Finance leaders fully recognise the unprecedented opportunity to drive performance improvement via digital transformation, but most lack a comprehensive strategy and are unclear on where or how to deploy digital technology to their best advantage, says The Hackett Group.
In its latest Key Issues research, the benchmarking and best practices consultancy finds that significant skills and competency gaps are preventing finance organisations from taking full advantage of digital transformation.
The group comments that digital transformation will result in dramatic changes in the business, as well as the finance service delivery model itself, as both move forward at unprecedented speed.
However, its research suggests that finance organisations that fail to meet the challenge of closing the digital transformation skills and competencies gaps will quickly fall behind in performance and put execution of the enterprise digital strategy at risk, potentially compromising their ability to compete.
“This study shows an emerging problem within finance organisations,” said The Hackett Group senior research director Nilly Essaides. “They recognise the tremendous potential to change the way they operate. But in this early stage of the digital revolution they are struggling to determine how to move forward, and how to truly attain the greatest benefit.
“There’s a significant opportunity for companies that can figure this out and make the necessary changes to technology, processes and people.”
The study found that more than 90% of finance organisations believe that digital transformation will fundamentally change the way finance services are delivered, including the way it services internal and external customers, suppliers and partners, as well as the talent and leadership roles it must develop.
Adoption of digital technologies in finance – including cloud-based applications, advanced analytics, robotic process automation (RPA), mobile computing and big data – is expected to grow dramatically in the next two to three years, the study found. Yet only 44% of finance organisations have a formal digital strategy and only 35% have the right calibre talent.
A further concern is that only 15% are planning to revise job profiles or competency models this year to address digital business transformation needs.
Finance organisations expect to remain heavily focused on reducing costs and headcount in 2017, as companies move from defensive postures to more aggressive growth through innovation. Despite projected revenue growth of 4.1%, finance organisations expect their headcount will fall by 4.4% and budgets by 3.8%, on top of declines of 3.3% in headcount and 4.0% in budgets last year.
Digital transformation is likely to provide significant support for this effort to improve efficiency. Many emerging technologies offer opportunities to improve productivity and quality levels beyond what can be achieved with traditional enterprise resource planning (ERP)-based business process automation.
The research also found very high levels of exposure to a broad range of business risks and sharp projected increases in these same risks over the next two years. The top four areas of projected risk – cyber-security, intensified competition, disruptive innovation and access to critical talent – are all related to structural transformation of the business, which in today’s world is inevitably digital in nature and driven by technology innovation.
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