One of the key business lessons that has come out of the Covid-19 pandemic is the critical need to digitize operations, with financial processes near the top of the list. Simple things like being able to pay suppliers and get paid on time are essential in order to keep money flowing in and out of organizations and between trading partners.
Yet, during the crisis, many companies realized the limitations they had in these areas. Organizations lacking remote capabilities — those using manual or on-site legacy systems to process invoices, pay bills and handle other finance functions — have been particularly challenged during this period.
Additionally, in this uncertain economic climate, it has become more important than ever for a company to know where it stands financially at a given point in time. This information is needed to manage finances and operations, such as accounts payable, invoicing, procurement, financial reporting and treasury. Companies using manual or legacy systems, which are heavily dependent on individuals to handle tasks, have not able to access this information quickly or accurately.
In leading an accounts payable automation organization, I’ve seen that for these reasons, the pandemic has been a wake-up call for many organizations that are now focused on accelerating their digitalization initiatives to gain greater visibility, control and management over their financial processes.
Six Strategies For Success
To streamline the digital transformation journey and improve effectiveness, here are six best practices to consider along the way.
Determine how finance aligns with the overall business.
The finance department should reflect a company’s vision and strategy, which can often vary according to a company’s growth phase and maturity. For example, if a business is in growth mode, it needs capital to invest and easy access to cash flow. When a company has flat or declining revenue, it needs to cut costs, particularly in areas that won’t negatively impact the business, such as through vendor discounts. Of course, when business is flat or declining, financial agility is critical so a company can pivot into new areas of growth and opportunity to turn things around.
It’s important for all finance departments to engage and work closely with management and other parts of the organization — such as the business units — to best understand their expectations and deliver the information they need. Having immediate access to accurate financial data is critical for reporting, analysis and making informed business decisions at all times, in all organizations.
Determine the problem that digital transformation needs to solve.
Identify your number one priority or goal for digitalization. Is it increasing accuracy or speed, reducing cost, improving reporting or reducing manual work by automating AP, AR or other areas? While digital transformation can help an organization improve many areas, I recommend focusing on the most important priority first. It can sometimes be the easiest to implement, too.
Define the technical architecture needed to meet organizational goals.
Start with your current state of operations. What does the infrastructure look like? What technical tools are currently available to you? What types of technologies will you need to accomplish organizational goals?
Make the business case.
Make the business case to management, using ROI calculations, to ensure you have the funding and support to make needed infrastructure and technology investments. Educate them on the benefits that automation can deliver across the organization and involve management from the start to get buy-in. When presenting the business case, provide concrete examples of changes already implemented that demonstrate what these investments can bring to the organization.
Develop a long-term plan.
Develop a plan, keeping big picture goals in mind throughout the process. When it comes to implementation, start with simple changes that can have a major impact. Digital transformation projects can often end up being a multiyear journey — although they don’t always have to be — and early successes will make it easier to get buy-in from management and the rest of the organization.
Build the appropriate infrastructure.
A cloud-based architecture is the best way to go in today’s mobile-first world. To build in flexibility and greater functionality, take a microservices approach, using independent yet easily integrated solutions to address the specific business requirements of each department and business unit. Leveraging a microservices architecture can extend the capabilities of an ERP to meet the advanced needs of payroll, HR, AP, accounting, AR and other business areas.
The ERP can serve as the transaction machine, integrating with individual solutions that have solid APIs. In addition, the microservices approach also enables companies to swap out or upgrade one area of functionality without interfering with others. It helps avoid multiyear ERP implementations, with agility and flexibility to adapt the system easily as the organization’s needs change.
Automation and remote capabilities are fast becoming must-have capabilities in today’s remote and ever-evolving business environment. Yet digital transformation doesn’t have to involve multiyear, expensive transformation projects.
Set goals, determine a course, get buy-in and look for easy wins. With cloud architecture and advanced solutions, companies can build the infrastructure they need to help move their businesses forward — and even grow — in these uncertain times.