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The pros and cons of digital transformation for finance departments

over 3 years ago by Tomi Lola Awosika
Digi1

Relatively new technology has very quickly become an integral part of many organisations’ digital transformation plans. But do the likes of artificial intelligence (AI) and robotic process information (RPA) already deserve their place in finance teams or could an overnight dependence on automated technology actually do more harm than good? 

The case for embracing digital transformation 

It goes without saying that technology has transformed the way that businesses operate and many of those changes have proved to be hugely beneficial. Remote access to software, emails and other systems has for example allowed employees to work from home or abroad and enabled organisations to operate 24/7. Even the simple move from manual, paper processes to digital was unthinkable before the advent of certain tech. More specifically for finance teams, sophisticated technologies such as RPA have improved efficiency, allowing individuals to focus on higher value activities. 

With so many benefits to be enjoyed from embracing digital, it’s hard to believe that there could be any drawbacks. We tend to assume that ‘new’ equals ‘better’, but sometimes, the opposite can be true. 

The downsides of updating internal accounting systems

While digital transformation is clearly the future and probably inevitable, too much too soon can sometimes have a negative impact in the short to mid term.

  • Productivity: company-wide adoption of new software or even an upgrade to existing systems is unlikely to increase productivity, while users get to grips with new processes.
  • Compliance: when upgrading technology, finance teams need to consider the requirement of multiple legislations such as SOX, GDPR and HMRC. This can be a time-consuming process that can detract from the everyday work that needs to be done. 
  • Cost: software licences and training your team to use it can be costly – something that is likely to hit small companies particularly hard. 
  • Integration: moving archived or work in progress, as well as data from your old system to your new one can be disruptive. It will require additional resources from your IT team while they complete the process.

Organisations should be aware of all of the above and carefully plan any transformation projects. Technology should never be adopted for the sake of it, and one size often doesn’t fit all – it’s more than likely that a bespoke product will be needed, if at all. In many cases, existing systems can also be adapted without fully moving over to the new, mitigating any slowdown in productivity, for example. Before making a decision, carefully assess what your greatest process challenges are across your finance team. Once you know this, you can establish whether or not technology will take that pain away and if it will deliver payback on the investment in a sensible time period.