“Digital transformation” is an admittedly abstract term—it isn’t a product or solution to be purchased, but a strategy that involves integrating several digital technologies, tools, processes, and solutions into your business. Simply put, digital transformation allows businesses to utilize technology to optimize their internal processes and operate more efficiently. More traditional methods of conducting business are falling by the wayside every day. Although it can be a challenging venture to implement, the need for digital transformation—especially with your business’s financials—offers several major benefits if executed effectively.
It makes a lot of sense to start the digital transformation journey with your financials. Any forward-thinking executive might say that with stronger, leaner competition and tighter margins—as well as the need to operate within a stricter regulatory environment—the need to evolve, to stand out, and get ahead of the competition is imperative. Moving from manual processes to automation can not only assist your finance department in the performance of its core functions but immediately provide a return on investment (ROI) to the project through time saved and cost benefits.
Since business financials are something tangible, this can be considered the perfect place to apply the abstract concept of digital transformation. For most businesses, these automation processes can include the core financial tasks of data entry, account reconciliation, accounts payable, invoicing, financial statement preparation, employee management (payroll, benefits, expense reports, etc.), and tax reporting and compliance, to name a few. In addition—in what has become more commonplace—businesses will bring in a Virtual Chief Information Officer (vCIO) to act as a digital transformation consultant and ensure a client gains a competitive advantage with the use of technology. These vCIOs may often complete tasks like financial forecasts—tasks that are often more inefficient and error-prone when completed by finance professionals in-house.
Automating your business’s finance processes results in several major benefits, such as: saving time, reducing the likelihood of error and chance of fraud, and ensuring greater consistency. In addition, allowing for automated, real-time data collection through these processes increases the utility of business information. This often provides insights that reveal discrepancies or new strategic opportunities—allowing you to chart a new course for your business or spark true digital transformation. Implementing a digital finance transformation system with these core processes can provide your finance team with more time on tasks that require human intervention—allowing them to better strategize and plan on a broader scale.
The adoption of artificial intelligence (AI) offers businesses yet another powerful opportunity to transform the way they deliver products and services to a rapidly changing audience. Strategic AI implementation in your financial processes allows you to make well-informed, sound, and risk-assessed decisions—often providing a competitive advantage. When it comes to automating your business financials, one of the best partners your finance team has is Robotic Process Automation (RPA). RPA utilizes software robots to execute business processes using the same interfaces that people use. For example, with RPA, your business can automate not only its core bookkeeping tasks, but also many time-consuming processes like payroll, expense management, tax compliance and reporting, invoicing, and accounts receivable and payable with minimal human intervention (and risk for error).
Digitizing and automating tasks, avoiding errors in processes, automating documentation and standardization, and achieving better efficiency and returns are just a few of the key benefits that RPA implementation can provide. Of course, adopting digital transformation technologies with your financials doesn’t mean eliminating your entire finance team and handing things over to a machine. Rather, it means making things simpler through standardized, complex processes. Finance professionals are still needed to evaluate and translate all this information into recommendations that support your objectives.
Data is the lifeblood of any digital transformation. Leveraging data effectively allows businesses to create a connected system of automated, people-driven processes that open new opportunities for efficiency. Implementing technology that lessens the burden placed on your finance professionals when compiling forecasts makes their work more productive and cost-effective and allows for more cross-departmental functionality.
It’s no secret that traditional forecasting takes a lot of time, and effort, and can be rife with errors. In the past, forecasting was done maybe twice a year. As soon as the ink had dried, these reports started becoming less accurate and relevant. Today, businesses need to re-forecast at a more frequent interval to adapt to change and risk. To make the best decisions, accurate financial data must be utilized consistently. Using accurate, rolling forecasts allows your finance team to provide greater insights and redirect resources where necessary—ensuring priorities are aligned with your business’s overall objectives.
Digital transformation can also help financial forecasting by not only improving accuracy but by easing the more traditional processes often placed on finance professionals.
Trying to balance the various elements required to produce the most accurate forecasts—that adapt to market shifts and uncertainties much faster—is time-consuming and error-prone. Forecasts based on historical data don’t account for market fluctuations or outside data—and, perhaps most important, the burnout among the teams compiling these reports is real. In a recent survey from McKinsey, some 40 percent of CFOs stated: that “their forecasts are not particularly accurate and that the process takes far too much time.” If it takes your finance team too long to prepare these forecasts, the chances of them being inaccurate by the time they are published are more significant.
At the end of the day, digital transformation won’t eliminate the need for the human element in many of these areas. Digital transformation is primarily about making your business willing and able to adapt to change. That includes your people. A digital transformation will forever change the way you do business. By incorporating new, emerging technologies, skills, goals, challenges, and strategies you’ll be in the best position possible to make decisions regarding its operation.
At the executive level, conversations around what sort of insights are most important to the business and the need for collaboration among those involved are vital. A vCIO or IT strategist partner (like Vudu) can help you conduct that conversation and determine the direction to go next. Few organizations can stand the test of time without a plan to strategically adopt beneficial technologies. To remain competitive in the modern business landscape, digital transformation is a necessity. As technology and the digital landscape continue to evolve, the need for digital transformation in financial spaces is clear.
At Vudu, we are technology wizards who want to bring IT magic to your business and achieve supernatural results. Have you been wondering how leveraging financial data effectively can transform your business? Tell us more about your goals.