Digital transformation is a “must” not a “maybe.”
Companies large and small, B2C and B2B, understand that in order to succeed in today’s global and highly competitive market, it is essential to utilize technology, especially digital technology. By implementing innovative technology, companies can more efficiently manufacture and develop product; more effectively market to and engage with customers; and more successfully gather, optimize, and analyze data. In addition, internal processes become more cost-efficient through the digitization of manual and paper-based processes that have been and continue to be time-consuming and error-prone.True digital transformation means that companies must integrate digital technology into all aspects of a business, essentially changing how they do business and how they communicate with their customers and suppliers. This can seem daunting … but it doesn’t have to be.
Why does digital transformation cause such trepidation in the C-suite?
A 2018 McKinsey study found that the failure rate for digital transformation was an unacceptable 86 percent. Even industries like high-tech and telecom, industries with extensive experience in digital technology, have a success rate of only 26 percent.
That is a frightening statistic for any CFO or executive to consider and questions persist:
- Do we have the right talent in-house?
- Do we have the necessary technology?
- How long and how much do we need to invest before we see an acceptable ROI?
And, of course, the inevitable fear of change itself.
But the move towards digital transformation is unstoppable. According to IDC, by the end of this year, businesses globally are expected to spend nearly $2 trillion on digital transformation projects.
So how do you manage the transformation project to ensure success?
Don’t try to do everything at once
An October CFO article related the incident of a major international utility company, based in North America, which decided to go digital to better serve its millions of customers. It was a full leap into digitizing every customer touch point instead of first focusing on simpler, more repetitive tasks to make sure that the first steps are completed before future steps are taken.
The result for the utility was almost pre-ordained, according to the article. The “moon-shot approach” burned through the budget ($250 million) and a couple of years later, the utility had to stop and start all over again. The “all-or-nothing” approach was replaced with a “continuing series of smaller bite-size projects.”
Take the step-by-step approach
There are specific areas within an organization that are natural collaborators when it comes to their specific functions and may be where to focus logical first steps. This is especially true of Procurement and Finance (both accounts receivable and accounts payable). These two functional departments have historically remained in their own silos, with little to no visibility into the overall transaction from purchase to payment. Digital transformation changes not only how these processes are handled, it also changes the relationship of the two departments, creating a “holistic partnership” that ultimately strengthens the company.
At Corcentric, we see very clearly that the convergence of Procurement and Finance is the real driver for technology solutions that will address the entire Source-to-Pay continuum, especially configurable solutions that can answer the needs of each department. This is about more than just eliminating paper invoices and manual handling. A holistic approach connects every step in the transaction process, from the point of sourcing product to the final step of paying suppliers. In addition, the ability to capture and analyze the data produced in the continuum as well as historical data enables CFOs and CPOs to better manage their working capital and grow their business.
Implementing digital transformation projects in this more incremental fashion also limits the amount of disruption your organization will experience. In addition, the teams working on these transformation projects (and it will take a team) will be able to identify which steps contribute to the success of each project and which caused slowdowns.
Download our webinar, Procure-to-Pay in 2020 to see how to plan for transformation.