Author: Shak Akhtar
Digital investments top the CFO agenda for 2021, according to analyst Gartner’s survey of finance leaders. However, the analyst warns that without plugging the digital skills gap in finance, CFOs will struggle to fully benefit from these digital investments in technologies such as advanced analytics, automation and AI.
According to Gartner, there are five key digital competencies applicable to finance work. These competencies are technological literacy, digital translation, digital learning and development, digital bias management and digital ambition.
Alexander Bant, chief of research in the Gartner Finance practice, said: “CFOs tell us that it is a struggle to secure just one of these competencies, let alone all five among their teams. However, the majority of these competencies are trainable and can serve as building blocks for a better return on finance technology investments.”
But where should finance departments start on this digital journey? It all starts from a CFO with vision who can set out the key milestones along the way. This means CFOs must upgrade their own knowledge, including the technological literacy and digital ambition competencies outlined by Gartner. Without this technological literacy, finance leaders will quickly revert to short-term tactical solutions rather than embrace true digital transformation for the finance department.
Second, as part of this transformation and digital upskilling, CFOs must start eliminating the inefficiencies, errors and unnecessary manual work present in many current finance and accounting processes. The crucial question is which, out of the dozens of major processes that finance is responsible for, which processes are the low-hanging fruit that can be more easily automated and yield immediate value? This will vary depending on both the organization and industry sector they operate – what is right for a bank might be different to what is right for a retailer.
There are methodologies and tools for this kind of process discovery – such as the ones offered by Redwood – but there are some obvious candidates which provide a good place to start. These processes are well-established and proven automation targets, avoiding the need to start from scratch with extensive time and motion studies or process mining. They include processes around transaction processing and the month-end close, such as journal entry, balance sheet reconciliation and intercompany accounting.
Automating these processes first will also help kick-start the upskilling your finance team. Finance staff working on automation projects such as these will quickly learn about the process discovery methodology and how to automate an end-to-end process, giving them the know-how to uncover other opportunities for automation.
Alongside this digital transformation, the finance organization still has day-to-day responsibilities which keep the lights on. It can’t suddenly halt the month-end close or budgeting and forecasting while it automates these processes. The two tracks of “running finance” and “changing finance” must operate in parallel until finance is able to transition the running element into new digitally-enabled processes. This requires traditional change management skills, albeit with a digital flavor.
Automation is the starting point and foundation for much of finance’s digital transformation. Automation does the heavy lifting and provides the platform for finance to take greater advantage of data science, advanced analytics and AI.
Ultimately, the digital upskilling and transformation of finance comes back to vision. What is the future shape and role of finance and accounting? The COVID-19 pandemic has highlighted the weaknesses and lack of resilience in the manual nature of many finance processes. But the response to the pandemic has also shown what is possible. We have seen first-hand, and in a very short space of time, how automation and digital can transform finance’s role. Digital technologies and skills not only sustain the running of day-to-day finance tasks, but also support growth and build the capacity and funding to deliver more dynamic planning and reforecasting. This gives the Finance team more opportunities to take on new value-added responsibilities such as environmental, social and governance (ESG) reporting.
Find out how Redwood finance automation can accelerate your digital transformation.