Technology
The Financial Transformation Framework: A Roadmap to Modernization
About the Author: Katie Thomas, CPA, is a content creator, 2021 & 2022 40 under 40 CPA Practice Advisor recipient, Top 50 Women in Accounting recipient, and the owner of Leaders Online, where they help accounting professionals increase their impact, influence, and income through thought leadership and digital marketing. Feel free to visit Leaders Online or connect with her on LinkedIn to get in touch with Katie.
Accountants face a number of intersecting issues that make their work more challenging and, at times, frustrating.
- Workloads are growing
- Tasks are becoming increasingly more complex
- Hiring and keeping good talent is an uphill battle
- Problems with data quality and accessibility make it more challenging to complete work
Technology, particularly artificial intelligence (AI), can be a game-changer, but true organizational change is not as simple as adding another tool to your tech stack.
Organizations need a game plan, and it needs to align with what accountants actually need. Organizations need a solid financial transformation initiative. This requires a defined vision of how an accountant’s efforts can enhance and drive the organization’s success, coupled with revamped processes and technology to bring this vision to life.
The trouble is, most organizations are taking a piecemeal approach that makes it difficult to succeed. A lack of collaboration between CFOs and accounting teams further complicates the process.
What’s to be done? Insights from FloQast’s latest survey can help us understand the current challenges and how to overcome them. In conjunction, the Financial Transformation Framework can provide organizations with a guide to success.
Global Insights from FloQast on the Challenges of Financial Transformation
FloQast’s recent survey, Embracing Financial Transformation: What It Is, Why You Should Want It, And How to Achieve It, examines the role of accountants in driving financial transformation and the challenges organizations face when undergoing transformation.
Here are the key takeaways:
- Most accountants (90%) are aware of financial transformation, but less than half are “very familiar” with this concept.
- CFOs are more familiar with financial transformation, but they are less aware of their accounting team’s pain points and the overall need for transformation.
- CFOs and accountants often prioritize automating processes and centralizing data, but they frequently overlook the importance of intelligent information and business applications, which can have the greatest impact on the organization. For example, 59% have a specific transformation initiative around automating processes, whereas only 32% have a specific transformation initiative dedicated to business applications.”
The survey included people from across the globe and in various company sizes and stages, making the findings more comprehensive.
The results of the survey suggest that there’s a disconnect between accounting teams and CFOs when it comes to financial transformation. Without a clear and purposeful approach, organizations may struggle to succeed with their initiatives.
To fully grasp the scope of this problem and why financial transformation is necessary, it’s important to understand what financial transformation is and the framework that leads to successful transformation.
What is Financial Transformation?
True financial transformation is the reshaping and modernization of financial processes to help improve productivity, decision-making, and company culture. Simply having data alone isn’t enough. The data must be understood relative to how it impacts business decisions and then shared appropriately with key decision-makers to drive meaningful change and reach organizational objectives.
This comprehensive approach ensures that data is not only collected but also leveraged strategically. Without financial transformation, companies miss out on being able to create this level of business impact.
With an understanding of what financial transformation is, how can one give financial transformation a direction and purpose?
That comes down to the financial transformation framework.
The Financial Transformation Framework
There are four key components, or areas of action, that should guide financial transformation:
- Process Automation: Streamlined workflows reduce the need for manual efforts and the risk of error.
- Centralized Data: Aggregating data into a single source improves its accuracy and accessibility.
- Intelligent Information: Raw data is transformed into actionable insights that help support decision-making.
- Business Applications: Technology is leveraged to support the organization’s strategic initiatives.
These four elements work together to help an organization achieve financial transformation. When organizations follow this framework, accounting and finance teams can improve their workflow, focus more time on high-value tasks, and help the organizations reach their goals.
Why is Financial Transformation Necessary?
Now that you have a better understanding of financial transformation, you may be wondering: is it really necessary?
And the answer is a resounding yes. In fact, it’s imperative.
Here’s why.
Currently, efforts are often focused more on quick fixes for data and processes than a transformed, purposeful approach. Moreover, CFOs and accountants are hyperfocused on centralizing data and automating processes, but they’re overlooking two things that can have a significant impact on the organization:
- Business applications
- Intelligent information
For truly impactful change to happen, there must be a complete transformation and there must be a vision in place around how accounting and finance teams can meaningfully impact the business.
Starting with a clear vision of the desired outcome, organizations can use the framework above to create a business application initiative that guides the most important work in automating processes, centralizing data, and helping accounting teams transform data into intelligent information.
That all sounds great in theory, but before this framework can be implemented, organizations must address a few crucial challenges. Knowledge gaps and perception differences can make it difficult for organizations to recognize the need for transformation and take a comprehensive approach to achieving it.
Addressing Knowledge Gaps and Perception Differences
Knowledge gaps and perception differences can present challenges that complicate financial transformation.
Accounting and finance teams have different experiences than CFOs when it comes to data visibility and ease of accessibility. And these knowledge gaps can make CFOs blind to the need for change.
FloQast’s survey found that accountants were:
- 2.6 times more likely to report not having data visibility
- 1.6 times more likely to report that too much manual effort was required to access data
Furthermore, accountants feel that their organization’s data is siloed, leaving them with less time to focus on valuable work, like transforming data into intelligent insights.
What’s the end result? Accountants and finance teams find workarounds for these problems, and CFOs—who are leaders that can make transformation happen—never recognize these pain points.
Only when accountants realize there are better ways to work can real transformation happen. And when transformation happens, it benefits the entire organization.
Of course, knowledge gaps aren’t the only thing standing in the way of successful financial transformation.
Organizations face another big challenge: differing perceptions when it comes to the ability to transform.
For example, when it comes to technology:
- Accountants feel they have a better understanding of essential features but believe that CFOs are better at identifying what’s working and what’s not working overall .
- CFOs feel more confident in identifying pain points and the overall need for change but they need more support when it comes to identifying available options, choosing the best option, and creating an implementation plan.
To overcome knowledge gaps and perception differences, accounting teams must collaborate with their CFOs to:
- Define why a change is needed
- Select the right technology solutions
- Achieve a successful transformation
Collaboration ensures the accounting team’s needs are heard and pain points are addressed. CFOs can then recognize the need for transformation and guide the team in making these essential changes using the Financial Transformation Framework.
Summary
Many organizations have financial transformation initiatives. The problem is that most will only focus on one or two parts of the financial transformation framework. Taking a piecemeal approach never truly solves the problem and hinders organizational success. CFOs and accounting teams must work together to achieve successful transformation.
Related Blog Articles
