“You see more of the transactional aspects of what treasury does being digitized, moving into this new era where transactions are being processed and even more complex transactions are moving into digital solutions, sometimes enabled by robotics,” she said. “It will solve a lot of problems that workstations have not been able to solve and free up the time of treasury professionals to do strategic work.”

When asked which major changes in technology they are undertaking this year, 64% of the executives Hackett surveyed cited plans for business intelligence and analytics applications. Hackett linked those plans to the 94% of executives who cited helping the company execute strategy as one of their top business goals for the year.

Cleaning up the Data

As finance teams contemplate digital transformation, 75% are preparing for changes by improving their data governance and master data management, according to the Hackett survey.

“If you don't store and organize your data right to begin with, you can't do much with it later,” said Essaides, pictured at left. “It's not reliable; it's not consistent.” She cited such problems as different parts of a company using different names for the same product or employing different definitions of depreciation.

“The first thing to do is define the data in a consistent manner and save it consistently across the organization,” she said. “We found that companies that do this right actually get a return on it.”

The best approach to a master data management (MDM) project involves collaboration between IT and the business, working “in a way that is spread across the enterprise,” Essaides said.

A Hackett study last year of master data management “shows companies are no longer looking at MDM as a tech, backroom thing,” she added. “It's looked at as a strategic initiative that needs to happen just because of the amount of data companies are accumulating. As they bring in more data, it needs to be saved in a way that can be retrieved consistently.”

Make a Map

According to the Hackett survey, 44% of companies have developed a strategy for their digital transformation.

Jim O'Connor, Hackett's practice leader for global business services and finance advisory programs, said such a road map isn't “an either-or proposition.

“It doesn't mean the treasury workstation goes away; it doesn't mean the bank technology and how they're automating now goes away,” O'Connor said. “It's more, lay out your five-year plan with other constituents and IT, and think about where some of those digital technologies will drive rapid improvement.”

The digital transformation plan should be put together in collaboration with IT, and it has to be tailored to the needs of the different parts of the organization.

“The plan for digitization around A/P or treasury may be different than the plan for planning, budgeting, and forecasting,” said Richard Cardillo, a principal in the group finance transformation practice at the Hackett Group. “The tools you leverage might be different as well.”

For example, Cardillo said, treasuries perform two different types of work. Areas like cash disbursement and cash application that are handled manually today “could be addressed by things like robotic process automation,” he said. “The other part of treasury, around hedging and interest rate projections, might lend itself better to things like predictive analytics or big data analytics.”

Of course, one question leads to another. Thinking about which tools to use for which jobs raises the issue of how those jobs are performed. “Rather than automating what I have in place today, do I start thinking about a more effective process?” Cardillo said. “If I'm going to change process and tool set, do I need to think about the skill sets of people? If I'm going to change tech and process and people, do I start to think about organizational roles and responsibilities and structures?”

While people contemplating digital transformation tend to focus on technology, “you need to think about the implications of that around people, processes, and governance,” he added. “It's not just the application of technology, it's all of those dimensions.”

Cost Considerations

The push to improve finance technology seems to run counter to another big finance goal: containing costs. In the Hackett survey, reducing the finance function's cost and headcount was cited as a top finance initiative for 2017 by 71% of those surveyed.

But Essaides said automation and digital technology can cut finance costs over time.

“If you look at our world-class companies versus their peers, automation helps world-class companies become world-class in terms of the cost of finance,” she said. “When you look at digital technology, we expect that cost to come down further.”

A survey of more than 400 CFOs and senior finance executives at U.S. companies conducted by audit, tax, and advisory firm Grant Thornton shows that cost considerations rank high among their concerns about digital transformation.

In fact, managing costs was the biggest barrier the executives saw to future technology growth, cited by 51% of those in the Grant Thornton survey, followed by the maintenance of legacy systems, which was cited by 41%.

“It's an uphill battle when it comes to adopting new technology because they do have existing platforms that need to be managed,” said Chris Stephenson, a principal at Grant Thornton.

Finance executives need to strike a balance “between adopting new technology, such as cloud computing and advanced analytics, versus maintaining existing platforms that might be a couple of steps behind where innovation is happening,” Stephenson said.

“Companies I've seen successfully make that shift are pushing the balance a little bit more toward the new systems, new innovations, new ideas, and not completely ignoring legacy systems but keeping them in operating mode and having a plan to transition to the new system,” he said.

Stephenson also cited the efficiencies that companies can achieve as they adopt more advanced technologies. For example, “the digital transformation is allowing companies to take some of their historic back-office operations—things as simple as updating customer information—and push that burden to customers and suppliers to keep updated,” he said.

What About Talent?

The intricacies of digital solutions seem to be a far cry from the training that finance executives get in business school. And in fact, the Hackett survey shows that just 35% of executives feel their finance team has the abilities required to execute a digital transformation.

One solution to any knowledge gap is for finance departments to work closely with their colleagues in IT.

“Right now what I've seen in some of the best operating projects is a very strongly linked CIO and CFO, or at least the groups under them, with either a translator or an ability to talk about the business side of the project and its capabilities,” Stephenson said. “Those [finance and IT groups] that are intertwined from the start of these programs have had a lot more success in understanding what was needed, delivering what was needed, and avoiding end-of-project surprises.”

He added that business education is evolving, with more information systems training provided at both the undergraduate and graduate school level. “I think we're going to see a maturity of the CFO as having IT systems as a second language,” Stephenson said.

But Hackett's O'Connor questioned whether universities are much ahead of corporates at this point in terms of their preparedness for the technological advances, and suggested the work of getting employees up to speed was up to the corporates.

“I think this is something most companies need to take on in terms of development of their talent,” he said. “If you think about the maturity lifecycle of digital adoption and how that's going to impact it, we're still in the learning mode. So how different companies are learning it is still slightly different.”