Digitalising finance functions has become a major challenge for organisations of all kinds.
According to Gartner, the term “digital” in the early 2000s only ranked among the Top 5 priorities for CEOs in one in every 50 companies surveyed. Today, it is a priority for one out of every five.
The proportion of businesses that have a digital strategy rose from 62% in 2018 to 82% in 2019, confirms Gartner, which considers that 90% of companies today have already been confronted with different types of disruption in their business models.
Why does accounting need digitising?
Corporate entities are now all concerned by digitalisation and are faced with the need to digitalise their accounting to simultaneously adapt manual processes.
However, it also helps accomplish other goals, such as improving relations with clients, leveraging electronic solutions to increase performance and productivity, and rethinking human resource management to increase people's digital skills.
According to a study on finance departments in 2020 by the human resource consulting firm Robert Half, 80% of CFOs can already see the difficulties they will have recruiting and retaining skilled teams of co-workers, particularly people with digital skills.
This performance requirement in a complex and uncertain environment is a recurring factor for finance departments. According to a PricewaterhouseCoopers (PwC) survey on 2020 priorities for financial directors, the need for digital skills has been a leading consideration since 2018 and will remain so for at least the next three years.
Digital transformation and its assortment of new technologies therefore represents a major opportunity for financial decision-makers.
That includes digitalisation but also Big Data, analytics, Robotic Process Automation (RPA), artificial intelligence and virtual assistants. All these technologies have a transversal and universal goal, which is to extract, assess and realise the value of data.
Digitalizing the accounting profession: what are the issues?
If companies can understand the value of their data, the status of financial professionals would, in extension, also be valued.
With digital transformation, finance professionals change their positioning within their organisations. They are seen less as occupying back-office roles and more as people who support wider business efforts.
Being successful with this evolution is critical in a world where data volumes are increasing at a dizzying rate. International Data Corporation (IDC) estimates that the size of the global “datasphere”, which represented around 10 zettabytes in 2012, is expected to reach 175 zettabytes by 2025.
Digitalizing the finance function
Financial data is no exception to this trend of information overproduction. Notably because regulatory obligations require more information to be stored for longer periods of time, and because business intelligence and visualisation tools incite organisations to increase their use of dashboards.
But digital transformation also helps speeds up electronic processing and increase the volume of digital data. Data remains at the heart of the process, such as invoices in electronic solutions, structured data in predictive models, labels for classifying accounting entries, and product references in ERP systems.
According to PwC, people in the most efficient finance departments are already spending 75% of their time analysing data. A report by Dresner Advisory Services published in late 2019, shows that 40% of finance departments intend to acquire Big Data solutions in 2020, notably as a way to benefit from information in real-time, align their work with management needs, and make data more reliable.
How can businesses digitalise the finance function?
Companies and finance departments are clearly going to continue investing massively in digital technologies, pressed by upper management – $271 billion from European companies alone in 2020, as estimated by IDC.
To address these issues, finance decision-makers, accountants, and auditors today have four very different roles to play:
- Sprinters, as digital transformation is a continuously accelerating process
- Marathon runners, as they need to be able to keep up the pace with respect to data flows and multiple work projects arising from digital transformation
- Coaches, guiding staff and business units
- Referees, confirming and securing decisions
It is nothing less than mission impossible for financial decision-makers to handle all these different facets alone. Fortunately, technologies are here to facilitate and accelerate the transition to the CFO 4.0.
Compared to their historical role as financial decision-makers, CFOs move from a support function towards that of a value creator with predominantly technical expertise to optimise more assertive leadership within the value chain.
What are the best new technologies for digitalising accounting in 2020?
In addition to the four new roles, there are also five other core principles for CFOs to help drive: performance, innovate, connect, communicate, and, ultimately, create value.
A range of technologies applies to each of these missions. Organisational performance leverages an increasing number of Cloud applications and, of course, digitalization technologies.
On the innovation side, artificial intelligence is already making headway into the finance function, while value creation is derived from a smart arrangement of technologies that feed the entire organisation.
2019 was an intense year for finance departments and Chief Financial Officers. According to the Protiviti consulting firm, 58% of finance departments increased their budgets for acquiring data visualisation solutions, 56% invested more in analytical solutions, and 50% of CFOs invested in robotic process automation (RPA).
These investments for the future are expected to show their benefits starting in 2020.