20 January 2022

Understanding (and Embracing) Digital Change in Finance Departments

by Michael Zimmel

New technologies are coming out at such a rapid pace that only the most plugged-in professionals have the time to act as “early adopters.” Among those late to the digital party are countless accounting, auditing, and other finance-related leaders, many of whom report significant hesitation when it comes to embracing technological advancements.

Of course, finance departments have much to gain from new technological advancements as any other. Indeed, those accountants and auditors who have made the digital transformation have reported being able to speed up their processes, deliver more in-depth insights, and generally streamline their operations in ways that would have been impossible just several years ago.

Yet, these individuals represent a significant minority.

So, if the benefits are so clear, how can one account for this industry-wide reluctance? Moreover, how can we as finance leaders encourage one another to embrace what the digital revolution has to offer?

How Digitalization Affects Finance

In order to discuss why financial professionals might be reluctant to embrace digitalization, it’s important first to understand how this so-called “Fourth Industrial Revolution” is affecting the industry. The first and most obvious example is increased automation. From online bots to address customer questions to the automation of file transfer, expense management, and spreadsheet organization, digitalization means fewer hours spent on manual tasks.

Another great example can be found in the increased availability of machine learning. More than any other advancement, this ability to identify and predict patterns is changing how we produce models and predict behaviors as finance professionals. In fact, we might only be scratching the surface of this technology’s potential.

Another advancement of note is OCR, or Optical Character Recognition, which has the potential to almost completely automate the accounting process by eliminating the need for human eyes on receipts, forms, and contracts. Couple this with increased reliance on digital storage, massive changes in cybersecurity needs and regulations, and improved customer intelligence and autonomy, and it’s clear that this move into digitization is less “slight shift” and more “continental drift.”

The Roots of Resistance

If you look at all the factors listed above, you’ll see one trend present in all of them. This is a decreased reliance on humans and an increased reliance on digital apps, automated programs, and AI. This is important, as it’s likely that most of the finance professionals see the gleeful adoption of new technologies as akin to “turkeys voting for Christmas.” That is, it simply isn’t in their best interest to pave a path for their own potential replacement.

This employment-related anxiety is currently dominating multiple industries, but Finance might be where it is most unfounded. Sure, technology may reduce the need for some more menial tasks, but it is much more likely to “redirect” than outright “replace.” That is, professionals shouldn’t worry about losing their job to an AI. Instead, they should worry about failing to realize how that AI can help them focus their energy on more important matters.

In discussing this issue with other Financial professionals, five reasons for this industry-wide reluctance become clear. We’ll list each below before discussing them in more detail.

  1. Overall Reluctance to Face the Future
  2. Too “Set in Their Ways”
  3. Struggling to Justify the Investment
  4. Overwhelmed by Choice
  5. Fear a Reduced Ability to Influence Stakeholders

Overall Reluctance to Face the Future

There’s no denying that the letters “AI” are enough to send chills down the spines of many finance professionals. It seems like just a few years ago that the idea of bots with machine learning capabilities seemed a far-off dream. But now, we can see the whites of their pixelated eyes.

This rapid change is aptly illustrated in two World Economic Forum Future of Jobs reports. For instance, in the January 2016 report, roles in the assurance profession were rated as stable. However, a report published in October 2020 ranked accountancy and auditing #4 on the list of job roles experiencing the greatest decrease in demand due to the development of AI.

Despite this troubling information, many in the profession remain adamant that the changes AI is bringing won’t affect them. In most cases, their response to the looming threat has been to merely carry on with their work just like they did last year (and the year before that). It’s as if they’ve planted their flag and are determined to defend their position, too fearful to look ahead.

Of course, deep down, none of these men and women can deny that the change is coming. All they’re managing to do is put off the inevitable, like so many business-suit clad ostriches. To make matters worse, they’re missing out on an excellent opportunity to get to know these new technologies. Indeed, even if they aren’t yet ready to embrace digital transformation, they can at least put in the extra hours to familiarize themselves with the benefits it offers.

Too “Set in Their Ways”

By their very nature, accountants and auditors like to work within tightly governed, rules-based frameworks. Challenging the status quo isn’t exactly their strong suit. Of course, adopting new ways of working, such as those offered by digital tools and software, requires a great deal of effort and a change of approach that is unlikely to come easy to most.

Because they have such a strong tendency to be “set in their ways,” financial professionals will all-too-often develop reservations about the efficacy of new technology. Will it work for them and their clients? What could go wrong? Can AI and machine learning deliver quality as well as quantity?

Whether these reservations are founded or not matters less than the fact that these professionals simply feel better having them. Rather than having to face a long, hard leap into the unknown after years of doing things “the old-fashioned way,” they can espouse a general distrust of new technologies in an effort to keep things familiar for as long as possible. 

Struggling to Justify the Investment

Any digital transformation requires the investment of both time and money. Finance professionals deal with both of these resources every day, so it’s not surprising that many have used them as an excuse to resist unwanted change. Therefore, even when presented with the full range of benefits a technology can bring, they will all too often make excuses to prevent having to consider the investment.

They talk about AI as having limited benefits. At best, it might take some of the manual procedures they dislike off their plates, but that’s about it. They’ll talk about inefficiencies and the various reported shortcomings of each technology while ignoring the overarching benefits. All of these serves the purpose of letting them say that the cost-benefit simply “doesn’t add up.”

Overwhelmed by Choice

There’s a lot of technology that can help accountants and auditors. A huge range, in fact. And that’s part of the problem. How does one know which to choose, which will work best for their business, or which can be most cost-appropriate? Moreover, how do you separate the wheat from the chaff when deciding which technologies have the best overall potential?

It’s not hard to see how such a dizzying amount of options ultimately leads to inaction. With professionals who are spoiled for choice deciding, it simply takes too much time to study the options and make a decision. So, they opt to keep things as they are and keep right on doing things the way they’ve always been done.

Fear a Reduced Ability to Influence Stakeholders

Change is scary, even for those who accept it readily. One of the main factors at play in keeping Finance professionals from adopting new technology is generalized anxiety about their ongoing ability to influence those people and organizations that make their businesses work. These men and women have staked their careers on knowing all the ins and outs of an industry that most laypeople find incredibly intimidating.

By accepting digitalization, they may be putting themselves into a world where their expertise counts for less. Through lack of knowledge, confidence in knowledge, and limited skills in making a compelling case, they might lose their ability to influence stakeholders as they’ve done in the past – the ramifications of which are as terrifying as they are unpredictable.

Recommended reading: Finance Business Partnering: The Collaborative Frontier

Tips for Embracing Change

Each of the above sentiments represents a perfectly valid reason for finance professionals to resist the path of progression, hunker down, and do their best to keep things as they are. However, it’s important to realize that this approach will eventually catch up with those who remain blinded (purposely or not) to change. To succeed in the long-term, assurance professionals need to embrace the future, reimagine how they perform tasks, daily processes, and procedures, and remain open to letting digital innovations play their part in improving their businesses.

As a counterpoint to these complaints, we’ve constructed a list of tips that finance and assurance professionals can use when looking for ways to make embracing new technology more evolutionary than revolutionary.

  1. Understand Your Own Mindset to Change
  2. Prepare Everyone Ahead of Time
  3. You Have to Start Somewhere
  4. Take “Baby Steps”
  5. Stick to Standards and Regulations

Understand Your Own Mindset to Change

Work on yourself first. Put on your own oxygen mask to reflect on how you feel about change and the adoption of new technology and ways of working. Reflect, as a professional and manager of others, on what aspects cause you most concern and which excite you the most. Work on positioning yourself for digital change and how you need to behave to lead others through change.

Prepare Everyone Ahead of Time

New technology is likely to affect everyone, so stakeholders need to be told what’s happening before you start springing changes on them. You can get everyone comfortable with the new technology with proper preparation, resulting in a far less shocking transition. In a way, it’s about switching everyone’s mindset so that they can start thinking digitally. Eventually, they’ll be able to clearly see the benefits the new tech brings to the table.

You Have to Start Somewhere

Or, more accurately, you have the option to start with an end in mind. Not knowing what to change first or fastest is likely to lead to procrastination and inactivity. It’s much more productive to jumpstart your digitalization journey by envisioning what you want the final destination to be.

After that, it’s just a matter of finding the technology you’re most comfortable with introducing, even if its impact is minimal, and make that your statement of intent. This initial step will help you envision all the things you want to do that you can’t do today. In no time, you’ll be able to plan the rest of your adoption journey.

Take “Baby Steps”

It’s never a good idea to start a digital transformation with huge, complex changes that completely overhaul everyone’s way of working. In most cases, starting small reaps the biggest benefits. We suggest initiating the switch by automating one or two processes and procedures. Once your team sees the benefits these changes bring, they’ll be more receptive to any bigger changes you have planned.

Stick to Standards and Regulations

Digital tools can change a lot about your business, but they should never be used as an excuse for abandoning your principles. Indeed, you need to make sure you and your team are still adhering to the standards and regulations that govern the methodologies you use. Technology is there to help you do things better, not to replace years of carefully established protocols.

Recommended reading: The Changing Mandate of Finance

In Conclusion: You are Not Alone!

If you’re one of the aforementioned reluctant, the first thing you need to understand is that you’re not alone. The other thing you need to understand is that – at the end of the day – digital isn’t going anywhere. Even if the majority of finance professionals choose to keep their heads firmly planted in the sand, the industry will continue to evolve in new, exciting, and unpredictable ways.

The early adopters are already reaping the benefits, and many of them are eager to see their colleagues do the same. Fortunately, it’s not yet too late to get started and catch up. Just keep in mind that putting off your digital transformation for too long could have long-term implications for your business – implications that won’t necessarily be easy to overcome. 

In the interest of leaving the conversation on a positive note, here are a few more pieces of actionable advice. These are things you can put into motion today to prepare yourself, your team, and your company for the digital journey ahead. If you’re willing to take these steps, you might be surprised how easily you can walk the remaining path to a digital future.

  1. Enroll in at least one course that can help you become more tech-savvy.
  2. Do research on the technologies that are really making an impact in the industry. Try to “demystify” them so that you can approach them with confidence.
  3. Reach out to those colleagues who have already adopted these new technologies. Ask them questions – you’re likely to get a lot from the answers.

Time to Get Started

To get started with your business’ transformation journey, start small. But start with a pervasive task that is valuable to the whole organization.

For the finance department, this small area can be expense management and better handling of out-of-pocket expenses. Within this easy topic, we can quickly accomplish many benefits for a broad range of stakeholders.

Volve is built with igniting positive change in mind. Our corporate card comes with an automated expense management solution and reporting tool. This enables all functions of business to capture productivity growth potential from time-cost reductions, greater accuracy, increased visibility and control.

Start with a limited group of people. Try it on a small group of people who travel a lot, for instance. Get user feedback and use these insights to improve the formula before moving to a larger audience.

Michael Zimmel
Founder & CEO
My recent work centers on analyzing and communicating how financial leadership principles can be applied to create value. Building on two decades of financial management experience, I founded Volve to offer solutions for streamlining corporate spending and accounting workflows. This is my commitment to help improve the work and value-add of finance and accounting departments.

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