How Can Finance Get Up to Speed in the Digital Transformation? Take Advantage of This Undiscovered Resource
By Andrew Durlak, Co-Founder & VP of Operations at Scout RFP The use of digital technologies in non-customer-facing operating activities lags behind technology utilization for other critical business activities, according to a recent HBR report in partnership with Scout RFP. (And yes, that lag includes various aspects of finance — scary, right?) This is a […]
By Andrew Durlak, Co-Founder & VP of Operations at Scout RFP
The use of digital technologies in non-customer-facing operating activities lags behind technology utilization for other critical business activities, according to a recent HBR report in partnership with Scout RFP. (And yes, that lag includes various aspects of finance — scary, right?) This is a problem, particularly when digital technologies are a top driver in critical strategic prioritization, as another recent report by Ernst & Young points out. If businesses aren’t fully up to speed in the digital transformation, how can finance leaders truly engage in strategic leadership – such as streamlining revenue and increasing ROI from tech investments – within the organization?
Finance leaders can blaze the trail in this area, accelerating digital transformation and positioning themselves as proactive leaders within their respective companies in the process. The first step is to broaden finance’s view of digital transformation outside of traditional FinTech. One area that poses the promise of high ROI is procurement — an area of the business that often falls under finance’s oversight, yet is rarely tapped to its true potential for bottom line savings.
While sourcing is a business function that is often overlooked in digital transformation efforts, it can also have a massive bottom-line impact on the organization: As the HBR report points out, strategic sourcing has the potential to drive up to 400 percent ROI and “any cost savings realized through sourcing improvement drop directly to the bottom line, which in turn can have a substantial impact on profitability.”
The report also goes on to highlight more untapped benefits to strategic sourcing: “Although some dimensions are more straightforward to quantify than others, the concrete financial returns of focused sourcing and procurement efforts are quick to accrue and very easy to identify, executives say. The work is tangible and measurable, with a rapid and unambiguous impact on shareholder value. Once the company undertakes improvement, executives point out, the financial benefits begin to accumulate rapidly.”
Taking the first step
With savings that go directly – and quickly – to a business’s bottom line, there’s no reason that finance leaders shouldn’t prioritize procurement in their quest for digital transformation within the company. As they think outside of increased sales to improve cash flow, the impactful, direct savings that strategic sourcing delivers is an obvious answer. Strategic sourcing brings a notable advantage to traditional cash flow tactics through efficient and effective processes.
In order to take the first step in sparking digital movement to establish these strategic processes, there are three key ways finance leaders must approach the transformation within their business:
- Encourage stakeholder buy-in.
Stakeholders must engage to truly make the adoption of new technology successful. Before implementing a new solution, finance leaders can encourage this buy-in by clearly defining the stakeholders’ needs met by the solution — whether that be a more collaborative team environment or accelerated savings. When compared to the current results stakeholders are seeing from existing technology or processes, a new solution worth implementing should have the power to speak for itself.
- Select the right technology.
Technology that prioritizes automation and collaboration yields efficiency. Adopting technology that allows cross-functional teams to collaborate, streamlines communication and project management in a single platform, and encourages more strategic vendor decisions means quicker savings that can then fuel even further technology adoption within the business. Digital transformation is a cycle — as finance leaders pursue forward-looking digital adoption, they open a new channel for accelerated digital transformation within the business as a whole.
- Make implementation easy.
While finance leads the business in a digital movement, quick and easy onboarding and streamlined implementation are key to continuing that momentum for further digital adoption. To keep stakeholders engaged even after the initial touchpoint, finance leaders must create an adoption process that is as easy and streamlined as possible. This will encourage users to dig into the solution early on, promoting familiarity and ongoing use of the technology. When users are fully engrained in a solution from the start, it makes it nearly impossible for use of the technology to fizzle out, establishing long-term impact.Traditionally, accounting and ERP software have been considered the fulcrums of change for digital transformation within the enterprise. While these certainly have their merits, don’t forget the path less (digitally) traveled. Finance’s responsibilities have shifted, and its leaders must adjust priorities accordingly. “Where once its remit was predominantly that of a reporting function that focused on balancing the books, it will become a data-driven decision-center,” Ernst & Young’s The DNA of the CFO report points out. Tapping undiscovered resources –like procurement– to jumpstart digital transformation, and taking deliberate steps to make sure that digital adoption reaches the business as a whole, puts the necessary parts in place for finance to adjust its focus to more strategic, data-driven decisions for the business as a whole.