Embrace digital ways of working to transform your finance organization

Enable digital investment strategies with these six modernization methods

The finance function is currently going through a significant transformation towards becoming a digital-first, autonomous organization. This transformation will enable the finance function to provide value as the business adopts digital working methods and invests in digital business initiatives. However, this shift faces challenges such as low success rates due to digital conservatism, limited budgets, skill shortages, and change fatigue within the finance function. To address these challenges, CFOs can consider investing in digital leadership roles within finance.

To drive finance innovation through digitization, CFOs need to revamp the finance operating model. This involves integrating digital capabilities, providing finance teams with digital skills, fostering collaboration within the finance function, and effectively managing costs.

Check out the six-step road map we've outlined in this article to transform the finance operating model for a more autonomous future:

Step One: Define how you operate, who does what, and what each person is responsible for

The current designs and operating models of traditional finance organizations are lagging behind the advancements in technology and automation. Chief Financial Officers (CFOs) are faced with challenges stemming from finance department silos, complex roles, and traditional views on which specific subgroups should handle finance activities. These issues are hindering the effectiveness and unity of digital initiatives.

To tackle these challenges, we need a more flexible operating model to replace the outdated methods. The shared service models used by finance departments for many years will help with this change. However, the main goal of shared service organizations (SSOs) is changing. Instead of just concentrating on centralizing and automating routine tasks, SSOs will now focus on supporting the digital transformation of finance.

As machines take on more financial tasks and technology improves processes, finance teams will have more time to focus on other priorities, such as hyper-automation and digital transformation. In an ideal situation, finance teams will become centers that support digital transformation. To make this shift successful, a finance team's digital program can do the following:

- Plan the use of technology

- Find ways to work together more effectively

- Help different parts of the company use digital tools

The updated, shared service operating model has implications for talent. In recent years, the finance staff's unique understanding of the specific business units they serve has decreased due to increased specialization and the widespread availability of business data. However, finance still has a special ability to recognize patterns across business units and provide insights at the portfolio level. Shared service organizations with more unified and cross-functional digital capabilities can enhance this value.

To achieve this, forward-thinking finance leaders must continue to move common activities to shared service centers (SSCs) and centers of excellence (COEs) to free up human capacity to assist business units in making informed decisions. This approach leverages finance's cross-functional visibility and impact on shared decisions across the organization.

Step Two: Spread digital skills across the team to eliminate digital barriers

Traditional finance organizations have been digitizing their operations separately, which creates isolated pockets of digital progress that don't benefit the entire finance function. To move towards a more integrated digital approach, finance teams need to have a structure that brings digital support staff and end users closer together. Here are two ways to do this:

1. Establish a finance IT team: This will reduce the need for enterprise IT support and allow for specialized knowledge in finance-related technology. It will also improve decision-making regarding digital investments for finance.

2. Establish a clear communication link between the finance IT and a digital champion: The digital champion, who reports to the CFO, will guide digital decision-making and lead a central team for digital transformation. This communication link between the CFO, digital champion, and IT will enhance transparency regarding digital investments and ensure that resources are directed to initiatives that meet the overall needs of the finance department.

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