Defining Digital Transformation for Finance & Accounting Leaders

However, nonwestern regions have some advantages in education, economy, society, and technological level. As a result, digital finance plays a stronger marginal role in promoting the digital transformation of enterprises there. The baseline model of this paper is a panel model of double fixed effect, with the fixed effect of industry and the fixed effect of region. Column shows the mixed regression results without adding control variables and fixed industry or region. Column shows the regression results of adding control variables based on the previous one. Column and Column show the results of fixed industry and fixed region, respectively.

Definition of Digital Finance Transformation

The macroeconomic characteristics are mainly selected from industrial structure and economic development, using the ratio of the added value of the secondary industry in GDP and per capita gross regional product , respectively, as shown in Table 1. Generally,Finance Transformationis the combination of Technology, Business Process Automation, Performance Management & Data Analytics which can help in achieving the overall objectives & strategy of the company and improve the overall value of the finance department. The executive team should be aware of them early and have contingency plans in place to get out of any situation that doesn’t go as planned. Every business is unique, and every business has its ideas of what a digital transformation should be. Supports and interacts with teams and individuals across the organization, and with vendors, financial partners, and clients. As a basic analogy, consider moving from a handwritten shopping list, to creating your shopping list on your newly purchased mobile device, to ultimately sharing your shopping list with your family members enabling real time updates.

Service that goes hand-in-hand with technology

Third, enterprises should proactively adapt to the opportunities brought by digital finance development, concentrate resources on building digital infrastructure, and accelerate the process of digital transformation. State-owned enterprises should make use of their own advantages to increase investment in digital transformation and better accelerate the digital transformation of the whole society. In the context of the digital economy, the digital transformation of enterprises, as an important accelerator of new economic and social development, cannot be separated from the support of financial resources. Based on the data of China’s A-share listed companies from 2011 to 2020, this paper studies the influence of digital finance development on the digital transformation of enterprises and its mechanism of action. Digital finance development can alleviate the financing constraint of enterprises, thus facilitating the digital transformation of enterprises.

  • Analyze where the market is heading so the organization can anticipate the potential for digital disruption and how it can be the disruptor instead of being disrupted by others.
  • The term “digital transformation” has been thrown around a lot, particularly in the past decade.
  • Finance teams and businesses should look to SaaS solutions, cloud migration, and other innovative technology to aid in their digital transformation.
  • Driven by market demand and fueled by technology, digital transformation means adopting digital-first customer, business partner and employee experiences.
  • We help corporations prevent the risk of fraud by continually auditing their third-party credentials.
  • As businesses formulate their own digital transformation strategies, there is much to be learned from your IT leadership peers.

World events along with technology advances are combining to give the finance function its time to shine. As you look to cut costs by automating repetitive processes and recruiting new analytic resources needed to upskill the finance function, you require a holistic view of what’s needed and the best options available to address those needs. Our community of Finance Transformation solvers can help you continually adapt to meet the latest demands and unexpected challenges that come your way.

Why is Digital Transformation Important?

Moreover, as we havereported, « Digital transformation efforts are ongoing and evolving, which can render traditional business value calculations and financial governance approaches less effective. » A project such as revamping a mobile application may have a short-term payoff but other projects are chasing longer-term business value. Mattel EVP and CTO Sven Gerjets says leading transformation starts with empathy. « Today, with a vast portion of the workforce now remote, employee experience of digital technology has gone from « nice to have » to « the only way work gets done.

The best cloud ERPsolutions use in-memory database technology, making them highly scalable and adaptable. This is important because they are essentially the “brains” behind digital business transformation. ERP takes all the core processes needed to run a company and integrates them into a single system. And when a modern ERP is powered by AI technologies, it has the power to not only manage and processBig Data, but to analyze and learn from it. In itslatest surveyof senior business executives, McKinsey found that since the pandemic, there is a palpable sense of urgency among business leaders to digitalize and modernize their processes and legacy systems.

Better risk management

The problem is that where ‘finance transformation’ once had a clear, targeted meaning, the waters have now become muddied. This means that in place of the expected transparency and optimism around updating the way you work, there is often now a sense of scepticism and anxiety. We are convinced that there are still very good arguments for shared service organizations, even if their form will continue to change. We bring your financial organization into a best-in-class form that efficiently and effectively supports business and accelerates decision-making and profitability.

Healthcare workers providing patient care and support are improving mobile and monitoring options so users can feel safe and confident with self-serve mobile technologies. Changing customer preferences, among them the waning interest in owning physical products, have been accelerating the shift to subscription-based offerings beyond software and digital service. A survey released by management consulting firm McKinsey & Co. in October 2020 found an increased use of remote work and collaboration, advanced technologies in operations and cloud computing as a result of the pandemic. These benefits help fuel ongoing transformation, as automation enables employees to shift to more innovative and higher-value work and more agility enables the organization to better identify opportunities and pivot resources toward seizing upon them.

Banking the Unbanked – Reaching Mass Adoption of Financial Services

Identify the objectives or goals of a particular initiative that supports the organization’s digital transformation strategy. Everest Group found that 78% of enterprises fail in their digital transformation initiatives; the research firm cited unsustainable returns, limited user adoption and abandoned projects among the top reasons for failure. As part of this strategic planning, executives should assess the organization’s existing capabilities — from employee skills to its existing IT stack, articulating what additional capabilities will be needed and devising a plan to obtain those capabilities. Organizational leaders will need to draw on a number of traditional disciplines, such as project management, as well as new techniques, such as Agile methodologies, in order to successfully bring their organization, its culture, its people and its technologies into the future. It is solely the individual’s ability to access digital resources for financial transactions. Safety and Security are the two prime factors in accessing digital finance tools.

Machine logs and maintenance reports are analyzed to optimize performance and efficiency. AI-powered business systems continuously analyze this information for patterns, trends, and correlations. These insights help drive predictive maintenance and automated workflows, increasing efficiency and productivity over time as the machine learning applications “learn” from the IoT data. The makeup of digital transformation teams can make or break a project. They advertise digital transformation benefits internally and externally to customers and shareholders.

Business innovation and three facets of digital transformation

These days, almost every business has a digital presence, and those without it are missing out on a significant portion of the market. For finance and accounting (F&A) teams, digital transformation is optimizing the use of technology solutions to engage, communicate and collaborate with stakeholders virtually. A finance business process is a sequential set of tasks that takes a set of data to a finished state; for example, collecting employee expenses, passing that information to managers and finance teams for review, and getting it approved until the employees get paid.

Definition of Digital Finance Transformation

Advancing efforts to digitally transform allows F&A teams to focus more on business strategy, emerging technologies, data and analytics storytelling, and critical areas impacting the global economy, such as ESG . Financial services firms require real-time modernization to change how they work. From banking to capital markets, payments to insurance, scalable technology drives innovation, service and security.

Defining “Digital Transformation” for Finance & Accounting Leaders

The term “digital transformation” has been thrown around a lot, particularly in the past decade. Or is it the direction that all businesses must be headed to remain relevant in today’s modern business environment? In this guide, we will define digital transformation and discuss the reasons why digital transformation is beneficial to your company. We will also talk about digital transformation in finance the importance of digital transformation in the finance world. Our model combines cutting edge technology, processes, and people in a fully-managed solution to deliver precise financial visibility and improved operational scalability, plus a lower and more predictable cost structure. We continue to help organizations tackle their most pressing business challenges.