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Picture: 123RF/ISMAGILOV
Picture: 123RF/ISMAGILOV

For many businesses, digital transformation is an imprecise term, with even more imprecise expectations that some magical technology intervention can propel them into new, more efficient and profitable states. While this is possible with faultless planning, piloting and operational management, for many businesses it is a more incremental development — one that requires a road map.

Naturally a technology-related response to the Covid-19 pandemic varies across sectors, with health leading the way with new digital solutions. But finance was not far behind.

At any given time, businesses will vary in their digital maturity, often depending on the sector they’re in and their quality of leadership. A new Sage research report, CFO 3.0 — Digital transformation beyond financial management tells us that leadership of digital transformation by companies is today as likely to be undertaken by the company’s CFO or other finance leader.

This is largely because success in digital transformation requires business planning and agility in developing new business processes, something CFOs are well versed in. Looking at the evolution of finance leaders, the Sage report says their role is becoming a far more strategic one than simple number crunching. 

The pandemic crisis has unexpectedly enabled finance leaders to break down cultural barriers to innovation, which may previously have stood in the way of experimenting with new digital solutions, especially in the field of remote working. This acceleration of digital transformation offers a positive outlook for the future.

The difference between success and failure in digital transformation

CFOs today are faced with more pressure than ever before to modernise and digitise. Many large businesses turning over billions of rand are still managed using little more than spreadsheets. This must change — and it is. The Sage report finds that 90% of senior financial decisionmakers have adopted emerging technologies in some form, while 87% of CFOs play a role in digital transformation and say that emerging financial management technology is key to success in their role.

They have done so as they grapple with the explosive growth of both qualitative and quantitative data, operations growth and complexity, the need to overcome information silos, a growing number of data analysis tools, and more. Staff turnover remains an ever present challenge, leaving huge knowledge gaps as new employees arrive.

Many finance leaders know they must digitise workflows and data — and fast. However, the worst course of action would be to invest in technology for its own sake. Before investing a single rand, CFOs must consider four factors that are likely to determine the success or otherwise of a digital transformation strategy for their business:

  • Outcome driven: Any investment in technology must consider the business impact and not its “bells and whistles” or in-vogue tech trend status. Every organisation has different needs and if a certain technology doesn’t fit directly to its business goals it’s doomed to fail. It is imperative that business goals be clearly defined as the first step and technology selected to reach those goals. It is a gross mistake to first invest in a technology and then retrofit goals to accommodate and justify that investment.

  • Commitment to change at the highest level of leadership: One of the biggest determinants of success in a digital transformation initiative is commitment to change, or it simply will not happen. A finance leader must be able to carry the board, and leadership team, to overcome any resistance. Thereafter, it’s vital to educate and train employees on new processes and technologies to make sure they’re confident when the time comes for deployment.

  • Knowledge capture: As CFOs contend with the vast growth in the amount and complexity of data, their systems must be able to capture information in ways that will permit better decision-making. As employees join, leave or take on new roles within a company, it’s necessary to have centralised processes for recording all information. Key to this is a digital knowledge hub that is institutional rather than individual memory based.

  • A well-selected team: This can be hugely valuable in decision making about digital transformation. CFOs should consider a handpicked team, and how to improve the overall experience for all parties that will be affected.

Digital transformation can appear to be an overwhelming undertaking. However, by using the above factors in designing an initiative, then the right team, technologies and strategies will become clear.

This article was paid for by Sage.

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