The Non-Digital Side of Digital Transformations

Around the senior leadership circles of ambitious businesses, the term “digital transformation” often becomes the calling card for efficiency, scalability, and control. As a CFO or finance leader, the need to bring technology into the operational processes of the finance and accounting department is becoming inevitable. The truth is: the workforce is changing. The desire to build a career on menial accounting steps is not one that motivates your team. Also, hiring manual labor to do that function is now a negative abyss that technology capability solves. Buying technology is easy, in any case. It’s the change management “non-digital side,” that growing companies need to address.

Buy-In Is Everything

According to Professor Behnam Tabrizi at Stanford University and his book Rapid Transformation, “buy-in from thought leaders and other key enthusiastic employees of the company” is the heart of the transformation process. Because we live in a cross-functional world, transformation can happen sooner and is more likely to succeed when everyone engages in parallel rather than serially. It allows for a shorter cycle of innovation.

In accounts payable, for example, the buy-in is required from the entire operations chain:

  • The CFO and controller
  • Those who currently perform AP tasks
  • The internal payables approvers that need to learn a new process
  • The suppliers or supply chain that may be affected

CFO and Controller Buy-In

If you’re the CFO or controller, and you’re leading the charge, your buy-in should be apparent. If not, convincing the CFO or controller requires a different appeal. The most basic is to address the benefits and value transformation that are inherent in all digital transformation projects:

  • The ability to scale the operational side without adding headcount
  • Greater reporting and data capture
  • Employing best practices for compliance and financial controls

The members of the senior finance team are the stakeholders in digital transformation projects. They’re the ones that need to set the chessboard up for the moves they want to make now and over the next 24 months. If they do not activate, no one else in the process cares.

The Effect of Transformation on Finance Staff

In an article in the Harvard Business Review, Dr. Behnam remarks that transformation for the team members affected by the process change goes over better if they have some say in implementation. The key here is to frame new technologies as “a means for employees to become even better at what they were already great at doing.”

For the accounts payable function, this could include enticing staff to embrace:

  • Improved governance and visibility over supplier payments
  • Reducing their need to service and communicate with suppliers about payment issues
  • Eliminating duplicate payments or bounced payments
  • Adding a higher level of service and capabilities with less work

Delighting Internal Customers

Finance is a service within a company—so much of its daily function is transactional. In the case of accounts payable, buyers and approvers of purchases act like customers. They’re on the front lines to engage with vendors and suppliers for goods and services that enable them to conduct business. That experience needs to take little out of their busy day. Transforming how they do that by applying more technology needs to be easy to digest.

Some critical factors that ensure the buy-in of busy professionals include:

  • Eliminating the friction around approvals
  • Centralizing and clarifying processes for all vendors
  • Avoiding complex user interfaces or systems
  • Make it easy to engage remotely

Ensuring External Participation

While you can force a change from internal folks, it’s an entirely different matter when asking people outside your organization to adopt a change. The good news is that with accounts payable, there is an essentiality for the supplier. They need their payments, and they generally want to make sure their customer is happy. That increases the chance that they’ll follow any process that’s required, but you can also sweeten the message to make it worthwhile. 

Here are some ways to entice suppliers to engage in a new payables paradigm:

  • Create a 24×7 portal that streamlines onboarding (e.g., bank accounts, tax forms)
  • Automate notifications of payment status, including payment issues
  • Make it easier to send or upload invoices
  • Provide multiple payment methods beyond check (e.g., wire transfer, US ACH, global ACH)
  • Offer accelerated payments to improve working capital

Digital transformation for payables is just as much cultural as it is technical. In the effort to scale that operation, it’s crucial to consider both.