What does digital transformation mean for finance?
You can probably imagine that digital transformation is a topic that interests me not only as a financier, but especially as LucaNet CRO. Firstly, because there’s no escaping it in my opinion. Secondly, it comes with unprecedented possibilities for every CFO. And, thirdly, it’s a process that is a fantastic challenge and marvellous opportunity when it comes to helping shape it on behalf of our customers. For LucaNet and myself.
The significance of digital transformation in ensuring long-term business success is constantly growing. As a result, more and more companies are incorporating digitalisation processes. And no, this isn’t something that has happened overnight, but rather over the course of years – in the context of increasing internationalisation, ever-fiercer competition, big data and new technologies such as machine learning/artificial intelligence (AI).
In this article, I’ll be shedding light on the trends and opportunities of digital transformation – and what it means for finance. And I’ll of course also be touching a little upon LucaNet’s vision to fully support finance departments in this process by making life easier for financial professionals.
The pandemic as the driver of a trend
Without a doubt, the coronavirus crisis has highlighted what digital transformation means for companies. It upheaved many companies – with the bitter realisation that they hadn’t been quick enough to set themselves up for modern departmental and corporate management methods.
The pandemic forced countless companies and their finance departments to completely redefine their priorities, with the focus being on crisis response, measures for safeguarding liquidity and also organisational changes. After all, many employees were working from home from one day to the next.
What potential does digital transformation hold?
But aside from offering possibilities and solutions to navigate the pandemic: What does digital transformation promise companies? What makes it a must for financiers and companies?
From my point of view, it would be the following in a nutshell:
- Increased efficiency, for example through intelligent software quickly and reliably assuming a multitude of routine tasks on behalf of employees
- Reduced costs because, among other things, automation takes the load off employees so that they can focus on other tasks and/or steer additional process optimisations
- Greater customer satisfaction as a result of being able to evaluate and consolidate data more quickly and individualise customer experiences accordingly
These are all decisive factors if you want to withstand the enormous competitive pressure in volatile markets. And – as you’re now well aware – we’re not just talking about new, digitally aided processes in departments such as marketing, purchasing and sales; digital transformation is now omnipresent, all-encompassing, thoroughly interlinked and woven into every business process. Including finance.
Caught up in their daily to-do list, CFOs often don’t have the time to look beyond their own department and think ahead to the future.
Smart financial solutions
From numerous conversations with our customers, we know that time is the thing that finance departments lack most. CFOs and their teams spend too many hours on reliably compiling meaningful data, struggling with IT systems and tables with limited compatibility, intricately synchronising processes, as well as manually maintaining and checking data. Over and over again.
Caught up in their daily to-do list, CFOs often don’t have the time to look beyond their own department and think ahead to the future. And that’s precisely where smart FPM solutions come in. They reduce and simplify the daily workload. They consistently enable massive volumes of data to be recorded at the click of a button and offer flexible evaluation possibilities. As already mentioned above as an advantage of digital transformation, they increase the efficiency of the department and thus significantly save time and money.
Here’s a selection of case studies from some of our customers to demonstrate this:
- 33 percent quicker budget planning (Toshiba Electronics)
- Consolidation time minimised from 10 to 1.5 days (Thai Union)
- 10 hours of time saved during monthly reporting (Zoo Berlin)
However, digital transformation doesn’t just mean implementing smart financial solutions, even though that is an important element. Among many other things, it’s about laying all the foundations for agile procedures in the department. Sudden changes can additionally be factored in better with agile controlling free of rigid processes, old work structures, outdated tools, tables, unwieldy pools of data and time-consuming communication processes. A lot of the companies that have so far fared satisfactorily or successfully during the coronavirus crisis had already optimally positioned themselves.
New role and technical possibilities of CFOs
Today, CFOs can and must process data in a new and more flexible way and respond to changes without warning. Their focus should now no longer solely be on making finance more efficient, but rather must encompass corporate management as a whole. By taking on a new role as a partner and strategic consultant to the executive board, they offer management-relevant information available at the click of a button and real added value to the entire company. For those wanting to delve deeper into this topic, I recommend our article on the role of the modern CFO.
The term “data warehouse” also becomes relevant here at the latest because it allows wide-ranging, extremely complex, up-to-the minute and highly variable data to be flexibly linked from the desired departments in order to agilely manage the entire company. The management team and the CFO as a part of it can thus make even quicker, more proactive and more informed decisions on the basis of highly valuable insights, thereby together increasing the whole company’s performance and competitiveness.
The ace up the sleeve of digital transformation: the cloud
We still haven’t finished yet, though, in terms of developments in the context of digital transformation. Instead, let’s move on to the topic that’s never far behind when talking about digital transformation: the use of the cloud in the finance world. The cloud provides even more freedom for new things, for strategies and for optimisation. Cloud customers can concentrate entirely on their reporting, planning, analysis and consolidation, while we provide and manage the FPM software in the cloud.
For our users, that means the following and more:
- Independence from the IT department
- No administrative burden when it comes to installation, updates or release changes
- Savings in terms of local license costs, e.g. for server operating systems
- No need for internal security and backup systems
- Better resource planning
- No extensive initial costs incurred by the provision of servers and the associated maintenance
How your finance department can leverage digital transformation
As you can tell, I’m fully behind digital transformation. And I hope that I’ve been able to demonstrate its significance and also show what crucial advantages it brings to finance departments and companies. Are you ready for the future?
I’d like to ask you: What stage are you at with your department? What do you need? How strongly positioned would you be for the next crisis and how can you direct your company toward the future in your role as CFO? And – as my recommendation of sorts for introducing a setup that is in keeping with the times – consider which of the following steps you’ve already taken:
- Harmonisation, standardisation and improvement of individual financial processes
- Optimisation of predictive capabilities in planning, forecasting and reporting processes
- Implementation and use of digital methods and agile work practices
Whatever stage you’re currently at, don’t hesitate to find out more about our LucaNet solution for financial performance management and our LucaNet.Cloud. We’d be delighted to accompany you on your digital transformation journey.
How to choose the right software
Choosing new software for your company is not an easy task, but you should make your decision carefully.
Financial performance management solutions that offer an integrated approach to consolidated financial statements, planning, reporting, and analysis have proven to be the most suitable product, especially in the financial sector. We give tips on how to choose the right FPM software for your financial team and what steps you should take in the selection process. We also provide an overview of the criteria of a state-of-the-art FPM software.