Millions of smaller organizations have used digital transformation to reinvent the way they work during the pandemic. The accounting profession is no exception. Fully 97% of respondents to an informal poll of AICPA and CIMA members in late fall 2020 said COVID-19 accelerated digital transformation in their organizations, firms and small businesses.
That poll was part of a series to learn more about AICPA and CIMA members’ perceptions on how to keep digital transformation in process. The data, while not statistically representative of the whole member community, offers a quick snapshot of the concerns many organizations may need to address on their digital transformation journey.
Indeed, the COVID-19 crisis changed the way the world does business, with digital solutions enabling many businesses to survive or even thrive in extraordinary circumstances. Here’s some helpful advice from leaders and members of the Association of International Certified Professional Accountants, the unified voice of the AICPA and CIMA, to get you on your way.
Budget issues and ROI loom large
Budget concerns or constraints are perceived as a prime challenge to digital transformation in small firms and organizations, according to the Association’s findings. Among the answers given, it was cited by CPA Letter Daily readers nearly 30% of the time as the main barrier to transformation, with the challenge of gaining leadership buy-in to transformational steps coming second. For those trying to assess or to convince leaders of the value of investments in digital transformation, traditional measures may be the wrong tools.
“If you try to apply traditional ROI on digital transformation, it will lead you in the wrong direction,” according to Ash Noah, CPA, FCMA, CGMA, Association vice president and managing director of learning, education and development – management accounting. Speaking in an AICPA LinkedIn Live, he pointed out that investment in transformation often focuses predominantly on generating efficiency and cost reductions but, with digital transformation, “you need to look at how transformation can drive the top line and serve your customers in new and better ways. Look beyond cost reductions and efficiency-based ROI to see how you can fundamentally reinvent your business model and create new revenue streams through new value propositions.”
Looking back to look forward
Other challenges cited by many Association members included finding time to plan and knowing where to start. Learnings from looking back can help organizations see the way ahead, Noah advised. He recommended that organizations consider what they wish they had done or known before the crisis as a starting point for future planning. They can also build on their experiences during recent months. He pointed out that CFOs and other finance professionals have moved out of their own realms during the pandemic to become more involved in a variety of other areas, such as supply chain and liquidity concerns. In addition, a business continuity plan, always a valuable tool, can help organizations identify the best way to build a foundation for whatever the future brings.
And transformation doesn’t have to happen all at once, noted Carl Peterson, CPA, CGMA, Association vice president of small firm interests – public accounting, also a panelist in the LinkedIn Live discussion. “What are the next incremental steps?,” he asked. “Small businesses and firms need to build on what they have learned and turn it into the foundation for a strategic plan,” leveraging the opportunities they’ve been able to identify this year. After navigating through the uncertainty of the pandemic, smaller organizations “may find that the hardest change may have already happened.”
Remember the advantages
Cost efficiencies were recognized as one of the top perceived benefits of digital transformation in the Association surveys. Organizations can review their own experiences to identify the benefits that a shift to digital solutions has already delivered during the pandemic. As an example, Peterson noted that, when his former six-person CPA firm moved to cloud-based solutions several years ago, “we found we had better cash flow and more completed tax returns.”
Another value to consider is the enhanced data available through digital transformation, a benefit cited by Association members. That data can be used in a variety of ways, such as adjusting inventory or prices based on purchasing trends, developing new services and predicting market needs. In short, organizations can better understand their businesses and how best to serve customers or clients.
Whether organizations are ready or willing to embrace digital transformation, the reality is that the pandemic has already catapulted them into new ways of doing business. “Our members are leading the change management,” Peterson said. “They have discovered how to use digital transformation to be more efficient and deliver services better,” which can lead to potential new opportunities. “You may not be aware of what they are until you get started.”
A guide for your roadmap
How can organizations get where they need to go in terms of digital transformation? A new Association report, Digital transformation reimagined: Accountants’ lessons learned and tips for moving forward, reveals many benefits to seizing the opportunities offered by digital transformation, including efficiencies and cost-cutting enabled by new processes, competitive advantages in bringing in new clients and attracting and retaining top people, and greater understanding of client or customer needs, which makes it easier to meet or exceed their expectations.
Based on interviews with CPAs and finance professionals around the world, the report includes a roadmap that smaller organizations can use to chart and drive their own transformations. “Accountants and finance teams are well-positioned to meet organizations’ evolving needs and help support new business models,” the report concludes.
Armed with insights, implementation tips and helpful resources, it’s time to start or enhance your digital transformation. Visit aicpa.org/digitalforward.