Digital transformation can have a revolutionary impact on a business, going beyond trends to make up the very essence of a company’s future operations. With every element of digital transformation playing an important role for enterprise organizations, the transformation process can be similar to a game of Tetris.
Fundamentally, digital transformation serves as the driving force that prepares companies for the future. This transformation is not a standalone process. Instead, it is integral to a wider story of companies undergoing a fundamental redefinition of their core operations, ultimately serving as a driver in achieving a company’s strategy.
Harnessing technology to revolutionize business procedures significantly impacts every aspect of an organization, spanning customer-facing activities like sales and marketing to the inner workings of human resources, finance, and the complex underpinnings of IT and product development infrastructure.
For example, a software company moving from on-premises licenses to software as a service (SaaS) would require changes in most, if not all, enterprise processes, enterprise systems, and business functions as part of its digital transformation.
It also involves updating IT systems for better performance and efficiency, including moving software and data storage from their own servers to cloud platforms, allowing for more flexibility and cost savings. Digital transformation can also include strengthening security measures with tools like multi-factor authentication and encryption to protect data in the cloud and hybrid environments.
While digital transformation holds immense potential for impact, the challenge lies in pinpointing the optimal starting point.
Clearing the First Line with Automation
As organizations embark on the process of digital transformation, the need to quickly realize benefits becomes crucial. The vantage point of the CFO role positions finance as the optimal launching pad for digital evolution.
Digital transformation projects often go hand in hand with ERP (Enterprise Resource Planning) upgrades or rollouts. ERPs are responsible for tracking the resources of large enterprises, everything related to inventory management, shipping, accounting and payroll. Many businesses upgrade these systems every few years, to become leaner, efficient and secure.
During ERP rollouts, which are often multi-year projects in global organizations, it is essential to ensure business continuity in AP (accounts payable) and financial transactions. AP needs to modernize its infrastructure to optimize efficiency and maintain transaction integrity throughout the rollout process.
Additionally, the complexity of diverse ERP landscapes, with multiple ERPs, varied processes, and intricate architectures, can lead to productivity issues and scalability challenges. Upgrading ERP systems alone won't drive automation and efficiency, especially in organizations that under-invest in AP with point solutions.
Manual processes can hinder digital transformation efforts and can result in increased headcount and inefficiencies. Automation of AP and order processing act as essential foundational elements, demonstrating tangible progress and establishing the groundwork for improved reporting and valuable data analysis throughout all facets of the business. Standardizing and automating these processes address common customer, employee, and vendor pain points while also buying time for more invasive transformation work, such as upgrading or replacing one or more ERPs.
The urgency for change is heightened by regulatory changes, like the obligatory adoption of e-invoicing in advanced economies, transforming what was formerly optional into an indispensable requirement. Acknowledging governmental mandates concerning online invoicing for businesses operating in nations including France, Germany, Australia and Japan further emphasizes AP or order processing as an ideal entry point. In fact, a recent Forrester survey commissioned by Basware found that eight in 10 finance chiefs are preparing for greater regulatory scrutiny in 2024.
This immediacy offers a chance to blend compliance with value-driven transformation in a company, unlocking the potential of improved data quality, releasing working capital and ensuring the transformation's effectiveness. Choosing the right finance automation tools alongside ERP upgrades directly impacts how businesses can ensure compliance and adapt to evolving regulatory landscapes.
Navigating the Era of Financial Tetris with Digital Transformation
Mastering the intricacies of constructing a digitally transformative company requires a solid grasp of foundational principles. These often encompass a wide array of factors, such as identifying the target market, setting forward-thinking objectives, and assembling a team of skilled and knowledgeable individuals.
Setting the groundwork and developing a robust blueprint will prioritize attention on the dynamic components that may need further scrutiny before diverting focus elsewhere. Like playing Tetris, where beginning from the bottom and progressing upwards, players can construct a floor plan ensuring seamless integration of other components.
Developing a vital business strategy offers a comprehensive overview of the forward-looking needs that each organizational component must meet to facilitate a smoother transition, especially given the uncertainty of the economy. Without a clear plan outlining the direction of both the market and the business, building upwards becomes inconsequential.
With the key components of invoice automation as a transformation strategy, business leaders, entrepreneurs and CFOs can champion a paradigm shift in the AP and order processes. For example, by fully automating procurement and payables processes, businesses can capture 100% of the data from financial documents and achieve the highest levels of visibility across the supply chain. This can help to mitigate risks across the supply chain such as late payments, which can hurt cashflow.
In addition, digital transformation is about de-risking large transformation programs such as ERP upgrades and ensuring a clearer return on investment. Furthermore, it involves enhancing the supplier experience, mirroring the focus of many digital transformation initiatives aimed at improving the customer experience.
Maximizing the Potential of AI and Automation
As financial leadership evolves in response to modern trends, CFOs find themselves redefining their roles, with automation emerging as a crucial tool for adaptation. In today's volatile economic landscape, businesses are under increasing pressure to streamline their operations, highlighting the importance of abandoning outdated manual processes in favor of efficiency and effectiveness.
To address these challenges, CFOs must prioritize the adoption of innovative technologies, such as AI and automation, to enhance critical workflows. Proactive CFOs will continue to be instrumental in driving future growth, with their strategic financial planning and operational prowess serving as linchpins for overall business success.
Ensuring access to the appropriate resources could potentially motivate stakeholders to enhance their proficiency with the necessary knowledge and tools required to effectively implement transformative technologies.
However, when resources extend beyond conventional boundaries, there is a significant emphasis on fostering shared knowledge throughout the organizational framework. Pursuing solutions to every conceivable problem might result in excessive resource utilization, leading to the depletion of valuable assets that could be more efficiently allocated elsewhere within the business. Effective resource management, whether concerning budget, staff or training, is crucial.
Key Strategies for Navigating Digital Transformation Challenges
Ensuring the delivery of a flawless product or service is essential for any business. However, in a dynamic business and consumer environment, agility enables businesses to adjust swiftly as new challenges emerge, thereby reducing unforeseen risks.
According to Gartner, CFOs who embrace a composable technology approach (i.e. flexible) will experience greater revenue growth compared to those who stick to traditional methods for their technology investments. By 2024, Gartner predicts that 60% of finance organizations will prioritize composable finance applications in their new technology investments.
Being able to efficiently manage invoice processing, ranging from automatically extracting data to matching purchase order-backed invoices with purchase orders and goods receipts, creates a fully automated process. This saves employees time from routine tasks, enabling them to better manage working capital and concentrate on their financial goals.
Similar to the game of Tetris, businesses will confront unexpected shapes at any given juncture. Embracing agility and striving to minimize redundant tasks would further motivate businesses to streamline workflow, enabling employees to gain a deeper appreciation of the vital role automation plays within their organization.
While digital transformation may unfold over varying durations, spanning from weeks to months, and sometimes even years, identifying potential drawbacks that could escalate into significant future obstacles empowers businesses to proactively provide appropriate solutions as challenges arise.
Recognizing the essential nature of security and compliance is merely scratching the surface of the various challenges encountered by companies during the adoption of digital software in their financial departments. Delving deeper into near-term issues and strategizing solutions within the means of the business enables effective resource allocation as needed.
While not every company may encounter identical challenges, identifying areas for improvement ultimately enables a business to scale appropriately, while simultaneously meeting the requirements of the transformative journey without disrupting the customer value chain.
In an increasingly complex regulatory environment, CFOs cannot risk operating at anything less than the very highest industry benchmarks. With manual processes open to errors and delays, forward-thinking finance leaders are taking advantage of upcoming invoicing mandates as a ‘burning platform’ to not only achieve the highest levels of compliance but also accelerate automation as part of a comprehensive digital transformation strategy.
Mastering this digital transformation, akin to a proficient Tetris player, enables businesses to strategically align their components, thereby cultivating a seamless and future-ready financial environment.
