When finance leaders were cast into economic tumult by the global pandemic, agility was everything in terms of keeping businesses from capsizing. Companies had to forecast even amid changing business conditions, plan and replan, and execute core finance tasks efficiently – while working remotely.
The importance of agility was reinforced by Workday's 2020 CFO Indicator Survey, conducted from March through May of last year, just when businesses began to sustain the full brunt of the pandemic.
The survey of 225 CFOs found a direct link between finance digital transformation and agile business practices. Such agility is not only saving businesses today – but will equip them to thrive in the future. McKinsey research, too, shows that companies with agile practices embedded in their operating models managed the impact of COVID-19 better than their peers.
Accelerators verses novices
Finance digital transformation – when businesses apply the power of cloud computing, machine learning, and augmented analytics to essential activities like planning, accounting, and procurement – is underway at many companies.
More than half (54%) of CFOs surveyed say they've implemented some digital transformation efforts, and they are clearly seeing real-world results, the survey showed. Seven in 10 of these digital accelerators consider their teams to be better at responding and reacting quickly to change, while just 43% of digital novices – those who haven't begun digital transformation efforts – expressed the same level of proficiency.
Also, of digital accelerators, almost eight in 10 said their teams were "more than somewhat proficient" at efficient reporting, planning, and financial close processes. Fewer than half as many (38%) digital novices said the same.
Readying for digital transformation
Yet pulling off finance digital transformation is not easy, as evidenced by the fact that almost one-third of CFOs said that a number of the finance function's digital transformation initiatives have stalled or stagnated. The CFO Indicator report offers some insights into moves finance leaders can make to help make digital transformation efforts more successful including:
1. Readying the workplace and the workforce
In the survey, one-third of finance leaders noted lack of skills and internal resistance to change as the top barriers to digital transformation. To build a more agile workplace, CFOs can begin working with HR, through both recruitment and reskilling, to build a workforce capable of working with emerging technologies. The most urgent skills shortages are in predictive modeling and scenario planning, as well as the ability to identify and manage risk, the survey showed. CFOs can also set a positive example for change by experimenting with new technologies, processes, and ways of working.
2. Becoming better data stewards
Nearly half of the survey respondents said they believe critical business decisions are delayed because of conflicting data, lack of real-time data, and finance is not proficient in delivering meaningful insights from data. This certainly speaks to the skills deficit in analytics, but as data becomes an increasingly vital business asset, only 27% of CFOs say they have a significant role in managing how data is collected, stored, and analyzed.
Taking a more hands-on data stewardship role could also help with efforts to safely return employees to the workplace. For instance, combining workforce with external health data could help executives determine who is ready to return to work safely.
3. Improving data systems
In many organizations, a legacy of fragmented systems and data stores has made it hard for finance teams to bring together the information needed to give an up-to-date snapshot of key metrics. The importance of data visibility underlines the case for consolidating information into a core finance system rather than leaving it in separate silos.
This is a prerequisite for providing self-service access to business partners so that they can access operational analytics to help their decision making. Performance, variance, and risk are three of the key insights finance must be able to provide to the business, and the need for self-service access to plans, actuals, workforce details, and operational analytics is much more powerful when it lives in a single system.
Thriving under all conditions
Despite the challenges, a third of CFOs (34%) expect digital transformation to be a priority by next summer, the survey showed. That is very good news. As the pandemic helped demonstrate, digital transformation in finance equips businesses to thrive under any conditions. Being able to quickly plan, forecast, budget, and pivot is critical anytime, especially given today's pace of business. The companies that take steps now will be that much better prepared to meet future challenges, and to enable finance teams to provide the insights the enterprise needs to support business agility.