Daniel Echeverri Restrepo
CFO
Renault Mexico
/
Expert Contributor

Plug and Play: The Digital Transformation

By Daniel Echeverri Restrepo | Wed, 05/11/2022 - 14:00

Nowadays, employees have access to high-end technology in their own hands on a daily basis. They use their cellphones to buy stocks and cryptocurrencies, track deliveries, and create 3D maps with LiDar sensors. How do we explain, then, that somehow within companies, leaders have been failing to take the leap toward the digital transformation?

Recent research from BCG shows that 70 percent of digital transformations fall short of their objectives, often with profound consequences. This is certainly the case for most finance teams, where traditional spreadsheets are transformed into slide presentations that are subsequently sent via email to many recipients and finally discussed in endless meetings.

For modern companies born in the digital era this is perhaps less of an issue. However, certain factors make it problematic for traditional companies to evolve:

  • People and culture, where the phrase “We have tried it before, and it didn’t work” becomes a paradigm.
  • Company structure, where several complex layers of hierarchy, divisions, and departments naturally slow down the decision-making process.
  • Systems and information flows, where having no (or too many) communication system prevents the information from reaching the right audience.
  • History and bureaucracy, where believing that, despite the evolution of technology, the traditional way of doing things is the best and unique, ensuring there is no space to create or adopt any kind of transformation.

Besides these factors, the traditional way in which finance leaders usually approach the digital transformation is not good enough. Some common reasons for the lack of success include:

  • Believing that it is a business-as-usual topic that can be addressed with a top-down command.
  • Using traditional project management methodologies that do not encourage interaction between teams.
  • Making big investments but without the right diagnostics.
  • Bringing in external teams that are not familiarized in detail with the company’s activities, systems, and culture.

This traditional approach results in never-ending projects, a lack of results and discouraged teams.

But the negative impact won’t be only within the finance department, it will permeate to all the related internal and external clients because an error on the digital transformation usually increases the workload for the surrounding teams.

Nevertheless, there is indeed a path that can lead to the digital transformation for finance, and here are some of the main levers that need to be activated in order to get to the right outcomes:

  • Results:
    • Before starting the transformation journey, it is important to have a solid base of company results.Even though the digital transformation should bring along positive results, the company should remain in good shape throughout the process, so the focus can be the transformation itself instead of fighting fires.
  • Culture:
    • Culture is the main lever. People must be brought together onto the ship of a new digital world. This requires discipline, and nurturing it with examples from companies succeeding is always a good option.
  • Agile methodologies:
    • ​​​​​​​There are books like “Scrum: The Art of Doing Twice the Work in Half the Time” from Jeff Sutherland that already explain why the traditional way of tackling projects by working in silos isn’t good enough. And why it should be changed to a model where short iterations between the teams constantly produce value-added results throughout the project.
  • Data mindset:
    • Being digital is not measured by how many systems the company uses, but by how fast the data can be retrieved and how deep it is. Therefore, it is important that employees are trained on having one single data pool across all the departments that can be easily consulted.
  • Managers joining the force:
    • The path for the transformation is not easy and needs to be supported by managers in every step of the process to motivate and guide the teams to achieve the expected results.
  • Focus on the clients:
    • The stakeholders or clients of the finance digital transformation should be not only the board of directors but peer areas, such as marketing, sales, HR, quality, and the final customer. They should always be considered in the evolution process and the results should also add value to their work.  

After these levers are activated, results are keen to come. Not only because the financial internal and external processes will become digital, but also because this will empower teams to use these same levers to increase the company’s performance overall.

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