AICPA & CIMA’s Associate Technical Director Peter Spence looks at the benefits of breaking down siloed working in IT, Data Management, and Finance, and by doing so building the key partnerships needed to make digital transformation work.
The key question facing finance leaders is not about whether they should be strengthening their digital capabilities. That is settled.
At AICPA & CIMA, our latest research found that digital transformation is no longer about gaining a competitive advantage; it is necessary to drive value and, ultimately, to survive. The energies of a CFO should now be focused on making sure the adoption of new capabilities is done effectively, and that means building a constructive relationship with IT and Data Management.
The starting point is that digital transformation is a much deeper commitment than just buying a new IT product or upgrade. The new capabilities which are coming to market will affect the entire organisation and its culture, so they must be approached with this concept front and centre. You will always be looking to use them to facilitate better ways of working and creating value.
Finance leaders have relationships with operational leaders and data insights into a business’s value chain across all its operations, and they can use this data to improve decisions. Because of this unique position our profession has within organisations, we are ideally placed to lead the shift towards digitisation.
Our research found that routine tasks such as data entry, invoice processing, account reconciliations, and payroll calculations are being automated through advanced software and robotic process automation tools. Additionally, data analytics and machine learning algorithms can make large datasets more accessible, generating deeper insights for operational leaders, leading to better decision-making across businesses.
However, we found that there are issues with a lack of collaborative working between finance, data, and IT teams which was hindering the optimization of these technologies. This is a classic case of how working in silos can undermine organisational performance. CFOs should use their convening powers to avoid this.
To affect successful digital transformation, the finance team needs to have a ‘seat at the table’ from the very beginning. Too often they only become involved when it comes to the costing and financing of the project. Digital transformation projects rely on harmonizing processes and standardizing systems across different operations. This requires the sort of end-to-end perspective which finance teams have and IT teams might lack.
Finance leaders should ensure that automation mirrors the value chain across all operations, and they should be doing this in partnership with IT and data management teams. Working together with a clear, shared understanding on the insights that will be needed to support better decisions can help realise a fuller potential of digital transformation projects.
Digital technology is dramatically enhancing the power of the data analytic tools available to finance professionals. This will be one of our key productivity drivers in the future. A consequence of this change is that we need to step up and take a leading role in data strategy.
This is not something you can leave solely to the data or IT functions. As outlined above, if finance teams are to leverage data to extract the maximum possible organisational value, they need to be fully involved in all data processes and planning. Part of becoming a custodian of data is learning about data ethics, which we have been researching.
It is crucial for organisations to establish clear responsibilities and protocols regarding data ownership to ensure data integrity, quality, and compliance. For this to happen, finance leaders need to play a bigger role in enterprise D & A governance, and that means familiarising yourself with the concepts that underpin it. If you consider the range of data now available, especially on the non-financial and sustainability side of things, and also how it is dispersed across organisations, this can be quite an undertaking.
We found that compliance with data regulations in your jurisdiction is a necessary step, but not a sufficient one by itself. Your stakeholders will have expectations around how your organisation uses and handles data, and a high performing finance team will be aware of these and work hard to meet them.
This is not something which any single team can achieve by itself. It requires cross functional collaboration and the establishment of a good data culture to maintain. It is another example of how breaking down silos is a key part of achieving success in the digital age.