improve efficiency, and enhance the client and employee experience.
Organizations should look for opportunities to adopt advanced financial technologies like ERP systems, cloud accounting software, financial close tools, blockchain, big data analytics, and other AI-driven tools. These technologies provide deeper insights into financial data, enabling more accurate forecasting and better risk management.
Step 5: Change Management
In any organizational change, there is bound to be resistance. Some employees enjoy routines and spreadsheets, so stepping outside their comfort zone can be challenging.
Change management plays a pivotal role in finance transformation projects because it helps minimize resistance to new technologies and strategic change initiatives.
Implement a strong change management plan to address resistance and ensure smooth adoption of new processes and technologies. This should include collecting input from stakeholders early on, regular communication, training sessions, and feedback mechanisms to gather insights from the team throughout the transformation process.
Enlist the help of your marketing team in crafting your message and communicating it throughout the organization.
Overcoming Challenges and Leveraging Best Practices
The journey towards finance transformation is fraught with challenges, including resistance to change, the high cost of technology, and the skills gap within existing teams. To overcome these challenges, organizations must:
- Get buy-in from the top. Support from senior finance leaders and other senior executives is essential for the success of your finance transformation. When senior leaders buy-in, they provide resources and support for initiatives that can allow the finance teams to make exponential progress.
- Prioritize clear communication. Regularly update all employees and other stakeholders about the benefits and progress of finance transformation initiatives. Make finance transformation part of the performance management communications so everyone in the organization knows where the company is on the finance transformation journey.
- Leverage external expertise. Collaborate with consultants or technology experts to gain insights into best practices. Outsourcing can also allow finance operations to learn from the experiences of others in the industry.
- Track progress. Identify specific, measurable milestones and track progress toward metrics and other KPIs. This helps project teams identify delays and take action when needed to keep the transformation journey on track.
- Focus on quick wins. Identify and prioritize initiatives that can deliver immediate benefits to build momentum and secure support from the wider organization. Celebrate these small victories and progress toward benchmarks to keep people motivated in the face of change fatigue. However, once you get buy-in from results on the low-hanging fruit, be sure to continue pushing for bigger projects that will make a significant impact on the business. Research from Gartner shows that 30% of finance transformations fail to deliver forecasted benefits—perhaps because these initiatives start and end with quick wins.
Driving Finance Transformation with Technology
Technology is a cornerstone of any finance transformation strategy. Integrating AI, robotic process automation, machine learning, and blockchain technology can revolutionize traditional finance tasks. For example, AI can automate routine tasks such as transaction coding and invoice management, freeing up finance professionals to focus on more strategic activities.
The use of big data analytics can also allow finance teams to predict future trends more accurately and provide valuable insights that can guide business strategy and budgeting for future transformation initiatives. Because finance departments are often early adopters of digital technologies that drive transformation initiatives, they can become a Center of Excellence for the entire organization.
By embracing change, focusing on technology, and preparing for challenges, businesses can ensure that their finance function is not only fit for the present but also ready to lead future growth across the organization. This transformative journey requires continuous learning and adaptation, but the potential rewards are significant. Embrace the change, and lead your organization toward a more prosperous future.
