Three-quarters of SMB (small and medium business) decision-makers understand that using digital technology effectively is key to business success in today’s digital era. The right digital solutions can help businesses address new challenges, course correct, and better prepare for unexpected changes in market and business conditions.
During this past year, in particular, it’s become abundantly clear that investing in digital transformation pays off: SMBs with digital transformation initiatives underway were much more likely to report year-over-year revenue increases than peers still in the planning phase, or those with no plans. SMBs already executing on digital transformation are also more likely to expect revenues to rise compared to other SMBs.
However, many SMBs find it difficult to develop and execute a digital transformation strategy. Some view the “digital transformation” itself as confusing and over-hyped. Is it about moving from paper to digital processes? Does it mean doing what we do today, but doing it faster? Or does it mean a complete overhaul of the technology environment, or moving everything to the cloud?
Even armed with a good understanding of the term, most SMBs still confront many other challenges. Concerns about security, integration, and just figuring out which solutions will work best, top the list. But resistance to change and the perennial “lack of” issues—lack of prioritization, money, time, skills, and staff—also get in the way.
Given these hurdles, how can CFOs help their organizations forge a successful path forward?
Digital Transformation Defined
Digital transformation encompasses more than just swapping out different technology solutions. It requires a shift in how you think about, operate, and manage the business to make it more valuable and relevant—and ultimately, to improve performance.SMB Group defines digital transformation as “how businesses use digital technologies to create new or modify existing business processes, practices, models, culture, and customer experiences to meet changing business and market requirements.” Simply put, digital transformation is a catalyst for businesses to rethink the purpose, structure, and culture of the business.
While people often focus first on business processes and business models, it’s important to keep in mind that people are the most likely impetus to digital transformation. SMBs rank improving employee productivity, keeping up with changing customer expectations, and improving external collaboration with customers, suppliers, and partners as their top three drivers to invest in digital solutions.
This means that most digital transformation initiatives must support improvements for people, not just processes. For instance, helping employees do their work better cultivates creativity and growth—and ultimately, competitive advantage. Initiatives that focus on making work more efficient and intuitive mean employees can spend less time on rote tasks. They gain more time to think more strategically, better serve customers, and focus on revenue-generating work.
Digital transformation isn’t an endpoint—it will always be a work in progress. As conditions change, business and technology strategies must adjust accordingly.
The COVID-19 pandemic brought this reality into stark relief. When the implications of the pandemic hit home in March of 2020, businesses suddenly had to address three main challenges: how millions of workers could productively work in remote settings, how to serve customers virtually instead of physically, and how to create safe physical working environments when necessary. They had to deal with unanticipated supply chain disruptions, layoffs, and furloughs. As the virus recedes, companies are dealing with new issues, from hiring difficulties and creating long-term hybrid work environments to figuring out if, how, and when customers will return to pre-pandemic behaviors.
The CFO as the Catalyst for Digital Transformation
Because the ultimate goal of digital transformation is to improve business results, work often begins in the CFO’s office—and almost always includes the CFO. To provide effective guidance, financial professionals must go beyond mastering financial basics and keeping up with the latest management practices. They need to serve as strategic advisors to help decision-makers better understand implications and evaluate options.Successful digital transformation initiatives begin by taking a fresh look at what’s going on in the business, and with customers, employees, and competitors. Maybe revenues and profits are dipping, or it’s more difficult to recruit and retain employees. Perhaps you miss out on a great opportunity to enter a new market because it requires too many workarounds. Or a competitor has introduced a new business model that’s disrupting your business.
Zeroing in on specific issues and problem areas can help you set goals to sustain and grow the business. The ability to communicate effectively and work collaboratively across the organization to engage people at all levels of the organization is also crucial. You need to gather input and get buy-in. While leadership must be on board to move ahead, employees must be on board to implement new business practices. Customers, suppliers, and partners can also provide invaluable input into what’s working, what’s not, and what changes are required.
Cloud-based Financials Solutions Provide a Strong Foundation for Digital Transformation
Clunky spreadsheets and brittle, client-server software can help you analyze what has already happened in the business. But decision-makers need more than a look in the rearview mirror. To successfully steer their businesses forward, CFOs need real-time information and analytics capabilities to inform overall strategy and to identify, interpret and execute in response to new opportunities and trends.
Modern, cloud-based financial systems are designed to deliver these capabilities. People enter data into the system once, ensuring all users have the same, up-to-date information. These solutions are built with open, flexible technology, making it easy for customers to integrate new capabilities and solutions into the core financials platform.
This article was originally written by Sage Intacct, and republished with permission.
