Digital Transformation (DX) is among to top strategic priorities for companies across industries.
And accordingly, businesses are pulling out all the stops in deploying the latest digital technologies, such as cloud computing, ERPs, AI-powered data analytics, and robotic process automation in an effort to improve their operational efficiencies.
However, despite all the enthusiasm and investments, DX success seems to continue to be elusive. One McKinsey study, for example, said that only about 30 percent of companies that have embarked digital journeys have succeeded in improving their business performance.
This appalling success rate could be attributed to many things, but one of the most glaring factors is the lack of a single source of truth, especially when transparency and access to real-time data play a critical role in DX.
Before automating critical business processes such as procure-to-pay, order-to-cash, and hire-to-retire, companies need to ensure that these processes are based on accurate and robust financial data, which is often not the case, as indicated in this study.
It is bad enough that only 38 percent of the professionals trust the accuracy of their organizations’ financial figures, but what is worse is the fact that a big majority of them (69 percent) feel that leaders have made critical business decisions based on inaccurate financial data.
Addressing the data discrepancies
Businesses should realize by now that DX built upon flimsy processes and outdated data is more likely to fail.
To remedy this, leaders should first look inwards and figure out how they can fix the financial data discrepancies.
Simply put, companies should look to modernize and transform their finance and accounting departments, as part of their DX project.
Far too often, these two departments are mere afterthoughts in transformation efforts and are forced to use “bolted-on systems” and “finicky customized processes” which is more of a liability than an improvement.
As a result, the digitalization happens at different paces and fortifies the siloed disconnect between operations and data.
Beyond that, businesses also end up missing out on the golden opportunity to carry out an organization-wide transformation and modernize every department at the same time with a fully integrated system, such as an ERP solution.
Modern ERP solutions that boast of unprecedented customization capabilities with add-ons for the different departments within an organization quickly solve data discrepancy issues, collapse all the silos, and provide the elusive single source of truth.
Furthermore, these solutions could also be integrated with accounting automation tools such as RPA, improving efficiency as well as reducing the risk of human errors and enhancing data integrity.
In short, many digital transformation projects fail, partly because decisions pertaining to them are made based on inaccurate, outdated financial data.
Thus, the accounting and finance department should play a more significant, foundational role in all digital transformation process, and one way to do that is to transform these departments first.