“Digital Transformation” is one of those buzzy phrases that’s been tossed around for the past two decades. Everyone from Fortune 100 CEOs to the local food truck guy likes to talk about how they’ve digitally transformed their organizations. The problem is the phrase means different things to different people.
If the local food truck guy accepts electronic payments and swipes credit cards via a mobile payment app, that is certainly a huge move in the right direction from the days when any transaction happening out of a truck was likely to be limited to handing over fistfuls of sweaty cash in exchange for a Nestle Drumstick or a Klondike Choco-Taco. But payments are only one step in the business process. What about the other 90% of the activities?
From inventory management to payroll and expense tracking, there are myriad other processes in any business that should be evaluated. The goal in the evaluation is to look for inefficient or cumbersome processes and find ways to improve or replace them. This goes from customer-facing activities all the way to back-office operations.
And if the global pandemic has taught us anything it’s that in order to survive this tumultuous economic landscape, we have to be more flexible, efficient, and customer-focused than ever. Whether your finance department is physically back in the office or distributed across the country, it is beyond time to streamline your back-office operations. Manual processes are slow, inefficient, and are rife with errors. They are not scalable or crisis resistant.
There is good news on the transformation front; however, as the need for automation (exacerbated by the chaos of the Covid disruption) is met by myriad available automation solutions. Off-the-shelf software solutions for everything from expense tracking to bill payment and collections are affordable from a variety of sources and at reasonable price points.
Whether your business is focused on providing service to other businesses and direct to consumers, there is an ongoing theme in the workforce where companies across the spectrum are being asked to do more with less: efficiency, proficiency, and resiliency are the key ingredients to success.
Success in each of these three areas means not only reducing the burdens on your own workforce, but also results in higher customer satisfaction. Efficiency means better, faster customer service at a lower cost. Proficiency means you are highly skilled and competent at what you do, and resiliency means your business can survive and strive no matter what happens in the outside world.
A full digital transformation is a huge project, and one that should be broken into component steps before a transformation plan can be implemented. Regardless of what type of business you’re in, however, the three big steps required to begin the transformation process are:
Identify and Document Internal Processes
In our food truck example above, the business owner only considered payment processing in his digital transformation. But there are so many other parts of his business. How does he track his inventory? He deals with perishable goods and fluctuating demand. How does he know how much lettuce or chicken to buy in any given week? How is he tracking food waste or ensuring he doesn’t run out of any items?
Chances are, in a non-digitally transformed business, he’s going on instinct and a hunch. But if he stepped back and chronicled his ordering and storage process it might lead to better solutions. For example, by tracking his inventory over time he could determine lettuce consumption over a week or month and begin to come up with a default ordering schedule.
Payments and inventory are still just a small piece of the pie. Processes will obviously differ across different types of businesses, but this step is the same no matter a company’s industry, size or geography.
Digital transformations only make sense when they are purpose driven.
Prioritization becomes clear once you’ve documented your processes and identified pain points or areas in need of improvement. Maybe payment processing is going smoothly with an off-the-shelf payment service. That means there is no clear or pressing need to make changes there. But what if it’s difficult to track those payments back to individual products or services? How are sales currently being tracked? Is that tracking happening in a standalone piece of software? How is that information integrated into the accounting system? If there are multiple steps that rely on manual data entry and have plenty of room for error, that is an inefficiency – and something to consider automating with a technology solution.
The first two steps, you may notice, are not very digital or exciting. But they are crucial to a successful business transformation. Throwing digital solutions (software) at a business without previously evaluating business operations and requirements is inefficient at best.
Automate Where You Can
Once you’ve identified internal processes and flagged specific points for improvement it is time to start looking for digital solutions. The search for a solution becomes much easier when you know what you’re looking for. There may already be off-the-shelf software solutions for your problem. There are dozens of software applications out there to help track and manage company credit card expenses; many others that help with AP and AR, invoice creation, tracking employee time, mileage, and even tools that help make budget forecasts.
Perhaps there will not (yet) be an off-the-shelf solution to all your business problems, but there may be other solutions. Most accounting software, for example, can now link to other applications via application programming interfaces (APIs), which allow systems to share information without requiring manual intervention.
By automating existing tasks, businesses can carve out time to focus on higher level priorities and strategies. Further, the more digital a company’s processes, the more flexible the company will be in the event of future disruptions.
To read more on finance automation, check out Deep Finance: Corporate Finance in the Information Age.
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Coming to paperback November 16, 2021 from Simon & Schuster.