How digital transformation affects finance teams

For the first time in history, Farrell noted, technology is outpacing best practices. While this is exciting and presents an enormous amount of opportunity, it also puts businesses at tremendous risk. Accounting and finance departments can help mitigate that risk.

For that to happen, businesses need to tackle key accounting tasks as they arise rather than putting them off until the end of the day, month, or quarter. “It needs to be real time and it needs to be always available,” says Farrrell, because omnichannel sellers need billing, invoicing, and tax information at their fingertips.

In fact, most branches of business now come to accounting and finance departments for the predictive and prescriptive data they need to drive growth. Farrell says, “Accounting is a fundamental building block to any company that wants to drive digital transformation.”

Furthermore, accounting teams are increasingly expected to provide real-time information and analytics that can help their companies grow. They need to look forward even as they compile retrospective data.

Armbruester agrees finance and accounting teams should be thinking about the insights technology is giving us in real time and also how to apply those insights effectively. “If you want to get the most insights out of the data, you can’t treat it as an afterthought. It really needs to be embedded in the fabric of financial technology and processes.” She notes that finance and accounting teams have never been under more scrutiny to “provide financial insights that guide and inform business decisions.”

Because simply having raw data isn’t enough. “People need great analytics,” says Farrell, “both descriptive and diagnostic (e.g., reporting and pivot tables) … but more importantly, prescriptive and predictive analytics.” Therefore, accounting and finance teams are increasingly responsible for identifying what’s likely to happen, as well as how to solve emerging issues.

Meath takes it a step further. “To predict and understand” is key, she says, but so is having the agility to adapt quickly in response to what you learn from the data.

While Barba believes digital tools and tech-savvy employees are key to a digital transformation, in her experience, focusing on the customer is equally essential. Businesses should develop technologies that empower, incentivize, and inspire customers.

Farrell concurs. “Having consumer-oriented technologies is key” because people are used to using technology in their daily lives, as consumers. “They’re able to use any technology and they enjoy using it. They want the same thinking in their business experience as well.”

Digital transformation is part of a company’s DNA, according to Meath. Businesses have learned that digitization can help eliminate human error and improve overall performance. Indeed, IDC found that businesses that have digitally transformed have experienced a 15% increase in overall company performance.

The discussion between Armbruester, Barba, Farrell, Meath, and Rizza took place in May 2022, but DX remains a top consideration for accounting professionals and other industries. One reason is that greater reliance on DX can help businesses cope with today’s economic uncertainties. As IDC noted in October 2022, “Digital transformation efforts improve an organization’s resilience against market disruptions.”

Professional service providers such as accounting professionals comprise the second largest industry for worldwide DX spending, according to IDC, after discrete and process manufacturing industries. Certainly, accounting practices are discovering the benefits of cloud-based document management systems and how technology can help counter accounting staffing shortages.

Read more about digital transformation in Avalara Tax Changes 2024.

This post has been updated.