Turning Crisis into Opportunity: COVID-19 as Accelerant in Finance Digital Transformation

by Michael Magaro

To accelerate transformational journeys, a recent survey revealed these 4 critical steps.

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The need for finance to digitally transform has been discussed for years – even decades. But COVID-19 may just be the catalyst to finally push finance teams to embrace new digital technologies. Unlike any other crisis before it, the pandemic forced big changes upon companies, including the need to immediately scrap their annual plans and re-plan 2020.

Almost seven months later, COVID-19 and the wider risk landscape is still highly volatile. The U.S. economy appears to be amid a slow and steady recovery from huge dips earlier in the crisis while other parts of the world face new challenges. For many people and companies, work and life remains remote. Some industries have fared well, others have been decimated. Overall, fallout from the coronavirus will haunt the U.S. economy for years, costing an estimated $8 trillion through 2030, the government estimates.

In this environment, CFOs must continuously and carefully evaluate the balance between innovation and offense and cost containment and defense as they stabilize the business, plan for a recovery, and try to anticipate how this unprecedented crisis will impact future business. 

For many, digital technologies have helped them meet those challenges, indicates the latest Workday CFO Indicator Survey of 225 CFOs from across the globe. The survey, conducted in April and May, indicated that just over half of businesses had implemented at least some finance digital transformation initiatives before the pandemic hit. Doing so served them well. Seventy percent of companies that had implemented some digital technologies, were more than somewhat proficient at responding and reacting quickly to change, the survey indicated. Just 43% of companies who had no digital transformation technologies in place expressed the same level of proficiency. 

No one knows what’s in store regarding the pandemic, business conditions that result from the pandemic, or even the pending impact of the US presidential elections. Being able to rapidly pivot in response to such conditions will be critical for companies large and small. The survey showed a direct link between financial digital transformation and agile business practices, swift decision making, and more efficient reporting, planning, and financial close. But how do companies get from where they are to where they need to be when it comes to digital transformation? 

Investments, Skills, Culture Critical to Success

Fully one third of CFOs surveyed plan to prioritize finance digital transformation in one year versus just 5 percent who were doing so at the height of the pandemic. To accelerate transformational journeys, Workday’s survey revealed critical steps, including that enterprises need to:

  1. Prioritize investments in digital technologies

The cloud. Machine learning. Augmented analytics. These technologies improve efficacy, insight, and agility in the finance function. Almost one third of digital accelerators—companies who’d implemented digital technologies in finance—already use artificial intelligence to provide prescriptive, personalized, and prioritized insights to the wider business compared with just 3 percent of digital novices, the survey showed. By investing in digital technologies, companies provide a foundation to make transformation a reality.

  1. Recruit and train for skills

Technologies are only a piece of the equation. One third of enterprises say they lack skills to use digital transformation technologies even if the technologies are implemented. Such a shortfall will lead to missed opportunities and wasted investment. The most urgent skills shortages are in predictive modeling and scenario planning, as well as the ability to identify and manage risk, the survey revealed. The skills gap also extends to data and being able to extract actionable insights from that data. To address the skills gap, finance leaders should work now to determine the skills they need, not only for next year but for years to come. Then, they need to work with their human resources team to determine how to acquire those skills via such things as recruitment, training, and re-skilling.

  1. Lead by example

Culture plays a big role in the success of any initiative, including digital transformation. Almost 9 of 10 companies that have implemented digital transformation technologies are more than somewhat confident that the culture of their finance function supports digital transformation, compared with just 35 percent of digital novices. To address the cultural shortfalls, CFOs can set an example by experimenting with new technologies, processes, and ways of working. They can set KPIs that push the finance team to contribute to transforming the entire function. By doing so, they set in motion a wave of change to impact the entire enterprise, and will prove to the rest of the enterprise the value of the initiative. That alone will go a long way to nurturing cultural support and change.

  1. Consolidate data

Enterprise data drives the finance function, yet many decisions are delayed due to poor data management, conflicting data, and an inability to access data in real time, the survey indicated. To make data a key pillar of business agility, CFOs not only need the skills to work with data, but they also need one source for data to avoid conflicts.

Remaining Agile

To manage through a recovery and to seize opportunities, companies will need to remain agile in planning, financial forecasts, and budgets. “This is one of those years when forecasts have to constantly change,” said Jonathan Smoke, chief economist for Cox Automotive, in an article in Forbes.

To remain agile, CFOs need the right skills, the right technologies and, perhaps most importantly, the right culture and leadership to shepherd digital transformation initiatives from the white board to the real world. 

Michael Magaro is Senior Vice President, Business Finance & Investor Relations at Workday.