Welcome to The Ledger where we sum up the latest finance and accounting news for you. This week, we're diving into a topic that's on a lot of finance leaders' minds — digital transformation. Specifically, we're bringing you news, insights, and strategies for revamping tech for efficiency in the finance and accounting function. Whether you're looking to scrap your stack and start from scratch, preparing to battle for buy-in or just want to see how aligned your digital to-dos are with other finance and C-suite leaders, this is the one for you. Let's get straight to it:
CFOs Cite 3 Major Challenges in Realizing Tech's Full Potential
When you consider that in 2022, 35 percent of CFOs oversee their organization's technology function — it's all part of the evolving CFO role — it's no surprise that integrating legacy technology, spearheading digital transformation and managing the IT function top their priority lists quarter after quarter. In fact, when we surveyed finance leaders this year, technology and automation tied with talent acquisition and retention as the most pressing challenge they faced.
It makes sense, then, that Deloitte made it a special topic in a recent quarterly CFO Signals Survey, where they asked — among other things — what challenges stood in the way of realizing the full value of their organization's IT function. The top three?
Talent: Talk about variations on a theme, right? CFOs were likeliest to cite finding and keeping cross-qualified IT talent — or IT-savvy finance talent — as an obstacle to realizing value from the technology they invested in.
Complexity: Non-standardization, a lopsided focus on front-office operations and lack of documentation all plagued finance leaders who hope to get the maximum value from tech.
Alignment: Third on the top list of challenges was a lack of alignment or business partnering challenges, like a lack of C-level buy-in, a resistance to change and disparate systems within their organization.
So, it's clear that if technology is top of mind for CFOs, optimizing efficiency within the function is top of top of mind. And these are just the top three of ten challenges. Read the qualitative insights that contextualize these findings — along with additional extensive insights at Deloitte.com.
Optimize Efficiency by Modernizing Legacy Tech
Just because something is working doesn't mean it's working well, but we doubt that's news to any finance leader today. Legacy technology plagues plenty of finance functions for a lot of reasons, including the ones above. Getting up to speed at scale is often extremely daunting when those obstacles have been cleared and continuing to delay means watching tech debt pile up in the name of a fix for now in favor of a fix for good. Throw in a staggering amount of bleeding edge options that advertise themselves as must-have additions to what might very well be a tech stack so high that managing them becomes a less-fun game of Jenga, and taking on the modernization of legacy tech starts to feel aspirational instead of acute.
With data security and day-to-day operations at stake, leaders know that the best time to start was yesterday, and the second-best time is today. Of course, it helps to have insights from leaders who have already been there and lived to tell the tale. Get the best ones over on Forbes.com, where 14 leaders lay out their top strategies for modernizing legacy tech, from reconciling new and old solutions to engaging end users in the process.
Revamping Tech for Efficiency in the Finance Function? Ask Yourself 3 Questions
Speaking of the growing glut of brand-new technologies clamoring for corporate dollars, eventually you're likely to have to invest some of yours in something new. If you're already feeling your jaw lock as the analysis paralysis sets in, try asking three key questions first:
"What value will this bring to those you serve and those with whom you work?"
"Does the new tech boost efficiency specifically where you need it?"
"How do you smoothly integrate new tech into your operations?"
We're quoting these questions here because summarizing them just doesn't do this three-step strategy — shared by a managing partner of an automobile fintech company — justice. See why when you read the entire op-ed on Forbes.com.
The Impact of the C-Suite on Digital Transformation: By the Numbers
Circling back to the evolving and ever-increasingly digital role of the CFO, new insights from McKinsey point to what separates the companies that are working to transform their IT function from those whose IT transformations are working double-time already. Here's a snapshot of what they found:
Know what's at stake — The difference between companies netting a median of 50 percent of full revenue benefits driven by digital change and netting 31 percent? A 15 percent increase in EBIT, apparently.
Be aggressive — McKinsey found that the top performing companies helmed by the leaders they polled spent twice as much on digital transformation than their less successful peers.
Head to the cloud — Sick of hearing this one? Too bad. Tier one companies were well ahead of lower-tier organizations when it came to migrating operations to the cloud.
Use your (collective) imagination — One in three companies said they were motivated to revamp technology to "enter a strategic market". One in five said they were doing it to "incubate new digital capabilities". Guess which group was more successful?
It's clear that organizations with a well-oiled C-Suite machine are the winners in the age of digital transformation. Ready to follow their lead? Get the full breakdown of how they do it over on CFODive.com.
Secure That All-Important Buy-in to Revamp Tech
If we’re preaching to the choir here, maybe you're facing a different obstacle to a finance function technology facelift: resistance or apathy from key stakeholders. Taking organizational perspectives from a risk-focused to future-focused is a tough task for CFOs with a mandate for driving digital change but little support. Here's how to move the needle:
Avoid apathy — Sometimes the cause of inertia is apathy, not divestment. Recent research found that while six out of 10 companies cheerfully claimed to embrace change, only three out of 10 saw significant drawbacks to postponing much-needed change or adoption, causing digital transformation to stagnate. Know what you're up against.
Root out resistance — For the leaders dealing with full-on refusal, understanding that friction may be rooted in the good intentions and not knee-jerk self-soothing intransigence may be half the battle. Backing up your assertions that the bottom-line benefits of digital change outweigh short-term risk mitigation — especially in uncertain economic times — can win stakeholders over to your side.
Sidestep psychological traps — Certain fallacies can throw up obstacles to needed change: decision-making that unnecessarily relies on concession from unaffected parties is common; catastrophizing and confirmation biases hinder progress too. Recognizing these traps is key to avoiding them, so learn to identify and avoid them.
If your projections, protestations and proposals tend to fall on deaf ears, maybe it's time to blind them with science instead. Equip yourself with the means to make that happen when you head to HBR.org for the full strategy.
Efficiency begets efficiency. Efficient tech empowers your team and qualified talent keeps your tech stack working for you and your organization. After you catch up on these revamping tech for efficiency insights, head to our solutions page to see how we can help you realize both.