Digital Business Process Transformation – like it or not – embracing change and automating financial processes is key to the successful Finance Executive.
The demands for financial process transformation represent an enormous opportunity for the inspired Finance Executive to take the lead. Not just an opportunity to significantly improve finance operating processes and reduce costs, but in addition leverage this experience to initiate and lead Digital Business Process transformation initiatives throughout the organisation.
With reference to and in the summary of a presentation by DocuWare on key takeaways for Finance Executives on business transformation. There are 4 facts which we as Finance Executives should be aware of;
1. The wide variation in the effectiveness in financial processes provides a rich opportunity for cost savings. These process variations, driven by non-standard, ad hoc, manual accounting document processes reliant on paper, create a debilitating cost disadvantage when organizations fail to adopt document management-driven financial process automation. We as finance leaders need to recognize that these fundamental different cost profiles are a drain on time and on our financial resources.
2. Most organizations are reaching the conclusion that offshoring helps, but does not resolve the cost disadvantage created by manual processes. It is estimated that the average organisation manually key in 58% of all invoices into the financial system and 61% of the cost to process accounts payable is in people. The cost savings derived some 20 years ago through offshoring for say the accounts payable function, were substantial at the time. However, today this offshoring is not sufficient to outperform the advantages of digitalization. The best way to drive down costs of repetitive, manual tasks, and free resources for higher-value activities is to automate accounting processes and eliminate paper.
3. Manual financial processes and information ultimately have a negative impact of other core processes. Poor financial processes not only impact financial operations, but have a “ripple” impact throughout the organization. Information and documents created by and surrounding financial processes are used in countless other processes and departments, including sales and customer service. It is estimated that organizations with poor financial processes typically suffer an error rate of 3.3% in their sales forecasts, compared to 1.5% at the leading organizations. Finance executives that embrace digital transformation technology to enhance finance processes, and take the time in understanding and collaborating with the business will be true value-added transformation agents. Finance teams need to grasp the speed of change and start demonstrating value that they can share using their financial skills and analytics to interpret financial position.
4. Guaranteeing the security and privacy of information and the auditability of financial processes is an increasingly vital role for the Finance Executive. Organizations must focus on both getting previously unmanaged documents and processes under control and on the risks associated with managing expanding volumes of information. Digital transformation of the finance function will achieve an upper hand in data governance and data control, mitigating serious risk management issues associated with breach in data information handling.
While the financial process digitalization initiatives may start with the intent of reducing cost, and while the finance team will continue to be the primary financial stewards of the organisation, the role of the Finance Executive to leverage the knowledge gained during digital transformation process redefines the role into a broader process and ultimately to the contribution of transformation of the business itself.