For business leaders, the digital economy is a double-edged sword. On one hand, executives have almost unlimited access to data about their business and their customers – information which could unlock monumental business growth. On the other hand, too much information can actually increase the complexity of decision making. Information doesn’t automatically equal insight.
According to a recent SAP Digital Transformation Executive Study, 96% of leaders across an array of industries agree that digital transformation is a core business goal. But it’s how and where they’re investing in technology that tells the real story. According to the study, the key areas for investment in digital transformation are Big Data and Analytics, (94%), followed by the Internet of Things (76%) and machine learning (50%).
These results confirm that business leaders are investing in technology as a means to unlock insight from information as well as to improve efficiencies and reduce complexity in their business.
Focus on finance
Take the finance industry as a case in point. According to a recent global survey of 1,500 finance executives conducted by SAP in partnership with Oxford Economics, 65% of finance leaders said their job function is much more complex than in was two years ago. And 54% of respondents stated that improving efficiency across their organisation is a top business goal.
Although some of these leaders are playing catch-up and just embarking on digital transformation projects, many of those surveyed already have digital transformation projects under their belt. Mature technologies like ERP platforms and the cloud have already become core parts of business process. These finance leaders are now looking to the next wave of technology to reduce complexity further and enhance their business.
Forward thinking finance leaders are looking at emerging technologies, including blockchain and artificial intelligence, which they identify as critical innovations in driving the performance of the finance function today and in the future.
Nearly all leaders say cloud-based apps are also critical to optimising working capital, while real-time analytics are key to driving strategic growth initiatives. Predictive analytics are seen as important to improving efficiency across the organisation. One such technology is automation – in fact, 73% of respondents said that automation is improving the finance function’s efficiency at their company, giving leaders more bandwidth for value-added tasks.
The responses from the fastest growing companies in the Report highlight the importance of automation in a strategically focused, value-driven leadership function. Leading companies draw a straight line from efficiency to performance. In banking, David Craig CFO, Commonwealth Bank of Australia points out that repetitive data input by human beings heightens the risk of errors, which can exasperate account holders and require costly, time-consuming correction.
“Automation delivers better service to the customer,” he says. Staff no longer have to undertake “dreary, repetitive work” and shareholders benefit from the increased efficiency. What’s more, through automation, staff are able to be retrained, increasing their skill set to take on more complex and strategic value-added work.
Interestingly, while leading leaders are committed to boosting finance efficiency through automation, they aren’t interested in trimming their teams. In the finance department, head count has remained steady over the past two years, with only 4% of respondents saying automation is causing finance jobs to disappear at their organisation. In fact, the fastest-growing and most profitable companies are likeliest to report higher finance headcount.
How do leaders get ahead of the game?
So how can finance leaders raise their game and meet the challenges of the digital economy?
Respondents to the Oxford Economics Report revealed that embracing new strategies and increasing access to digital tools, such as cloud technology, real-time analytics and automation, allow them to take on new responsibility and ultimately lead their business to success.
The report identified six key traits of high-performing leaders - traits which boost business performance and increase efficiency within the organisation. These leaders:
- Influence beyond the finance function: At 70% of fast-growing companies, respondents said that finance influences innovation and new product development, compared with 53% at slower-growing ones.
- Drive strategic growth initiatives: 31% of respondents said that one of the finance function’s most important business goals is driving strategic growth initiatives.
- Focus on efficiency with automation: Nearly three-quarters (73%) of respondents agree that automation is improving their finance function’s efficiency, allowing it to focus on value-added tasks.
- Master core finance processes: Companies with 5% to 10% profit margin growth are almost twice as likely to rate themselves “very effective” at core accounting and closing as those with 0% to 5% profit growth.
- Collaborate across the business: Finance leaders collaborate; where non-leaders create a vacuum between different business units.
- Work closely with GRC to handle regulatory change: Highly profitable companies are more than twice as likely to say their finance and GRC functions collaborate on an ongoing basis than those with a low profit growth.
Does embracing digital transformation really drive results?
Committing to digital transformation pays dividends – 85% of leaders surveyed by the Digital Transformation Executive Study said the effort has increased market share and 80% said it has increased profits. Importantly, leaders also found that unifying cultures promoted a digital mind set within their teams and wider business.
No universal formula can guarantee a leader’s success. Every country, every sector, and every organisation dictates its own parameters for how an individual function operates. Nevertheless, leaders who want to make sure their hard work delivers tangible results should look closely at the way technology plays a role in their organisation. The technology landscape is constantly evolving but those who can unlock the insights and efficiencies of it are the ones who will get the most out of their digital investment.
Darren Hunt, Head of Strategic Industries at SAP UKI
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