“Why do some digital transformation (DT) efforts succeed and others fail? Fundamentally, it’s because most digital technologies provide possibilities for efficiency gains and customer intimacy. But if people lack the right mindset to change and the current organizational practices are flawed, DT will simply magnify those flaws.” (Digital Transformation Is Not About Technology, by Behnam Tabrizi et al. Harvard Business Review, March 2019)
Digital technologies have transformed just about every aspect of running a small business, and accounting is no exception. The sudden shift to remote work at the beginning of the COVID-19 pandemic laid bare the limitations of on-premise accounting software and accelerated adoption of cloud-based accounting.
But digital transformation of accounting processes has been under way for years. As we have all become accustomed to instant access to everything from sports scores to stock prices to bank balances, leaders in many types of organizations have naturally come to expect the same accessibility so that they can make management decisions based on real-time information.
What Is Digital Transformation?
Digital transformation is one of those buzzwords that can mean a lot of different things, and one of the misconceptions is that it’s all about technology. The truth is, if you’re just making existing processes digital, you’re not transforming anything.
Accounting made the transition from paper ledgers to computerized accounting systems nearly 50 years ago, but the process of accounting for debits and credits remained essentially the same until the software-as-a-service model took hold and made cloud-based accounting software affordable to even the smallest organizations.
The truly transformative aspect of today’s cloud-based, AI-powered accounting software is that organizational leaders can see results as they happen — not two months after the fact — which can be a game-changer when it comes to making timely management decisions.
Realizing the Power of Digital Tools
These advanced technologies provide the potential for instant access to deep insights into a business’s financial operations and results. But without a redesign of accounting processes, this goal remains remote. So how do you realize the potential of digital technologies to illuminate real-time organizational results?
- Transformation doesn’t happen by simply thinking about your future state. It requires gaining an understanding of each part of the accounting process, and then reimagining that process (and the technologies that enable it) so you have the information you need, right when you need it. For example, when bank transactions and bill images flow into the general ledger automatically, time that used to be spent on bank reconciliations can instead be spent resolving unexpected and potentially erroneous transactions — or simply answering the question, “Are we spending money in the right places?”
- Once you know your organizational goals and how your processes must change to achieve them, you can begin assessing available technology. Your accounting provider can help you evaluate and select the right tools to provide real-time insights into your organization’s financial health. You will want to evaluate many types of financial applications (such as bill pay, payroll, and invoicing) that connect to your cloud-based general ledger to let you automatically collect and report on your organization’s critical performance stats.
- Transformation flows from the top down. But for the change to be sustainable, it must also bubble up from the bottom. Have a trusted advisor sit down and walk people through the changes. This hands-on approach is the only way to help those who run those processes see and feel how the changes will make their lives easier and the organization more successful.
Transform Processes for Real-Time Visibility
During COVID, organizations that were equipped with real-time, actionable information have been better positioned to succeed, while businesses with static, outdated processes have lost ground. Leveraging increasingly affordable and accessible technology can give you real-time visibility into organizational results you need to adapt to future market shifts — but only if your processes and people change, too.
Is your organization ready to unlock real-time, actionable management data? Contact your CRI accounting advisor to learn more about the process of transforming your accounting technology and processes.