Perhaps it’s due to the assumed threat to jobs posed by AI and automation. Perhaps it’s due to the business disruption risk presented by new tools and systems of working. Or perhaps it’s simply because our preferred methods have always just worked.
Whatever the reason, FP&A teams have traditionally been slow to realize and benefit from the opportunities presented by digital.
To understand what digital tech can do for your team in the years to come, it’s important to first understand current barriers to adoption, and consider what needs to change for FP&As to thrive in an ever-more digital landscape.
What impact has digital had on FP&A to date?
Given all the hype around AI, automation, machine learning and other new innovations, it would be easy to assume that finance teams have already made significant progress in tech adoption and are reaping the rewards.
But this simply isn’t borne out by the figures. Currently, just a third of finance executives describe the performance impact of digital transformation as either “high” or “very high”, according to research from The Hackett Group.
And that’s not all. Fewer than one in three respondents say they have experienced a significant effect on their ability to achieve enterprise objectives, or on their finance delivery model, through digital transformation.
But that’s not to say FP&A teams aren’t open to digital transformation.
We may often be seen as risk-averse, but we’ve always had an eye on innovating to achieve cost savings, drive efficiencies, and build for the future. And given the array of new challenges facing CFOs, we’re actively looking for opportunities to innovate. So what’s been holding us back up to now?
Why have we traditionally struggled to enjoy the benefits of digital?
One compelling argument suggests that the slow pace of digital transformation within FP&A teams comes from top down.
As CFO, you’re still more likely to be spending time on traditional finance activities than on digital trends, according to research from McKinsey. This is despite the fact that finance chiefs say they actively want to place greater focus on digital initiatives, and on establishing how digital technologies can be applied to specific finance tasks.
This gap between expectation and reality is understandable. Finance is your bread and butter; the area in which you’ve traditionally offered most value. With few best practices to draw from and a shortage of clear business cases, it can be all too easy to view digital transformation as a “nice to have” – something to worry about tomorrow.
In short, you’re eager to innovate to improve the performance of your team and the business as a whole. But you’re time-poor. You need practical solutions with immediate applications. You need case studies that clearly demonstrate the benefits of digital technology. You need help.
We helped PlainsCapital Bank to make decisions faster by reducing its data consolidation time by 92%. Find out how here.
When exploring the reasons for slow digital uptake, The Hackett Group prefers to consider the wider finance landscape rather than focusing on your role as CFO. It found that finance functions are lacking in four areas that are key to laying the groundwork for digital adoption:
- Strategic maturity: Do they already possess a digital transformation strategy, and are they executing it?
- Strategic alignment: Is the finance strategy aligned with that of the wider business?
- Execution: Do they have the necessary competencies and resources to execute successfully?
- IT capability: Can they access adequate support from the internal IT team?
As The Hackett Group discovered, a significant proportion of finance teams are falling short in some or all of these vital areas:
What needs to change (and is it likely to happen)?
Significantly, despite the current limitations identified by The Hackett Group’s study, finance teams are positive about their prospects of overcoming them in the near future, with sweeping improvements expected across the board:
Whether or not these predictions prove to be accurate, it’s encouraging to see that finance functions are optimistic about their digital transformation efforts. The desire exists; now it’s time to put in the hard yards and make it happen.
How emerging use cases will drive digital adoption
Whereas digitization has previously seemed tantalizingly out of reach for finance functions, it’s now a realistic goal. McKinsey has identified a range of factors that have placed your team on the cusp of digital transformation, including:
- The widespread availability of business data
- The ability of finance teams to process large data sets using now-accessible algorithms and analytic methods
- Improvements in connectivity tools and platforms, such as sensors and cloud computing
What’s more, it’s becoming increasingly clear how your team should be using digital. Use cases range from improving processes through automation and robotics, to accelerating decision-making support by leveraging advanced analytics. Not to mention tapping into the power of the Cloud to allow your team to collaborate more effectively, model creatively, and spend more of their time on the things that really matter to your business.
That’s why we’ve developed Agile Financial Modeling. By connecting Excel – still the tool of choice for creative modelers – to the Cloud, we minimize all that time-consuming spreadsheet maintenance, freeing up your team to run those all-important forecasts and what-if analyses.
If your team is built on skilled spreadsheet models who rely on Excel’s functionality and flexibility, and you’re looking for a scalable solution capable of keeping pace with the needs of a large or rapidly-growing business, we believe Agile Financial Modeling is the best solution. To find out what we can do for you, request your bespoke live product demo today.