Why digital transformation in finance teams needs to happen now
By Mark Jenkins, Chief Information Officer at MHR
On 30 November 2022, the public was introduced to ChatGPT, an AI platform that can write code, give advice, and answer almost any question thrown in its direction. It is therefore surprising that in a world where anyone can access technology as complex and advanced as this, over half (51%) of finance leaders still rely solely on Microsoft Excel, according to MHR. In some areas, the absence of technology is even more noticeable with almost three-quarters (72%) of organisations still using manual processes for payroll.
These statistics are symptomatic of an industry which has for too long failed to sufficiently invest in digitalisation. As a result, businesses often lack solutions capable of replacing the time and cost intensive manual workflows that have been a staple of finance teams over the last few decades.
Digitising these processes comes with a range of benefits. Not only can new technology increase accuracy and reduce the risk of human error when it comes to data entry and calculations, but it can also free up much needed time which can be reallocated to business-critical tasks that would benefit from human input. In fact, MHR’s research found that the three most time-consuming tasks reported by finance teams are accounts payable/received, data visualisation and consolidation – all tasks that could be automated to a significant degree.
Getting the most out of finance professionals
It is not only the wider business that feels the impact of this wasted time, but also finance leaders and their teams themselves. MHR’s survey found that 44% of leaders are left out of business strategy conversations, largely because their time was instead being taken up performing and overseeing manual processes. This is a startling statistic, and one which highlights how businesses are creating an environment where finance professionals are prevented from realising their full potential. If these professionals do not have time to carry out tasks and responsibilities that allow them to develop and expand their skillset, the productivity of the business will be negatively impacted in the long run.
Instead, businesses should be looking to utilise technology to automate these processes and allow finance teams to use their expertise to drive initiatives that add real value to the company’s short- and long-term strategy.
Leaving spreadsheets in the past
There is a reason why finance teams and businesses as a whole have been so slow to engage with new technology and drive forward digital transformation: the existing tools are familiar to them. Take Excel, the spreadsheet application that is at the core of many finance departments’ processes. Finance teams have used it for many decades, and it is a known quantity, integrated into workflows across the business. There is a reluctance to look to newer technologies as this would mean re-thinking the way in which departments operate.
While Excel does have its strengths, such as its ability to perform rudimentary calculations, its shortcomings are becoming harder and harder to ignore. MHR research found that 31% of finance leaders consider unsaved spreadsheets and lost documents the greatest risk to the work they do. Excel is an outdated system that does not provide the security necessary for hosting businesses’ financial data, relying heavily on humans using the software correctly. It lacks encryption features to safeguard sensitive data, greatly compromising the integrity of the data stored upon it.
Additionally, Excel is significantly behind other data management tools in that it does not have sufficient collaborative features such as file sharing, discussion boards, conversation tracking or task lists. Collaboration is at the heart of efficiency and therefore businesses should be using tools that promote, rather than hinder, collaborative practices.
How effective data management can transform your business
The data generated by finance teams is some of the most important data that a company produces, and it should be treated as such. To make full use of this data, it must be stored, analysed, and accessed in a way that legacy systems just are not capable of. With new technology, this data can be leveraged to improve strategic planning and forward thinking, greatly contributing towards the successful future of any business.
In an uncertain market, scenario planning is vital to improve the resilience and adaptability of any organisation. Financial data is essential for this process and can be used to identify a range of trends and outcomes, and plan for a variety of possibilities. Black swan events, such as the COVID 19 pandemic, can have a very real impact on a company’s finances and having the agility to respond to them is becoming increasingly important. It is new technologies and AI tools that can give the companies the ability to effectively use financial data in this way.
While Excel spreadsheets have long been at the heart of the finance team’s operation, we are entering a new age of technological potential, and finance departments cannot be left behind.