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The Necessity of Digital Transformation for Finance

on February 07, 2022

It’s a fact – everyone wants the latest and greatest devices when it comes to phones and other gadgets. With the digital transformation of business, cutting edge is essential for finance leaders to harness the power of financial software. The finance world relies on enterprise resource planning (ERP) system upgrades with inherent fraud detection and prevention solutions built-in. Often, this includes Artificial Intelligence (AI) to ensure we have the fastest and latest functionality.  As technology evolves, so must the way we run our businesses. 

Digital Transformation is Ever-Changing 

We all work and live in a digital era where technology changes or evolves daily. The MIT Sloan Management Review, a publication that focuses on how management transforms in the digital age, says, “Digital transformation is better thought of as continual adaptation to a constantly changing environment.” In other words, because technology is a moving target, businesses must constantly re-focus their approach to common issues and daily business tasks. When you're responsible for the financial health of the company, knowing where to aim requires the right tools. 

In the financial world, we have all figured out that we can’t do things like we used to. We have grown dependent on our large ERP systems to catch accounting errors, store data, perform account reconciliations and provide us with everything needed to close our books at the end of the month. But what are these systems not doing for us?

The Power of AI

As CFOs enter a period of significant transformation in the financial space, they are discovering AI technologies readily available to help drive efficiencies, enable fraud prevention and provide insights into business performance. 

One of these technologies is robotic process automation (RPA), which helps to automate the many repeatable and transactional finance processes. While helpful, RPA is limited by rigid rules that don’t allow it to execute decision-oriented tasks. When machine learning (ML) is added, technology can handle more complex activities, such as budgeting and forecasting. This frees up capacity, allowing employees to focus on more value-added tasks.

Let's turn our focus to data, analytics, spend risk mitigation and continuous monitoring. Is there a platform available to address all these subjects? The short answer is yes. But, before you choose your solution, consider these three objectives to ensure you select the right platform for your continued path to digital transformation of your company's finance function. 

Three Objectives for Digital Transformation

  1. Does it Mitigate Risk?

Left unaddressed, risk can prove extremely costly, which is why risk mitigation is one of the most important expected outcomes from this transformation. If there was zero risk involved in your processes, there would be no need to improve or automate them.

However, when you are looking at solutions in accounts payable automation for example, it’s important to realize risk does not exist in a silo. There is exposure across the entire organization and many stakeholders play a role in risk mitigation. Just as risk is not isolated, financial software solutions should not be, either.

When considering digital finance software for risk mitigation, look beyond siloed solutions that only solve one piece of the equation. Instead, explore comprehensive solutions that meet the needs of all stakeholders with a vested interest in risk mitigation.

  1. Can it Influence Employee Behavior?

The second objective of digital transformation is to positively impact employee behavior and create a “culture of compliance. According to Oversight data, 25% of employees are unintentionally acting outside of compliance while only 5% of those individuals truly act with malicious intent.

 

As such, most companies don’t want to create a punitive culture, but design supportive programs that create opportunities for employees to learn and improve. The problem is that manual processes make it hard to detect and prevent expense fraud. The right solution will identify patterns, provide data analysis of expense reporting and more. 

The solution you decide to implement within your organization should have the ability to provide actionable feedback that will influence employees to adopt responsible financial reporting behaviors.

  1. Will it Improve Operational Efficiency?

Despite the importance of the first two objectives, their full impact on digital transformation should improve operations across the organization. If you manage to meet those objectives only to cause hang-ups elsewhere, those issues have only been moved somewhere else in the organization.

Your transformation needs to increase operational efficiency down to the bottom line to really be effective. Look for a solution that both provides this type of impact and measures it, as well.

The Bottom Line

Digital transformation of the finance organization of your business is a necessity, and CFOs need solutions that mitigate risk, change behavior, and improve operational efficiency. Technology exists to help finance teams address all three. 

See how Oversight can help you achieve the ultimate digital transformation within your accounts payable, travel & expense and credit card spaces.

References:

Digital Transformation isn't just about Technology Published on August 23, 2021

https://www.linkedin.com/pulse/digital-transformation-isnt-just-technology-mohamed-riadh-jebabli/

Gartner for Finance 10 CFO Opportunities to Accelerate Digital Transformation https://emtemp.gcom.cloud/ngw/globalassets/en/finance/documents/trends/the-digital-future-finance.pdf

Becky Clay

Senior Product Marketing Manager

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