Digitalisation in finance is no longer an option but rather become an inescapable reality for any business wishing to stay successful. Without a doubt this was accelerated by the global pandemic crisis in 2019, speeding up digital transformation not just in the more common areas of marketing and client experience but across all business functions.
Consider that according to a survey by IDC France, 70% of large companies and 53% of SMEs had already begun their digital transformation by mid-2020. Then the health crisis introduced a dual impact: on one hand, existing projects such as remote working and new forms of teamwork were forced to accelerate; on the other hand, it highlighted some of the downsides of not moving forward with transformation, including losing clients and experiencing heightened competitive pressure. As American investor Warren Buffet once said, “Only when the tide goes out do you discover who’s been swimming naked".
Company leaders began exploring new ways to streamline processes, generate additional revenue, and overcome any obstacles in their operations. This included implementing digitalization in finance departments, in fact according to a 2020 Gartner study the health crisis has motivated 70% of the finance departments surveyed to accelerate their transformation. According to a Blackline survey, communication and teamwork (44%) and technology and infrastructure (31%) are among the main challenges for finance and accounting functions, where more than eight out of ten professionals expect to see faster digital adoption as a side-effect of the crisis.
KPMG found similar results in their 2021 UK CEO Outlook pulse survey regarding prioritising to drive growth. In the report they found that over three-quarters of UK CEOs say that the pandemic has accelerated the digitisation of operations and the creating of a next-generation operating model, moving from high on the corporate agenda to an imperative. In addition, the survey found that one of the key challenges they faced in accelerating their transformation was determining various operational scenarios - such as the customer experience - and incorporating that into their strategies.
Why is digital transformation so complicated?
While implementing any kind of digital process initiative might seem straightforward, appearances can be deceiving. The reality of digital transformation is far more complicated, a consideration that is typically not portrayed by a few summary figures that do not reveal the widely diverse contexts, strategies, constraints, and complexities found throughout organizations and in teams. On fact, there are as many kinds of different digital transformations as there are organizations looking to make a transformation!
Nonetheless, three key worlds interact in all cases: technology, organizational, and human. Each one of the three has its own levels of complexity and unique challenges. It is therefore necessary to combine several facets, ranging from the easiest (technology can be brought into a company) to the less easy (existing organizations need to evolve), and including the most difficult (integrating human factors). As previously mentioned, there are many kinds of technology so determining which to use and then identifying how to use it - organizational evolution - is already complicated. Now include the human factor and things become much more complex.
After all, by definition, people’s behavior varies widely and evolves continually. Uses, corporate culture, and corporate values must adapt constantly. Change management concerning people is very clearly a key piece of the puzzle. Still, it is a difficult mission because the transversal aspects required for digital transformation directly confront people’s individualism and can require additional attention and support. Change can cause anxiety and worry among employees regarding employment, skills, and collaboration methods especially in an ever-evolving economic environment. Clearly this is a problem: the goal of digitalisation is as a tool for transformation, not discord.
The American economist Gary Hamel provides a good summary of the pitfalls facing companies when it comes time for transformation: “Today’s organizations were simply never designed to change proactively and deeply - they were built for discipline and efficiency, enforced through hierarchy and routinization”. Those aspects are hardly adapted to external shocks that force rapid change, such as a serious and sudden global health crisis.
What can be done to get “quick wins”?
What actions can be taken to help in change management and digital transformation efforts? There are several principles that can be emphasized.
First, avoid underestimating the challenge. This means you need to be aware of the problem, particularly regarding an approach overly focused on technology to the detriment of usage, cultural issues, and human factors. Here, it is important to understand why digital transformation is not generating the expected results. Failure to succeed may be related to the specifics of both corporate culture and individuals, with their values and beliefs. These aspects must be identified to distinguish those that pose a problem from those that are likely to boost the process in the right direction. Edgar Shein, professor of management at MIT, says: “Culture is the primary source of resistance to change”. It is therefore necessary to focus simultaneously on the environment, beliefs, and behaviors.
Second, it is necessary to set a clear direction to avoid improvisation and leverage existing features and available resources. Of course, this involves knowing how to find benefit in the unexpected, which can be used as a strength instead of a constraint.
Third, it is wise to take on work projects that allow rapid deployment, while generating strong visibility, immediate benefits, and driving behaviors and practices forward. That is what happens with digitalisation, which combines low levels of investment in terms of time and budget, especially when using SaaS. Digitalization brings maximum exposure concerning many processes with solutions that are simple to deploy. User satisfaction rises thanks to the elimination of time-consuming tasks, coupled with better understanding of daily gains.
Change is better and accepted more quickly by emphasizing these three principles, as they reduce worry and present the transformation in a positive light (notably by saying goodbye to time-consuming and demotivating tasks with little added value). This approach also encourages people to step safely outside their comfort zone. The respected management consultant Tom Peters summarizes the stakes of change management clearly: “Change is about recruiting allies and working each other up to have the nerve to try the next experiment”.