You know where you want to grow and how technology can get you there. But technology is only one part of a successful digital transformation strategy. In addition to the platforms you choose, the success of your transformation also relies on a culture that’s ready to implement, test, adapt and champion your strategy. That culture, ultimately, is dictated by people and process.
Today’s finance executives grapple with transformation
Mastering digital strategy is a core challenge for finance executives. Based on a 2022 study of 500 senior executives, 43% of businesses with $11M-$25M annual revenue cite digital transformation as a top-three obstacle to growth. This challenge only becomes more common for businesses scaling and expanding, with 47% of businesses with $51M-$100M annual revenue reporting this as a top-three obstacle to growth.
By undertaking the unsung elements of transformation, businesses struggling to adapt can successfully scale. These elements form the major pillars for a digital transformation strategy:
The 3 Ps of digital transformation
Even the most sophisticated tech solutions require expertise, collaboration and continuity to get off the ground. Every digital transformation framework starts with the three Ps: people, platform and process.
Transformation doesn’t mean opting for shiny new tech. Dream first, then apply discipline: define your future state, then take the time to perform a proper current-state assessment to see how your tech stack measures up.
“If you put in the effort upfront to understand where you’re going, you can work backward to capabilities and run a proper RFP, so you get the tech stack you actually need,” says Paro VP of Growth, Jon Repka.
While employees are seldom the focus, they’re often the lynchpin to success.
“People commonly misconstrue digital transformation to be about automation or technology,” says Repka. “It’s driven by people. That is, without question, the most important thing.”
A holistic people strategy underpins a successful digital transformation in finance and elsewhere. Lean on your core team, but make liberal use of a flexible talent model to fill the gaps.
“If you don’t look at your external network of advisors, consultants and vendors, you’re missing half the battle,” says Repka. “Think cloud-based teams. Think remote work. Think meeting the talent where it is today.”
Paro Chief Product and Technology Officer, Saum Mathur, also recommends adding external, flexible talent into the mix.
“Outside expertise becomes more important, because you won’t have expertise in every domain in-house,” he says. “It’s cost prohibitive. Instead, hire temporary talent for the skills and experience you need, and let them go.”
Your process connects the dots between your people and platforms.
“Process is the oil between the gears of people and platform,” Repka states. “If you run out of that oil, the whole machine grinds to a halt.”
Processes should be designed to provide controls, automation and efficiency—be sure to document everything. Your standard operating procedures (SOPs) will be your biggest insurance against turnover, so the wheels don’t fall off the truck when you lose a key stakeholder. Solid processes also enable you to easily update and answer to board members when they have questions throughout the transformation.
“You can’t scale scrappiness,” adds Mathur. “You have to recognize when you need to do things more systemically and systematically. Every startup reaches an inflection point where you have to invest in best-in-class processes in order to scale.”
The process design cycle
Prioritize core revenue generation
Start by thinking about how to improve your core processes quickly. There are plenty of off-the-shelf solutions with standard processes built in to help you hit the ground running in finance digitalization.
Build in measurement
“Many companies know why they’re transforming but have no way to collect data and measure success,” says Mathur. “I’ve seen numerous companies reach the end and say, ‘This didn’t deliver value—I just have a feeling,’ and that’s no way to make decisions.”
Optimize for efficiency and growth
Aim for nonlinear growth—i.e., increasing revenue without increasing headcount. Continuously evaluate your processes to be more efficient through technology, so that you can scale without the need to grow your full-time headcount. Think about how you can use technology to reduce friction in areas like customer experience to free up employees for more complex, value-adding activities.
“Every company should have blackbelt process engineers,” says Mathur. “Implementing new tech is not a constant, but process engineering is. Always be optimizing.”
Change management is critical to your digital transformation strategy
Success often boils down to strong change management:
“Most transformations succeed or fail based on how change management is handled. That’s why larger companies have a tough time with transformation. Smaller companies are ripe for it as long as they’re thoughtful upfront,” states Mathur.
Success starts at the top
Leading from the middle is a big risk factor. ROI requires not only buy-in but also passion across the C-suite. Most importantly, the CEO should understand what the transformation entails—from risks to rewards—and become a champion to the company and stakeholders. Make the effort to align management on the “what,” the “when” and the “why” of finance digitalization.
Embrace the right voices
People often see technology as a threat, but your employees might just be your greatest transformation asset. In fact, automation and technology can improve employee engagement.
“You can’t improve or reinvent processes in a vacuum,” says Mathur. “If you’re automating processes, or if you’re inventing new processes, there’s nobody better to give you input into what that should be—what works, what doesn’t work and what pain points they have—than the current employees.”
Find your best talent—the ones with a willingness to change—and assure them that they’re part of your future. Mathur continues, “Willingness to change is key to look for in an employee before engaging them in a transformation effort. Can they change themselves? Can they change others? Change is personal. If you can’t change yourself, you can’t change the company.”
Optimize your strategy with flexible talent
When transitioning business systems or adapting to finance digitalization, having an expert who has executed similar transformations within your industry can bring greater efficiency to your plan. Freelance or remote talent can offer advisory and added bandwidth without long-term costs and extensive training or onboarding needs.
Define your digital transformation strategy and master the three Ps of a successful digital framework. Paro offers strategic advisory solutions, guided by remote finance experts with the industry and technical experience your business needs to optimize the processes and systems that drive your growth. Find cost-effective, flexible support to bring your in-house team up to speed.