Completing the Digital Transformation Puzzle

Businesses that have quickly embraced the world of digital are beginning to reap the rewards in the form of increased profits and revenues. In the current world consisting of increasing competition, legacy systems are no longer enough for businesses to survive and thrive. The trend of digital transformation (DX), which began in the last decade, has only been accelerated as a result of the pandemic, and even as the pandemic subsides, DX is going to be the future.

In a recently concluded roundtable organised by BW Businessworld with some of India’s top leaders setting the pace for India’s digital transformation in the finance domain, a wide range of topics were discussed, including changes in processes and functions of organisations since the pandemic, priorities of finance leaders and the role of CIOs, and tips to CFOs for a total digitalisation of the finance function. 

The impact of digital on finance functions:

While the pandemic was at its peak, CFOs played a major role in turning the crisis into an opportunity, and CIOs helped them in this process. Vivek Ganesh, Regional Director at SAP Concur, said, "CIOs are supporting CFOs in their digital transformation journey, especially for the finance function. Businesses now have switched their focus from growth efficiency and partnerships towards business continuity, increasing cash position, and more importantly, lowering the functional costs by enabling remote work.”

With the inclusion of new spend categories, novel payment mechanisms have also come to the fore. Ganesh provided an example to further illustrate his point. He explained, "Our partner financial service providers have witnessed an increase of over a million contactless transactions in the first quarter of last year compared to what it was pre-pandemic. Due to the changes in payment types, the spending categories have also witnessed a change, and hence the expense management programmes in the organisation have also witnessed a significant change."

In the world of finance, there are several areas where changes are pretty much visible. Ganesh pointed out, "The four major areas where we witnessed changes are- utilisation of AI/ML for guided decision making, reducing the payment time and increasing efficiency, making the audits more accurate, and renewing the focus on the compliance part in terms of spending strategic policies."

Change is the only constant in the world of finance:

Shobhana Lele, CIO at The Bombay Dyeing suggested that in the domain of technology, change remains the only constant.

Lele said, "During the pandemic, there were several lessons learnt and a lot of companies adopting new processes. These processes that were adopted during the pandemic due to their ease of usage and/or cost/benefit factors can continue in the post-pandemic age too. For instance, a hybrid working environment that began as a novel approach may become the new normal in the future."

BFSI is one of the leading industries that are following compliances and leading on automation. Lele underlined, "Earlier, for investments in security, or adopting new technologies, one would need to have a lot of supporting documents to justify the reasons. Now the process is a lot easier as most companies have witnessed the benefits of automation and also realized the importance of a cyber-resilient world."

The new power couple in the world of finance:

A lot of change has taken place during the past couple of years, especially due to the pandemic and its impact on businesses around the world.

Chirag Boonlia, Group CTO at the Embassy Group, remarked, "CFOs and CTOs are the new power couple in town. Our world can never be the same, as it was in the pre-pandemic era. The pandemic has accelerated the trends that were inevitable either way, and it is now clear that it is important for the finance function to work in tandem with every other function, including IT. This is because, every function is now re-imagining with technology at the centre and hence, if the businesses were to adopt and adapt technology, the finance has to do the same." 

It is of key importance for business stakeholders to come together, especially CFOs and CTOs, especially in terms of business value realisation. As Boonlia observed, "If all the business stakeholders come together with a common purpose of business realisation in the back-drop, the transformation would be a compelling differentiator in terms of how an organisation stacks up against its competitors."

Pramod Mundra, CIO at Havells India Limited, underlined, "CFOs are always concerned about the data—whether the organisation has a single version of the truth or not, and also whether the data is meaningful or not. Additionally, the challenge is not just to create one version of the truth but also to build capabilities to generate insights out of this data, and bring predictability to the decision making." 

Mundra suggested that finance function conventionally been paper-centric and with a significant number of manual processes. He highlighted, "CFOs will need to focus a lot more on hyper-automation such that the function can go truly paperless. So far, automation has happened in bits and pieces. Hyper-automation will involve automating the entire process end-to-end and work with a measurable outcome-oriented approach."

"Currently, tonnes of solutions are available, but they are all being used in isolation, be it digital invoices, digital signatures, or OCRs, most of the times they are all used in isolation," he added.

According to Vivek Ganesh, CFOs and CIOs have realised that it is time to step up digital spending. As per a recent Gartner survey, 82 per cent of CFOs agreed that they are going to increase their digital spending by 70 per cent.

Ganesh focused on some key areas where CFOs and CIOs have been working together. He said, "CIOs have been helping CFOs by providing them with updated data. Earlier, CFOs wanted a report every fortnight, but now they are looking forward to reports weekly. Secondly, mapping the working capital allocation is critical in an organization. Thirdly, there is the question of connecting the KPIs of the finance team and automating them. Also, building a core of digital competencies in the financial domain, where invoice capturing has generally been traditionally manual."

Numero Uno challenge- compliance:

Shrikant Kothari, Head of IT, at Microsoft Corporation India, pointed out that there has been an increasing shift in focus on compliance. Kothari said, "Compliance remains the number one challenge, and we continuously need to find ways to make sure that tools and technologies can identify these gaps in our systems and processes and highlight them at the earliest possible to the organization and the board."

"An early alert system is the need of the hour. What kind of contracts have we signed and agreed upon, and convert all of them into identifiable and searchable contracts, and help pre-alert sale organizations to ensure renewals happen" he added.  

Also, providing the right data to the right person remains a major challenge. Kothari commented, "Rationalization of data with the right role is of key importance while driving complex organizations. The question is that we have data requests from everyone for pretty much anything, so where do we draw the line, where do we segregate? "  

He mentioned that empowering people with the right data yet having the necessary checks and balances in place is of paramount importance. He said, "There is this whole element of data security which the finance world is becoming more and more conscious of as a whole. This is a major change which I have seen over the past 5 years."

Accelerating shift to a digital world:

Suhrid Brahma, CTO at WNS Global Services commented, "In today’s environment, speed of execution and cost optimization are key, gone are the days when if you take a multi-million dollar project as a CTO and plan in a way that benefits would be delivered after 2 years. With the changes in the eco-system that allows infrastructure and applications available as ready-to-use (IaaS/SaaS/PaaS), and the Agile delivery model, the results can be delivered in a much shorter time (read in months/weeks). In terms of cost, the biggest change has been the variable cost model (including pay-per-use options) for infrastructure, cloud applications (SaaS/BPaaS).  This, in turn, has enabled CTOs to drive a much higher level of business benefits at lower cost." 

Brahma also underlined that it’s not just that the business ecosystem has changed, the customers’ buying preferences have also seen a big shift. He pointed out, "The whole buying pattern has changed now. Traditionally, for instance, Insurance was primarily a B2B2C business where intermediaries existed, and now customers are probably buying insurance in a B2C format on a digital channel directly without any intermediary.”

"It is imperative for the CTOs to make sure you are helping the company evolve/adopt newer models. If we fail to do so, forget about saving costs or generating revenue, it would be very difficult to survive in the first place."

Vivek Ganesh mentioned that CEOs and CFOs need to identify key areas where they can work together using technology. He said, "The challenge is how to identify technology that can protect the bottom line, or make the bottom-line better by having better cost optimisation and implementation in projects across the organisation."

The digital core is of the utmost importance for revenue maximisation. Ganesh commented, "The CFOs try to chalk out what can be made better for our customers, whether a B2B or B2C applications are required, or e-commerce solutions are required. In SAP, we call it intelligent technology."

"Ultimately, the investment in intelligent technologies is going to help organisations in this journey. On one side of the coin focus will be on cost optimisation, and at the same time, the technology will grow further and help reach customers more actively, help a business expand more in multiple regions, cities, countries, and also acquire more customers," he added.

The panellists concluded the roundtable discussion by stating that the digitalization of financial functions is going to completely revolutionise how organisations of the future will operate.