Digital Transformation, Change & the ‘Fear factor’

This article aims at putting the spotlight on the all-important human aspect of Digital transformation, and help Finance leaders & teams on the ground navigate the depth of change impact involved & address the ‘Fear factor’.

by Evelyne Legaux on 14-07-2022

 

What does it Take for a Digital transformation project to Succeed?

Do you know that 70% of such projects fail? That’s a daunting figure… According to subject matter experts, companies must have 5 fundamental change blocks in place to succeed:

• Strategy & digital Mindset à clarity about business strategy & expected output value, or leadership
• People & Customer Engagement à adaptability & openness to change, or buy-in
• Culture of Innovation à cement of cohesion & sustainability
• Technology & Cybersecurity à transformation enablers
• Data Analytics à measurement of progress

So, let’s focus on change blocks 2 and 3.

What we are saying here is that people must be adaptable & willing to embrace change for any Digital transformation project to succeed because, at the end of the day, it all starts with the people & they drive the journey.

While people are a risk to any projects, they are also an amazing asset. They must therefore be brought onboard, be part of the decision-making process & own the to-be solution.

For this to happen, bi-directional communication, knowledge sharing & collaboration are essential!

So, what approach can organizations implement to get that People’s buy-in that will sustain the Digital transformation journey?

What can they do to develop a Culture of Innovation that will create the necessary cohesion between all functions involved?

 

Cash culture - End of the functional Silos era?

During the recent pandemic crisis, companies had no option but to make Cash (or liquidity) a Board-level priority to simply keep the business going & survive, or else become resilient.

Interestingly though, such a change prompted the need for better Cash visibility which in turn, triggered a number of valuable side-effects such as helping stakeholders better understand the business & become aware of the impact of their respective day-to-day job on the company’s Cash.

But two of those side-effects in particular deserve attention:

• The Cash optimization imperative brought to light the limiting role of traditional functional silos & fostered cross-teams collaboration towards a common goal, like never before, and
• It also elevated People’s acceptance of change across the entire business organization.

 

So, the question here is how strong & how sustainable such cross-functional rallying behind a shared priority really is for companies today?

And, how accepting of change people genuinely are?

The good news here is that digital technology does indeed help Order to Cash (O2C) teams  for instance, work collaboratively with Sales & Operations through shared visibility over data across the end-to-end process cycle.

This however is only the tip of the iceberg, so let’s dive into the serious stuff…

 

How Deeply does Digital technology adoption Transform work in O2C?

Over the past two years, O2C & Credit teams have been under huge scrutiny to protect Cash Flow generation & minimize bad debt, at a time when assessing 3^rd party Credit risk has never been so complex.

With the growing challenges & uncertainties of today’s world, the role of O2C has become more demanding & critical than ever. In actual facts, O2C & Credit teams now ought to be cash-efficient, cost-effective, help maximize revenue & boost customer satisfaction - all at the same time… Clearly, to deliver on what is expected from them, those professionals must now be supported by technological solutions that enable them to act efficiently, effectively & transparently.

Adopting Digital technology however doesn’t come without challenges… While Digital enables people to access data & virtually work from anywhere, it also drives profound changes in how people work. For instance:

. the respective roles that people & technology play with regards to a given business process, need to be re-imagined,

. a new skillset is required if people are to understand the technological capabilities of digital solutions & integrate same with their own expertise & judgment,

. new creative ways of thinking are needed to ensure that all opportunities to transform & optimize business processes are leveraged, prior to automation itself,

. similarly, functional responsibilities across the organization need to be re-invented, with a view to placing the customer at the centre of the end-to-end O2C process & ultimately augmenting value-creation for the business.

So, let’s be clear.

What is at stake here is not just upgrading an existing ERP system to its latest version to bring in new/improved functionalities. Instead, we are talking of a fundamentally different way of imagining the nature of work itself, along with the interactions framework that surrounds it.

The prospect of people having an opportunity to upskill technical talent while using their analytical & influencing skills a lot more, undoubtedly means a more interesting role, and exciting times ahead for the Finance function at large…

With such profound changes on the near-term horizon however, inevitably come anxiety, stress & fear for all people impacted, that may translate into feeling disconnected from the new direction being taken, feeling that a new solution they haven’t chosen is being imposed on them, feeling unable to cope with new learning requirements, having to move away from their comfort zone, and the list goes on…

Here comes into play the whole dimension of Change management that is so critical to the success of any transformation project, whether Digital or not...

So, what should companies DO / NOT DO to best navigate & overcome that anxiety & ‘Fear factor’ throughout their organization? Is recognizing the emotions triggered by Digital transformation & instilling trust the right answer?

 

Does Digital transformation mean team Downsizing to you?

Truth is the ‘Fear factor’ can cause much damage where Digital adoption is perceived as a means to reduce headcount. Such a negative & narrow way of thinking is similar to a missed opportunity, therefore is wrong!

Instead, embracing Digital should primarily be understood as a key enabler for business organizations to:

. free up people from mundane & repetitive tasks, thus allowing them to focus on business value-add activities such as getting to know strategic customers holistically or sitting down with Sales & Operations to help steer the business towards reliable, creditworthy & margin-generating customers,

. put people at the heart of enhanced operational efficiency, effectiveness, transparency & accuracy, with a view to delivering augmented business value creation & customer experience,

. unearth & leverage people’s likely under-utilized abilities & talents, thus giving them opportunities to shine their value-add, while improving employee retention/attraction as a result.

Digital adoption should therefore be first & foremost viewed as a potential value driver.

The challenge for companies here is to shift the leadership mindset so that Digital transformation success is measured as the ability for Finance to meet future business strategic needs & long-term value creation, as opposed to being solely measured in terms of costs.”

Could organizations fail their transformation due to a restrictive or narrow view of what Digital adoption can bring, across the many layers of leadership & management? How can they best operate that mindset shift successfully?

 

Or rather, does Digital mean potential to Reshape your organization’s Culture for the better?

When companies truly place Digital adoption at the heart of business strategy with cross-functional implementation, and look beyond the operational benefits & financial value expected from it, a new dimension starts opening up: they create collective opportunities for increased mutual learning between people & AI-based technology.

By recognizing the respective strengths & weaknesses of humans vs technology, and ensuring that each resource plays the role that it is best at, companies can significantly enhance process efficiency, transparency & accuracy, which leads to smarter business decision-making & happier customers.

In turn, such tangible business benefits drive clarity, augmented human collaboration & renewed trust throughout the entire business organization.

And that gives a major boost to the organization’s moral and its ability to retain/attract talent…

Would human organizations have ultimately reached an ideal level then or some sort of a Nirvana?... Or, should they do more? What about setting up programs to enhance employees personal development & mindfulness skills, and appointing a Chief Wellness Officer?

 

We would love to hear about your human experience & challenges through the Digital transformation journey on info@financeotcconsulting.com or indeed through our Contact page.

Happy Bastille Day to you all!