Digital Transformation. Are Finance leaders ready for it?

When I started my journey as a digital transformation and finance consultant at ideeds and Finsiders, the digital world was not the same as we get to experience today. Five years ago, a lot of companies were still not aware of how switching to digital systems could completely change their day-to-day operations, and AI was not the buzzword it is today.

A lot has been said about digital transformation, and the truth is that in the ever-changing world of business and finance, it has become much more than a buzzword. It’s the force that can drive change and innovation into an organisation, even when, at times, it’s met with some resistance. 

Having worked closely with organisations from different backgrounds and areas, I’ve been able to witness how digital transformation can have a true impact, especially when teams fully embrace it. But all of these journeys have also taught me the importance of looking at digital transformation as more than simply implementing a new software that can automate processes. Digital transformation is, in its essence, about reaching a synergy between four different pillars: strategy, data management, systems, processes and, most importantly, people.

For Finance teams, digital transformation can have an even bigger impact. Traditionally seen as number crunches and budget gatekeepers, Finance professionals can delegate the manual and time-consuming tasks to digital solutions, providing them with the time to become more involved with strategic business decisions. Aside from the efficiency of these tools, their insights have also proven to be valuable assets to help make business decisions that could have a high impact on the organisation as a whole.

But as with any major shift, this transformation is not without its challenges. Fear of job displacement, generational gaps and the need for continuous adaptations are some of the setbacks organisations still tend to encounter. Fostering the above stated synergy within the organisation is key to tackling these issues in the long run, especially if the focus remains on the people, as they are essential for turning the digital transformation journey into a success.

To truly understand how digital transformation is reshaping the Finance world and how Finance leaders can proactively contribute to it, we need to understand what this transformation implies. What does digital transformation actually mean for an organisation? What are the major setbacks and how can those be overcome? And what is the role of the Finance leader in this equation?

One of the main things I’ve come to understand over my career as a digital transformation specialist is that digital transformation is much more than just a trend word. It’s a fundamental shift to the way organisations operate and grow. And that goes way beyond simply implementing an online store or building a website: it’s about creating an ecosystem with strategy at its core. But other pillars are essential: strategy, data, systems, processes, and people.

Strategy is the heart that pumps blood into a digital transformation’s body. It reflects on the company’s long-term evolution, on what it’s trying to achieve and the road it will take to get to that destination. And goals can change, depending on what the company is striving for. It can be as simple as generating 15% more revenue in 2024 or being as ambitious as aiming for profitability and a positive cash EBITDA. But to achieve these goals, a strategy must be set in place. It hinges on setting and following SMART KPIs and ensuring that every step taken aligns with the overarching vision.

But for the strategy to be effective, there are other essential pillars. The first being data management and governance, and this is where transformation truly begins. Today, data is on par with gold for businesses. Collecting and utilising the right data provides information that’s essential for making the best strategic decisions. It also provides insights into process efficiencies, guided by KPIs, which are crucial to shape the company’s future.

Systems, our second pillar, focuses on selecting the right ERP (Enterprise Resource Planning) systems that align with the company’s strategy. This is where AI has been coming more and more into play over the last few years. As the technology evolves, AI has become essential to help Finance teams in tasks such as invoice processing. Technology has been transforming traditional processes over the years, and has made them more efficient and interconnected, which makes the Finance team’s jobs a lot easier.

Strategy is the heart that pumps blood into a digital transformation’s body.

But for systems to be efficient, the right processes — our third pillar — need to be defined. If a company is moving from a traditional setup, it’s important to define all the processes that are set in place, map out the company’s goals and understand which of these processes can either be streamlined or abolished altogether. This is where tools like RPA (Robotic process automation) come into play, automating sequences of steps to enhance operational efficiency.

If strategy is the heart of the digital transformation journey, people are its brains. People are the fourth and most critical pillar of digital transformation. When starting the journey towards digital transformation within an organisation, it is key to ensure that people are engaged and involved with it. If you have the best system in the world, but your team does not want to work with it, it won’t be a success.

For that, Finance leaders need to be involved, and they need to be equipped with the right set of management skills. That is the only way for them to keep individuals engaged and on board with all the changes that can impact the organisation. An impact that, as I’ve personally witnessed, can drive great results, and even change people’s lives.

Take AP accountants, for instance. Traditionally, an accounts payable accountant would be hung up on manual tasks such as invoice processing and matching, something digital tools with OCR technology can automate, streamlining the whole process. This digital workflow allows for electronic invoice approval, machine learning for matching, real-time reporting, and analytics. Similarly, for general ledger accountants, modern accounting software automates and centralises financial data, reducing errors and time spent on manual reconciliations and journal entries.

Transformation should not be a blind adoption of technology, but a strategic move towards a more efficient, data-driven, and people-centric future.

Embracing digital transformation is, indeed, a true game-changer. It makes businesses more efficient, flexible and competitive. In the long run, it can help save great sums of time and money, and allow for teams to quickly react to market changes. But it’s important to understand that digital transformation is not a one-size-fits-all solution. You need to start small, take baby steps, prioritise time-consuming tasks, automate them and set systems in place that allow for constant feedback.

As I mentioned before, people are an essential part of the success of the digital transformation journey. But they are also the ones that can create the biggest challenges. Transformation should not be a blind adoption of technology, but a strategic move towards a more efficient, data-driven, and people-centric future. For that, you need to learn how to overcome the setbacks people can create.

Picture a scenario where a team of finance professionals who, for the past 20 years, have been working with traditional manual systems, are told they now have access to a full-on digital tool that can do their work for them. They won’t need to spend countless hours inserting invoice data in lengthy reports or searching for lost receipts. Everything will be done by a smart tool, and they won’t have to worry about a thing.

Sounds easy, right? As a manager, you would probably expect to find employees rejoicing and popping champagne bottles all around to celebrate this new achievement. But the reality is often much different, as not everyone will be so keen to accept these changes in the blink of an eye.

As we enter a more tech-oriented digital age, Finance teams are quickly facing the fact that they need to adjust and prepare for what’s yet to come. But it’s not always that easy. Job displacement is one of the most pressing issues, as people from older generations feel like they are unable to adapt to this new technology and will, eventually, be laid off from their positions.

To overcome this, continuous education is key. Most organisations that I’ve come across have been increasingly turning to finance academies. Such academies play a crucial role in re-skilling and up-skilling employees, ensuring that their expertise evolves with new technologies. They foster an environment where continuous learning is not just encouraged but ingrained in the company culture.

Another significant challenge is breaching generational gaps within Finance teams. It’s natural to find a diverse age range in these teams, and at times it can mean that there’s quite a noticeable generational gap. You can find a veteran who has all the experience in traditional methods and knows all the regulations by heart, and the millennials or Gen Z’s who have grown in the digital age and know all about the latest digital tools, often relying on them. The secret to bridging the gap? Collaboration. The younger employees have a lot to learn from the older generation and vice-versa. Provide a space for them to collaborate, share their insights and work together to achieve the best outcomes for the digital transformation journey.

Outlining and explaining the benefits and goals of digital transformation will help the team truly understand not only what will happen, but what it all means for them in the long run.

The same can be said for older finance leaders, who might also have limited experience with the latest digital finance tools. Another solution to overcome this problem, which can be extended to the whole team, is relying on demonstrations and hands-on training sessions. This will not only demystify technology, but also show its benefits in automating routine tasks and freeing up time for more strategic work.

Overcoming resistance and scepticism towards digital initiatives can also be achieved through clear and effective communication. Outlining and explaining the benefits and goals of digital transformation — and the systems responsible for it — will help the team truly understand not only what will happen, but what it all means for them in the long run. Involving sceptical stakeholders in the planning and decision-making process can lead to more inclusive solutions and greater acceptance rates. As well as introducing pilot programs so different teams and branches can showcase the transformation’s potential before making the decision to scale up to the rest of the organisation.

Appointing ambassadors within the Finance team can also help disseminate information. I’ve worked with companies that choose to have someone from their team become, in a way, a spokesperson of digital change. This person’s role is to listen, to understand the main pain-points of the rest of the team, gather their feedback, help to align operations and guide them through the whole journey, with the help of the management team. It’s also important for this ambassador to celebrate the successes and quick wins along the way, reinforcing a positive outlook on these changes.

It might not be the easiest of roads to overcome, as some degree of scepticism will always exist, and that’s a natural part of any transformation journey. The focus should be on the benefits and the wins these changes will bring to the organisation as a whole, while trying to help those who still need some guidance to overcome their fears. For that, having the right leaders who are also prepared to embrace change is a must.

We’re living in the midst of a new era in Finance, witnessing rapid technological advances and markets that shift in the blink of an eye. More than ever, it’s important for Finance teams to be prepared to embrace the future, and this preparation involves not only the members of the team, but also their leaders.

Today, a data-driven approach is much more than collecting information: it’s about obtaining insights for better decision-making and risk management.

Finance leaders have seen their work change over the years. They’ve gained a more strategic role that has led them to be involved in broader discussions regarding the future of the organisations. In an era of digital transformation, aligning the Finance team’s goals with the overall strategy the company has set is essential, as these shifts can help ensure those long-term objectives are achieved. And CFOs have a big role to play here, as they need to understand where the company aims to be in the future.

Data, of course, is the backbone of this transformation. CFOs need to be ready to align with management on long-term goals. They can then work with the Finance team and establish strong KPIs that need to be continuously monitored and analysed to ensure they are meeting their objectives. If at any time the team understands that the current processes and systems are not aligned with the KPIs, a reevaluation is necessary. That’s why a data-driven approach, today, is much more than collecting information: it’s about obtaining insights for better decision-making and risk management.

Using the right systems also plays a pivotal role. When choosing ERP systems, finance leaders must understand if they not only align with the current digital strategy but that they are also easily adaptable in the future. For that, incorporating AI and automation features can help significantly, as it streamlines operations, improves accuracy and enhances reporting capabilities.

Digital transformation is a journey, not a destination, so start small, give your people the time to experience this whole new world technology has to offer and guide them through it.

But technology alone is not the secret to drive digital transformation. People, as always, are an essential piece of the puzzle. Hence the need for leaders to be involved in the process, from the moment the idea arises to the day the project meets its deadline. Management teams need to understand, support, and engage with the digital transformation process. That also means identifying their team’s challenges and roadblocks, involving them in the journey and ensuring full transparency of the projects so teams feel more receptive and adaptive to change.

Finance leaders, particularly CFOs, need to be equipped with the right set of soft skills that help them navigate these changing times. They need to have an operational understanding of the new systems being implemented, be curious and show some proactivity when the need arises to search for solutions. They also need to be up to speed with the latest technological trends and proactively adopt them. It’s also becoming increasingly important to collaborate with IT departments in areas such as cybersecurity.

Managing teams will also be essential, and part of a CFO’s soft skill set will mean deciding when it’s best to get involved in the digital transformation process, which can vary depending on the size of the organisation. At times, CFOs themselves might not be equipped to provide the answers their teams are searching for, but they should have enough knowledge to point out who the right person to answer a question is.

The future holds many great things for those pursuing digital transformation, and some significant changes are just around the corner, so this is the time for Finance leaders to set up and prepare to seize the opportunities as they present themselves. We can’t say for sure what the future holds, but we do know data collection and analysis will become even more critical, especially for insights driven by AI. In the next few years, sustainable finance, ESG reporting and ethical finance are also set to become more prominent, aligning financial strategies with societal values and environmental responsibilities.

As Finance leaders prepare for these challenges, the focus should be on adaptability, strategic alignment, and continuous evolution. Digital transformation is a journey, not a destination, so start small, give your people the time to experience this whole new world technology has to offer and guide them through it.

At the end of the day, making the shift into the digital world is an ongoing commitment, a never-ending story made of multiple chapters that will lead to an end goal: ensuring that finance teams not only keep pace with the digital transformation but lead it.