Sooraj Shah looks at the common misconceptions around the trending phrase ‘digital transformation’, and asks how it will apply specifically to accountants.
While there is a lot of talk about digital transformation, the sheer number of surveys, statistics and research bandied about make it hard for accountants to know exactly what it is and what it means for the sector.
Depending on the survey you’re reading, there are also different levels of maturity in the market and the benefits of digital transformation differ wildly.
IT advisory and analyst company IDC suggests that two thirds of SMEs are using new technology to improve their business through a digital transformation strategy, while a survey by YouGov found that digital transformation had the potential to shave off man hours and repetitive tasks to free talented accounting minds to focus on strategy.
“In the UK, we are spending £8.72bn every year on finance-related admin tasks which, although necessary, could be dramatically cut down by using the right tools and software easily available,” said Carlo Gualandri, founder and CEO of multi-user spending account provider Soldo.
Combination of factors
In one sense, digital transformation is the introduction of new technologies or upgraded IT into the business. So it’s a combination of the things accountants have been hearing for years: cloud computing, big data and mobile, for instance.
Tim Difford, strategy and innovation director of IT services company Sopra Steria, suggested that cloud computing could drive down costs, and enable the creation and analysis of much larger dataset. This has the potential to promote greater transparency around the issue of compliance, as well as spotting anomalies and trends more rapidly.
Meanwhile, Difford also said that technologies such as invoice automation could help companies to comply with different types of legislation.
Focus on end users
However, Gary Coombs, chief operating officer of online accountancy firm Crunch Accounting, suggested that the organisation shouldn’t be the sole focus of digital transformation.
“It’s more important for the company to focus on its end users and it should shape how they interact with the organisation,” he said.
Indeed, a thorough plan before embarking on a digital strategy would focus on the customer’s needs.
But focusing on the organisation rather than the customer isn’t the only misconception with regards to digital transformation – another misstep is focusing purely on technology.
Transformation requires a change in culture, structure, processes and even personnel.
“In order to be fully digital, organisations need to ensure they are rethinking and refreshing their existing business models, the people they hire and the way they work,” said Hermann Sidhu, EY global assurance digital leader.
Change for change’s sake
As Jon Wrennal, CTO at software company Advanced outlined, a digital strategy shouldn’t mean companies get carried away with making digital technology changes for change’s sake.
“For example, companies should start with the positive impact they want to achieve on three areas:
- the functioning of their accounts team or accounting practice to save time or remove manual tasks;
- the ability to provide business leaders with financial insight they need for better decision making;
- and the impact the financial insight can deliver and how it can enable them to stay one step ahead of their competition”.
Many employees may be wary of a digital shift coinciding with fewer jobs in the finance function. However, those in these roles need to ensure they can add value elsewhere – particularly in regards to the insight they can provide.
“It will be hard to develop the skillset of the accounting professionals whose jobs are being automated, potentially taking them out of their comfort zone and even away from the parts of finance that attracted them to the profession in the first place,” said Adrian O’Conner, founding director at recruitment consultancy Global Accounting Network.
Don’t change too much too fast
Perhaps the best advice for any organisation attempting to go through digital transformation is to remain cautious.
“Trying to change too much too fast is a recipe for disaster,” said Crunch Accounting’s Gary Coombs, who added that it is a strategy that requires intricate planning.
But this doesn’t necessarily mean it’s a two or three year programme either – digital transformation does not mean going from one state to another in a single project. It’s more about getting to a state where a company can continually adapt and change as technology develops.
The current state of many companies, particularly in the financial services sector, means that this isn’t possible; archaic technology and processes don’t allow for companies to continually evolve.
Simple shifts from using paper to using digital processes, using workflow software to prevent bottlenecks and breaking down the barriers of communication between different departments – perhaps even hiring a chief digital officer to oversee the digital shift in each and every function within the business – are just some ways businesses or accounting firms can make a digital transition.
Those that do are likely to be a step ahead of their competitors in the years to come.