CFOs know that it is imperative for companies to transform the way they work by digitizing core processes. Such transformation has been found to improve the performance and reach of organizations. George Westerman, a research scientist at MIT’s Sloan School, puts it dramatically as follows. When done right, digital transformation is like “a caterpillar turning into a butterfly,” but when done wrong, “all you have is a really fast caterpillar.” So the letter is on the CFO’s screen, but she’s not sure where to start the transformation initiative – which processes are best suited for digitization?
Showing early results to colleagues and management is important to gain support for digital transformation within the organization. Demonstrable benefits, easy and quick implementation, low barriers to entry, and enterprise-wide impact are some of the factors that bring credibility to a successful digital transformation project. Marks like these help pave the way for larger digital ventures that require significant capital investment and executive attention. As a digital transformation partner for several finance leaders, we have observed that the digitalization of spend management delivers impressive results on these management metrics. Platforms, suites, and solutions for this area go by different names, but mostly fall under the Procure to Pay (P2P) umbrella. P2P solutions use a common platform that connects all players involved in sourcing and procurement. This platform-based approach breaks down silos of miscommunication and non-communication and catalyzes collaboration within the organization and with vendors. From the always missing bill that was lying in a drawer to the e-bill that is automatically forwarded to the right desks. That’s the kind of support that P2P solutions offer. Faster error-free cycles and better supplier relationships are the performance gains of digitizing spend management.
When business processes are digitized, there are fewer instances of policy deviations. In fact, it is the digitization of politics that is turning caterpillars into butterflies. Organizations have spend management policies that can be quite complex due to changes and additions over time and the need to make situation-specific decisions. Today’s sophisticated P2P software has a rules engine that can be programmed to honor most spending policies and approval processes and integrated into the DOA matrix. With automation, the majority of expense instances can essentially be managed by the system, with management teams focusing on exceptions and outliers.
So, digitizing spend through P2P software has high impact, results are fast, stakeholder engagement is high and hence it is the ideal starter project for CFOs and CEOs to turn the caterpillar into a butterfly.