Over the last decade, customers have increasingly turned to the flexibility and convenience of digital channels to interact with organisations. The arrival of COVID-19 accelerated this trend and turned digital transformation into a business-critical investment across the economy. Organisations can no longer afford to stand still. The nature of transformation itself is evolving, driven by a range of factors including climate change, talent shortages, and increasingly digitalised customers. In this world of continuous transformation, finance teams play a crucial role in helping organisations benefit from agility and rapidly adapt to changing circumstances.
At the end of last year, I joined a panel of experts, to discuss the finance profession’s role in digital transformation. The event was hosted by the ACCA and the Consejo General de Economistas (General Council of Colleges of Economists of Spain). The panel was made up of myself; Felix Anso, CFO at Aon; Esteban Romero, President of the Committee of Transformation; and Suresh Sood, Chief Data Scientist at Chartered Accountants ANZ. During the event, we discussed; the elusive definition of transformation, the finance profession’s role within transformation, and we answered direct questions from the viewers of the webinar. The aim was to explore the critical role finance professionals play enabling digital transformation.
What is transformation?
While there is no uniform definition of transformation, I believe it should be viewed as fundamentally adapting an organisation to the point where it can rapidly recognise and respond to market changes but also, through low-risk innovation, shape the markets in which it operates. Transformation shouldn’t be viewed as a project with an endpoint but rather the creation of a sustainable culture of experimentation and empowerment that enables the organisation to better anticipate and flex.
The successful role of finance within transformation
The ACCA’s research identified 12 key principles that finance teams need to adopt to operate at the heart of the transformation process:
1. Finance must transform its role before it can play an effective part in organisational transformation.
2. Effective use of data by people and processes is the key to organisational transformation.
3. Business cases are now value-driven not just cost-driven, incorporating the ESG goals.
4. Transformation is a business-led, not technology-led activity.
5. Focus on purpose and customer value in driving transformation.
6. Transformation is a continuous process.
7. The pace of technology change will not slow so nor will organisational change; the pandemic has heightened the speed but not the outcome in improving productivity.
8. Not all projects are agile, projects form portfolios.
9. Cloud is an enabler to transformation, not an end goal.
10. The right culture and leadership are vital in a successful transformation.
11. Programmes are becoming more important than projects.
12. Skills in technology and data are essential as are innovation and creativity.
As a panel, we discussed these principles and explored different ways for finance professionals to put them into action.
Many organisations struggle to shake off traditional approaches to financing. Initiatives are often conceived of as large projects based on fixed scope, detailed cost estimates and long, projected benefits. Experience suggests long schedules and high sunk costs are risky business. The market often moves on before the project is even launched resulting in waste. The panel discussed how to tackle this problem by taking a hypothesis led approach. This allows an organisation to focus on incrementally working to address a fundamental business need, testing your hypothesis by building out new features or products. The emphasis shifts, therefore, to a targeted approach to transformation, mapping out the journey to a clear end goal and de-risking the whole transformation process.
Esteban Romero raised some excellent points on the fundamental role of leadership in change. In particular, he highlighted the importance of a change in mindset in finance to be more proactive and adaptable to change. Finance leaders should become ambassadors for change, setting the tone to develop an organisational culture that supports constant evolution.
Harnessing Predictive Capabilities
Data and analytics was a key topic of discussion. Suresh Sood, co-author of the ACCA research, underlined the value of this technology in opening the door to more predictive capabilities for an organisation. Data analytics skills will allow finance professionals to offer predictive insights to the rest of the business, guiding and enabling transformation with forward-looking assessments and advice.
Catalysts for Change
Felix Manso drove home this point when he outlined a vision for finance as a “catalyst for change”. He explored how finance should be positioned at the head of transformation. As a function, finance needs to focus less on just reporting past events, and much more on forward-looking planning and analysis to drive change in the business.
Both Esteban and Felix touched on the concept of ‘open innovation’. Essentially, innovation can come from anywhere within an organisation, every stakeholder should be taken seriously when it comes to new ideas. Innovation comes from the individual, not the role, and businesses should support that process by building networks of information exchange to enable transformation.
Skills development is a crucial part of ensuring finance teams can support transformation activities. When addressing this topic, Felix explained that finance should not just be about numerical skills anymore. There needs to be more emphasis on IT, as well as creativity and relationship management skills. These capabilities will allow finance teams to successfully mobilise their deep integration with every part of the business – the ACCA report describes finance teams as “super connectors” – to help lead and guide change.
Finally, I think it is clear that a culture shift needs to occur amongst finance professionals for the business to transform. Essentially, the attitude of those working in finance needs to change from finance being seen as an internal regulatory function, to a business partnering function. Alongside this, an appreciation for technical frameworks and delivery approaches needs to become more apparent. Finance professionals do not need to become technology experts, however, there needs to be some willingness to engage with certain patterns and frameworks.
Changemakers not scorekeepers
Finance has a huge role to play in digital transformation, however, this should not be as scorekeepers, but rather proactive changemakers who continually experiment to ensure that the correct paths can be followed to the transformative “north star”.