Analysis

How digital trends are reshaping government financial management

Deloitte-NASACT 2015 Digital Transformation Survey

​The emergence of digital technologies is fundamentally transforming the way organizations, both public and private sector, operate. Financial management, including auditing and accounting, cash management, treasury, and banking, is in the middle of a digital transformation.

​About the survey

Findings from the Deloitte NASACT 2015 digital government transformation survey of US state and local financial government executives help shed light on the state of digital transformation in government. A total of 33 NASACT members, with diverse functional and organizational backgrounds, participated in the survey. This is a subset of Deloitte’s global digital government transformation survey that covered 1,205 public sector executives across 70+ countries during January and February 2015.

The survey explores how digital transformation is reshaping state and local governments. It seeks to understand what strategies government organizations are using to navigate the digital roadmap and to identify the areas of greatest opportunity in adapting a digital-first strategy. The organizations have to recognize that digital transformation is not just about implementing digital technologies. They have to create a strategic plan to best implement a digital transformation by taking into consideration a number of issues, such as:

  • How does the culture of an organization impact digital transformation?
  • Do leaders and workforces have sufficient skills and resources to successfully achieve digital transformation?
  • What procurement processes are in place to provide much-needed flexibility to design and develop digital services?

Not surprisingly, many organizations recognize hurdles to manage the digital transition in all of these areas. At least two-thirds of the organizations find it challenging to manage digital transition in each—culture, leadership, workforce, and procurement.

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Key findings of the Deloitte-NASACT 2015 Digital Transformation Survey

  • Digital strategy drives digital maturity. Only 30 percent of respondents from agencies at the “early” and “developing” stages of digital maturity—the extent to which technologies have transformed processes, talent engagement, and business models—say their organization has a clear and coherent digital strategy. Our analysis also indicates that agencies with a clear digital strategy are better equipped to respond to threats and opportunities, and have better nurtured a culture of innovation and collaboration.
  • Agencies lack key elements of a “digital mindset.” State financial management agencies lack key elements of a digital mindset: customer focus, open functionality, and agile development. Although digitally maturing agencies fare better than the early-and developing-stage agencies, most agencies have yet to embrace certain basic tenets of digital operating.
  • Digital technologies are having the greatest impact on revenue collection, auditing, and cost management. Process automation and analytics are identified as the primary enablers to achieving their top priorities: improving cost efficiencies and automating operational processes. Currently, agencies do not view cloud technology and social media as major enablers, most likely due to associated security concerns.
  • Innovation, collaboration, and transparency are the cultural norm in more mature organizations. Digital technologies help build an innovation and collaboration culture, and the digitally maturing cohort seems to understand how to use digital technologies to build an innovative workplace. The transition to digital also helps financial management agencies increase transparency and share data with the public.
  • The lack of digital workforce skills represents a major obstacle. Skills for a digital-age workforce go beyond just technical skills. They also include an understanding of the business applications of digital trends, a willingness to work collaboratively to build solutions, and an ability and willingness to take risks and work iteratively. More than half of the financial management agencies surveyed cite workforce skills as the most challenging part of the digital transition.
  • Digital transformation requires changes in procurement processes. Agencies identified rules and regulations and a lack of flexibility as the key barriers to improving procurement processes. Satisfaction with technology vendors is fairly low. Agile development, less restrictive terms and conditions, and modular development are the biggest changes desired in overhauling digital procurement.

In an environment where competing priorities continually raise demands on finite resources, the absence of a digital strategy or a workforce with the right skills compounds the challenges that organizations face on the path to digital transformation. Review the study for more details on digital trends in state government financial management.

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