How is digital transformation impacting your business?
Read Canon's guide to introducing digital and automated technology to the finance function
Digital transformation impacts every department differently, however, the finance function has typically found this process more challenging than others. Four out of five finance professionals say that their department is not keeping pace with the rest of the organisation’s digital transformation plans[1]. Canon’s FAQs answer how modern finance leaders can overcome challenges and drive digital excellence through transformation.
The role of the CFO traditionally involved financial planning, reporting on performance and managing risk. However, it is evolving from looking back and reporting what has happened, to defining and planning the future of the organisation. CFOs are now expected to create data-driven strategy which plans around expected trends. The CFO can only take on this more advanced role if they are not hindered by time-consuming admin and every-day accounting work. As a result, CFOs are typically investing in more technology which make these tasks more efficient and automated, allowing them to focus on more value-added strategy work.
The finance department typically find digital transformation more of a challenge than others in the business. In fact, 88%1 fully admit they struggle to keep up with the business’ digital goals. As a result, the finance function frequently faces issues with lower productivity and efficiency, whilst also producing higher process costs. In turn, this can exacerbate the reputation of the finance function as a cost centre.
[1] AIIM report: Finance and Accounting in 2017
Progress continues to be mired by excessive reliance on manual processes and legacy systems - 66% [1] of finance professionals say they are more paper-reliant than any other business function. The reality is that whilst as all business functions are aiming for department-wide digitisation eventually, this process is a journey. With the department handling some of the most sensitive and important information of the whole organisation, it can be daunting to consider disruption to typical workflows. As a result, adoption of digital technology must be well-considered, and any new digital and manual work processes still need to work together.
The reality is that businesses are always straddling the new and old: optimising and updating legacy IT whilst introducing the new. Therefore, digital transformation means updating key processes and seizing opportunities for automated efficiency while maintaining and improving non-digital workflows for later optimisation. Digital transformation is more likely to be successful when the business embraces the reality of this hybrid environment where both digital and analogue processes are at play.
As a result, when integrating new technologies, they need to be flexible to the needs of the varying stages of transformation and offer seamless and full integration with current, back end and future systems, workflows and processes.
Whether it’s the recent introduction of the General Data Protection Regulation (GDPR), or other laws on bribery, modern slavery or the duty to report payment terms, there are a growing number of compliance challenges that are putting pressure on finance departments to change. Traditional paper-based methods not only make key processes more complex and difficult to manage, but put regulatory compliance at risk too. Alongside improved efficiency and agility, introducing digital and automated technology helps businesses build more transparent, accountable processes and workflows that suit today’s complex compliance landscape.
Whilst there are many technologies which are hailed as the ‘next big thing’, automation offers the most genuine, practical benefits for a finance function today. Finance automation should be a key strategic pillar in the digital transformation of any business; it is a crucial way of linking the physical and digital information being managed by the department. There are numerous benefits of introducing automation to core processes such as invoice processing, including making it more efficient, reducing back office admin costs, and making it easier for businesses to remain compliant.
Automation enables finance departments to minimise the chance of human error, in terms of processing paperwork and also following best practice, for example by making it simple to build in step-by-step measures such as mandatory approvals, preventing users from skipping steps necessary to remain compliant. Meanwhile, a digitised process can be easily audited and helps comply with internal governance and external accountancy regulations.
One of the best examples of how AI can tangibly benefit a business, is in harnessing data to provide valuable predictive insights instead of simply telling a business what has already happened. One of the central tasks for any CFO, and for the finance function, is analysing performance and creating strategy. Whilst this is always data-driven, AI is able to analyse years of previous performance data and spot meaningful patterns which might be hidden to the human eye. Once a strategy is in motion, AI can then monitor - in real time - and alert the business to deviations, automatically flagging issues to the appropriate stakeholder when action is needed.
Finance and procurement are working increasingly closely, yet only a third of organisations believe that their procurement and finance functions are actually closely aligned. The speed and accuracy of an organisation’s payment processes strongly affects the quality of its relationships with suppliers. When payment processes start to become overloaded as the workflows are not well optimised, the quality of those business relationships suffer. As a result, many businesses are looking to improve cohesion by integrating automation technology, which reduces the delays and errors associated with manual processing, and in turn improves the relationship with suppliers.
According to AIIM, 22%[1] of businesses confess to only a quarter of their invoice processing operation being currently automated, but this is expected to grow and it’s clear why. AIIM’s research found that for businesses still using a paper-based solution, the average time to process invoices is reported to be 3-5 days. In comparison, businesses invoice processing cycles for those using an automated solution were reported to be less than a day.
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