Digital finance transformation is no longer a luxury. It’s a necessity. While leveraging the right tools can still provide a competitive business advantage, it’s fast becoming table stakes to remain competitive.
CFOs are increasingly at the forefront of driving these transformative initiatives, ensuring that their organizations remain not only competitive, but efficient and resilient as well.
However, it’s vital to recognize the need for digital transformation before it becomes critical. If you’re backed into a corner and being forced to make a digital transformation, you’re almost sure to make poor decisions, overspend, and create a solution that doesn’t work as well as it could.
In this article, we will explore key warning signs that indicate digital transformation is necessary, and provide guidance on how to start modernizing your operations.
6 Warning Signs That Digital Finance Transformation is Needed
Any good CFO understands they need to have their finger on the pulse of their organization. They need to be able to sense when resources are needed, spot inefficiencies, and identify processes or workflows that are causing problems.
In short, they need to be able to see and fix problems before they happen, rather than spending all their time constantly fighting fires. When these signs start to recur regularly, it might be time to consider a more long term solution.
Here are six warning signs that it might be time for digital transformation:
1. Struggling with inaccurate or outdated cash and transaction data
Consider this, a recent survey by Blackline found that nearly 40% of CFOs around the world do not completely trust the accuracy of their organization’s financial data. If your organization struggles with inaccurate or outdated cash balance and transaction data you’re clearly not alone. It’s also a clear sign that your current systems are inadequate. As CFO, this isn’t likely to be a problem you’re unaware of, and it could already be having a major impact on your ability to generate reports and create accurate forecasts.
The inability to quickly and reliably access real-time data can hinder decision-making and lead to missed opportunities. And while it might not have created a specific crisis or mistake yet, it’s almost surely just a matter of time.
Digital transformation can address this issue by implementing advanced data management systems that provide real-time insights and ensure data integrity.
From a CFO and Treasurer’s perspective, having a real-time, 100% accurate view of all the current cash balances and transaction data, creates the foundation for improved process and decision making all across the finance function.
2. Challenges with unstructured data management
Many organizations struggle to collate and compile unstructured data. In fact, visibility into global operations, cash, and risk exposures continues to be the most challenging and time-consuming areas for treasury executives surveyed by Deloitte.
Unstructured data can be difficult to manage and analyze with traditional tools. To make it usable, this data needs to be manually cleaned and categorized, which can take a significant amount of time. Even then, it introduces the potential for human error.
If data management is a challenge, it’s a tell-tale sign that digital transformation is needed.
Modern digital tools can help streamline the process, making it easier to organize, analyze, and leverage unstructured data for strategic decision-making.
Much of this process can be standardized and automated, taking time away from low value data gathering work, to allow for more to be spent on high value analysis.
3. IT support bottlenecks
If your organization relies heavily on IT support to implement and maintain technology projects, it’s a sign that your current systems are not user-friendly or efficient. Modern software solutions are designed to be intuitive and accessible, reducing the need for constant IT intervention.
This problem is compounded if third party support is needed, as is often the case with legacy TMS or ERP platforms. This means that not only is the process of improvements slow, but it can also come at a hefty financial cost.
By adopting more user-friendly platforms, CFOs can empower their teams to take ownership of technology projects, leading to greater efficiency and faster implementation. Ideally, you want to partner with a technology provider that works with you to iterate and refine the software to make it more effective.
Not only does this make it more useful to your organization, it also helps improve the product for the software provider. A true partnership.
4. Operational inefficiencies and low employee productivity
This one can be hard to quantify, but if it’s a problem, you’ll know about it. Systems that are slow, clunky, and unable to keep up with business demands can severely impact operational efficiency and employee productivity.
This is also one of the reasons it’s important to get feedback from your employees on any impediments to them doing their best work. Most of the time, if there’s a problem with their tools, they’ll tell you.
Not only does this impact the productivity of your team, but you shouldn’t underestimate how much these inefficiencies can also negatively impact employee morale. New technologies can streamline processes, automate repetitive tasks, and enable employees to focus on more strategic activities, ultimately boosting productivity and morale.
5. Forecasting limitations
Accurate forecasting is essential for strategic planning and decision-making. But if your organization is struggling to produce reliable forecasts due to outdated systems or data management challenges, that’s a problem.
Modern analytics tools can provide more accurate and timely forecasts, helping CFOs make better-informed decisions and mitigate risks.
The automated data gathering of modern platforms is the foundation of these forecasts. Bank connections through APIs and legacy file formats allow for rich datasets, including rich metadata. This not only means that forecasts are more likely to be accurate, but they can also assess the impact of different decisions through the use of scenario planning.
Once created, all of these forecasts can be automatically updated as new data becomes available.
But modern forecasting tools create an even bigger advantage. Manual forecasts built in spreadsheets require substantial knowledge on financial formulas and advanced spreadsheet experience. Analysts can take years to fully master Excel.
Modern software platforms make this far easier, eliminating the need for manual formulas and detailed, fragile models. It gives more junior employees the capabilities of those with many more years experience, allowing your finance team to run leaner, while being more effective.
6. Recruitment challenges
Ask any senior executive what their biggest corporate assets are, and they’ll almost certainly mention their people. The ability to attract and retain top talent is hugely important for any organization. But just like a professional athlete doesn’t want to play in an old, dilapidated stadium, the best finance talent doesn’t want to have to work with outdated technology.
If your company is struggling to attract new talent, your systems and processes may be playing a part. Today’s workforce expects to work with modern, efficient tools that enhance their productivity and job satisfaction. Digital transformation can help modernize your operations, making your organization more attractive to potential employees.
When digital transformation is fully embraced, it can actually be a drawcard for the best in the business. Ambitious people want to expand their knowledge, and offering the chance to work with cutting edge technology can be a major benefit.
Recommended: Check out our recent episode of Fintech Corner as Jeff Macke, founder and President of Macke Asset Management, interviews Trovata Founder & CEO Brett Turner, and Joseph Drambarean, CTO at Trovata. Together, they discuss the impact of recent market forces and how cutting-edge technology can empower finance teams to respond.
Getting Started with Digital Transformation
So perhaps you’re sold on the idea of digital transformation, but you’re not sure where to start. It can be a daunting process. Here’s what you need to do:
Audit your team’s processes and tech stack
Begin your digital transformation by auditing your team’s processes and technology stack across departments such as treasury, accounts, and FP&A. In order to implement something new, you need to understand exactly where things are now.
Be sure to interview your team and key stakeholders to find out the biggest pain points and bottlenecks in their processes. Identify gaps in your current systems and assess how these gaps impact departmental performance.
Benchmark gaps and impact on performance
Once you’ve identified the key problems in your workflows and tech stack, the next step is to dig into the details on how these issues are impacting performance. Evaluate how much time your team spends on collating data versus analyzing it. If your team is bogged down with manual data collection and processing, look at how much time could be saved through automation.
During this process, you’ll want to gather benchmarking data so that you can assess the impact of the changes you make. This could be metrics such as workflow time scales, number of incidence reports, or support tickets raised.
Explore technology solutions
With a clear picture of your main problems, you can begin to search for the right solutions. The clearer your list of needs, the easier it will be to assess tech options on how well they are equipped to fix those problems.
Consider what technology solutions could drive efficiencies and have a measurable impact on your organization. Look for platforms that offer seamless integration, automation, and real-time data visibility, such as Trovata’s advanced cash management platform. These tools can help streamline operations, improve data accuracy, and enhance decision-making capabilities.
How Trovata Enables Digital Transformation
Trovata has been designed from the ground up to facilitate digital transformation. Unlike legacy TMS and ERPs, Trovata’s architecture takes a cloud-native, API-first approach to your business. In practical terms, that means it allows for fast, scalable flow of data, while offering features that allow you to analyze and dissect that data in just about any way imaginable.
Some examples include sophisticated forecasting and scenario planning, real time cash visibility across your entire business (including subsidiaries for multi-entity organizations), automation tools to speed up workflows and reduce or eliminate manual work, and a collaborative update schedule that can be measured in days, not months.
Because digital transformation is not just about adopting new technologies; it’s about fundamentally changing the way your organization operates. By recognizing the warning signs and taking proactive steps to modernize your operations, CFOs can ensure their organizations remain competitive and resilient in the face of these always changing challenges.
Are you ready to take the first step towards digital transformation? Book a demo with Trovata today, to see the tangible benefits that a modern finance and treasury management platform can bring your company.
