A direct link exists between digital transformation in the finance department and agile business practices, a survey of 225 CFOs, conducted by enterprise cloud application Workday, found. These agile practices lead to better decision-making and more efficient reporting and planning.
The survey also showed more CFOs plan to prioritize digital transformation as they navigate COVID-19 recovery, but they face roadblocks. The two biggest obstacles are a technology skills gap and internal resistance to change. Unlike budget or infrastructure deficiencies, these challenges are within CFOs' power to directly address.
The research, conducted between March and May 2020, found while nearly half of CFOs have not completed any digital transformation initiatives in finance, 34% expect to prioritize it in the coming year, which will allow for advanced predictive analysis and risk management capabilities, among other benefits.
"I’m surprised so many companies haven’t yet fully implemented digital transformation projects," Michael Magaro, senior vice president of business finance and investor relations at Workday, said. "It’s clear the benefits provide competitive advantage but still so many companies haven’t yet been able to get these projects over the finish line."
Finance digital transformation, as defined by Workday, is the implementation and use of digital technologies — the cloud, machine learning, and augmented analytics — for finance processes to improve efficacy, insight, and agility.
Workday divides finance organizations into two types: digital accelerators and digital novices. The accelerators, they found, reliably benefit across the board, and consistently perform better on agility, enhanced insights, and improved efficacy.
"CFOs were thrust into uncharted territory when the pandemic hit, underscoring the need for them to make data-driven decisions to adjust, plan, and then continuously re-plan as conditions rapidly changed," Magaro said. "This survey validates CFOs' shifting priorities as they look to a combination of new skills and technologies to give them greater visibility and agility."
While finance has been slower to embrace digital transformation than some other areas of the business, Magaro said, the pandemic has become "both a catalyst and imperative for change."
Lack of technology skills and internal resistance to change are the two greatest challenges to digital transformation in finance, Workday found, while lack of budget was rated the lowest challenge.
Nearly half of CFOs surveyed believe that critical business decisions are delayed by finance's lack of proficiency in delivering meaningful insights from data, with 34% of CFOs citing a shortage of skills needed to work with emerging technology as a key challenge.
As a result, CFOs are prioritizing visibility and risk mitigation skills most, and when it comes to hiring, most urgently need predictive modeling/scenario planning skills, and the ability to identify and manage risk.
To prioritize technology investments that provide greater forward-looking visibility, CFOs should address technology skills gaps, incorporate key performance indicators (KPIs) to overcome resistance to change, and consolidate data into a single, clear source, Workday said.