Digital used to be a way of life, now? It is a fact of living. Nearly everything, if not all we do, involves technology. And with the use of technology comes the digital footprint, the speck of fairy dust we leave behind every time we interact with technology. Although this technology isn't new, the speed of change we're experiencing is unimaginable.
The human race has always been afraid of the effects of machinery on our work lives. It is believed that the Luddites of the 18th century were worried about the use of machinery within textiles. The Luddites have lent their name to the 'Luddite fallacy' that technological advancement could lead to lower employment levels. According to Alex Tabarrok's comments, 'If the Luddite fallacy were true, we'd all be unemployed because productivity has increased for the last two decades' (Tabarrok 2003). In their publication Race against the Machine, McAffee and Brynjolfsson (2011) said that the key to winning the race isn't to compete with machines but to compete with machines. In this regard, we must embrace digitalization and technology and recognize the opportunities it offers.
The term "transformation" has been used in high-level management meetings to the point that it has become a cliche. But add digital to the word, and it could mean almost everything! Enterprise CXOs require actionable and tested initiatives that provide significant value to their business, not merely presenting concepts on PowerPoint decks. However, digital transformation initiatives are extremely effective and can transform businesses to create huge gains for all stakeholders.
Each transformation scenario demands carefully planned strategies, tools and solutions. So, what exactly is the impact of digital transformation on businesses?
Impact of Digital on the Workplace for the Finance Profession
For the profession of finance, the impact of this can be defined due to five factors: the five Vs. of change
- Velocity is the rate at which business is changing, and organizations must alter their strategies drastically.
- Volume - The growing amount of transactions and the resultant impact on data flows from the connected devices that we currently utilize to conduct business is growing more important.
- "Value" is the need to get insight, analysis, and forecast from data flows to comprehend and better model the business and to make use of data to provide more information, quicker and more accurate aid to decision making.
- Variety - Technology is causing us to employ different methods, systems, sources of data, and a range of models for managing projects (e.g., Agile, Kanban). We're being asked to adapt to various processes and systems and figure out ways to improve these processes in our workplaces.
- Veracity is the credibility in the quality, authenticity, truth, and accuracy of the information that we use to make various business decisions, applying our ethics lens.
Combining these five forces indicates that the work environment is changing, and the role of accounting and finance professionals in organizations is evolving. This raises the expectations that professionals employed in business or practice can provide an opinion that shows an understanding of the business with the help of data and tools that make greater insights more accessible.
Effective digital transformation in finance
Effective digital transformation is a result of three distinct areas. While technology is an integral part of it, it will only be an enabler. It should be built on a reliable data model for the organization, and it allows for easier accessibility to the products and services that consumers would like to have. What we choose to consume or use is a determinant of the demographic segment that the organization is aiming at the most: how technologically competent it is and how changes in birth rates and age-related profiles within it increase or decrease the degree of acceptance. The third aspect is the companies' growing focus on their goals and their value to society. We, as consumers, evaluate organizations more and more from this perspective. Finance and accounting professionals have to understand the effects of these three aspects of digital change on their work and the way they evaluate their organization's effectiveness and performance.
Developing Your Digital Quotient
As professionals in finance and accounting, it is essential to invest constantly in our digital capabilities to take advantage of the available opportunities. As the digital revolution continues to accelerate - we can't afford to fall behind. However, the growth of digital skills has to be seen in the framework of the other factors. Accounting professionals have strong technical backgrounds through certifications. Their skills in business and technology are a compliment, but the combination of these three skills makes us the best choice that adds value to businesses and their clients. Those who want to build solid careers must be in the optimal position. Your business-related skills are refined typically through the experiences you have in the workplace as you advance in your careers and your understanding of organizations' business models. While education provides an understanding of the context, it's the application of data and analytics that aids in the development of business competencies.
Therefore, equating digital skills to pure mastery of applications would limit our ability to embrace the transformation of the business model and the evolution of data models and 'customer-centricity. Mastering our digital skills in a changing world is a continuous process. However, we must be aware of the potential of technology. To this day, the number of public blockchains is small; however, there are a few instances of private blockchains forming in fields where the guarantee of the authenticity of trustworthy parties is a concern. There is a general lack of interest in the topic. With the introduction of any technology, its importance can be exaggerated. This can be followed by an understanding of its limitations as well as the consolidation of practices. This can be described as the change from excitement to reality.
Suppose we are developing the digital abilities that we believe are as important as new technologies. In that case, it is possible to develop an initial awareness in the initial phase of enthusiasm and be mindful of the need to delay investing in the realization phase. Failure to recognize this exposes the accountant and finance professional to the danger of becoming too invested in new technologies that could turn into a less effective tool than anticipated.
Professionally, the highly successful accountant and financial professional are constantly developing their digital quotient through two areas distinct from each other:
- Assessing the importance of the digital environment to their work environment.
- Understanding how the business strategies are implemented through technology - the digital context using specific expertise related to the technology that your company uses - digital applications.
The emergence of new technologies is thought of as a third type. These areas represent the combination of skills and knowledge. However, each one requires distinct personal growth strategies. The first is about developing a comprehension of the company's model and how technology can be utilized. Business models are things we acquire through our experiences and the information provided by others. Every business's business model is distinctive. The mechanisms that drive value are deeply embedded into the service or product that is offered. The other is to use the technology in your day-to-day activities. It could be done in an active manner, such as an active user, or inference by using the outputs of the software.
If the accounting profession grows to be highly technologically proficient and proficient, the accountant will drive the technology-enabled business agenda forwards. Digital impacts all aspects of a company in various ways, such as processes efficiency, analytics, and customer interaction. The CFO, who plays a major role in the strategic planning process, should not be left out of this process. It is essential to concentrate on the level of digital literacy among those working in the field.