Welcoming digital transformation with open arms

Author: Somkrit Krishnamra
Partner | Risk Advisory
Deloitte Thailand

The third annual Deloitte Thailand Digital Transformation Survey 2022 revealed that many organisations rapidly adopted digital technologies during the height of the pandemic as a survival mechanism. As the country moves towards recovery, many organisations are realizing that not all technologies adopted are useful for them, and have since become more selective in their implementation processes. However, the evolving roles of the finance functions have intensified the CFO’s focus on digital transformation.

Digital transformation impact

Technology is creating new capabilities and demanding new ways of working. The survey results revealed that 35% of CFO respondents experienced major impact on their businesses due to digital disruption, whereas the majority of the remaining respondents experienced minor to moderate impacts. For some organisations, their digital transformation efforts represent a continuation of a digital journey they had already embarked on before COVID-19, which is now accelerated due to the pandemic. Finance functions are now pivoting away from an operational focus and towards the delivery of financial insights – incorporating data, analytics, and modeling to add more value to strategic decisions for businesses. They are increasingly expected to take on more frontline roles on pressing issues such as data analytics and sustainability, which digital transformation can support. Digital disruption in finance represents opportunities to tap on the wealth of massive amounts of information, to do it quickly, and to distribute knowledge wherever it needs to go.

Digital transformation and organizational competitiveness

More than half (62%) of CFO respondents strongly agreed that digital transformation has been essential for their companies to remain competitive. CFOs are welcoming the accelerated shift towards automation of repetitive and mundane tasks, allowing finance teams to free up resources and focus on stronger value-adding activities. With new digital tools, finance functions can update existing core systems while delivering entirely new capabilities, improving finance performance and serving the business more effectively.

Implementation challenges

The top three challenges for digital transformation implementation amongst CFO respondents were organizational silos (57%), lack of internal and external expertise (50%), and lack of a coherent digital strategy & vision (43%). A large hurdle that finance leaders are currently facing is aligning today’s talent to tomorrow’s technology. They must strike a balance between maintaining a workforce that can fulfill all the company’s basic financial and regulatory requirements, and implementing new technology to support their responsibilities. Talent models for digital finance tilt towards data science and business partnering, but finance organisations may not have the right professionals in place yet. The need to recruit for new skills is no doubt taking on a new urgency.

Technology investments

The top three areas of digital technology that CFO respondents have either planned to or already invested in are cloud (71%), traditional web technology (57%) and data analytics (50%). However, adoption of more advanced technology such as AI, RPA and blockchain was much lower - at 29%, 14% and 14% respectively. Obtaining buy-in for larger scale and more advanced digital transformation projects, as well as the right talent to support, is not easy, as companies need to justify the return on investments for such projects. Many functions are still focusing on the shorter term and more tangible business objectives which produce faster results. Although many CFO’s have acknowledged the theoretical value of advanced technologies such as blockchain and other digital ledger technologies, the hesitation on a full-scale adoption is evident, likely due to high costs and a lack of relevancy.

Today’s finance functions are rapidly adopting new roles and capabilities. The push from new technologies will support a shift from controlling, repetitive work to business partnering, analytics and decision-making. Finance leaders must strike the right balance between reaping the benefits, mitigating risks and maintaining a competitive edge. It is imperative that CFOs and their finance functions acknowledge and embrace their role during this time of transformation and play a proactive part in reshaping the future of their organisations.