According to 2019 Finance Key Issues research from The Hackett Group, Inc., corporate finance organisations are counting on enterprise digital transformation to help them prioritise customer-centricity and cost optimisation as their top initiatives for this year.
Digital transformation is also seen as key to enhancing the value that can be derived from enterprise data and analytics. However, expectations may be overly optimistic. To date, fewer than 33% of all finance organisations say that digital transformation has helped them achieve their goals.
To benefit from digital transformation, finance organisations need to address significant obstacles. Progress has been slower than expected as companies struggle with adoption and implementation of technologies. Digital transformation is a long-term investment that has only just begun to have a positive impact on finance performance.
An additional challenge is that finance organisations expect to see more cuts to budgets and staff this year. This will drive the need to reduce any productivity and effectiveness gaps in the face of significant revenue growth. With digital transformation recognised as the dominant approach to improve productivity and effectiveness, finance organisations must find ways to close the execution gap.
At present, adoption rates for a wide range of technologies and digital tools are quite low. However, research shows that this is expected to increase dramatically in the next two to three years. Adoption of robotic process automation is expected to at least double from 38% to 86%, with broad adoption skyrocketing eighteenfold, from 3% to 55%.
Adoption of advanced analytics is expected to increase from 35% to 72%. And adoption of cloud-based business applications – clearly seen as the foundation for the next generation of finance technology capabilities – is also set to grow significantly, reaching 90% in the next one to two years.
The Hackett Group believes that, in many cases, these projected adoption rates may be somewhat optimistic, particularly given the execution gaps seen to date. But significant adoption growth is likely to occur in all these areas.
“Clearly, finance organisations are finding it more challenging than expected to make the pivot to digital,” said Jim O’Connor, North American G&A Advisory Practice Leader for The Hackett Group. “They’re seeing some impact and are counting on it to enable finance to create more strategic value to the enterprise while adopting a better cost profile for overall finance. But progress has been impeded by issues such as a lack of a mature strategy, lack of internal IT support, and a lack of dedicated resources. Nevertheless, finance organisations are optimistic about their ability to overcome these issues.”
While finance organisations are making progress and seeing some benefit, The Hackett Group’s research finds that they have encountered greater difficulty than expected in achieving broad-based adoption of digital tools, securing IT support, and dedicating talent to their digital initiatives.
The Hackett Group’s 2019 Finance Key Issues research, 2019 CFO Agenda: Building Next-Generation Capabilities, is based on results gathered from around 150 executives in the US and abroad, most at large companies with annual revenue of USD$1bn or more. A complimentary version of the research is available for download, following registration, here.