The C-suite utilizes shared assumptions and beliefs to define an organization’s cultural dynamics and to address and drive change. Key players in the C-suite include the CEO, CFO, COO, and most recently, the CDO. The role of CFO in particular has experienced a lot of transition; today’s new CFOs have transformed from data crunchers to informed consultants and the right-hand of the CEO. The CFO plays an integral role in helping to support the entire management team, providing a checklist of data and analysis points that are used to make informed business decisions. It is crucial to have the team, tools, and technology in place to take on this expanding role successfully.
Adopting technology as part of a cultural change
According to Deloitte’s Global Human Trends Report, 82% of business leaders view culture as a competitive advantage. Yet only 28% believe they understand it and 19% believe their organization has the right culture. The lack of understanding and unwillingness to drive cultural change can seriously undermine leadership, and ultimately business performance.
Modern businesses use technology as a catalyst for cultural change. Adopting technology can drive improved communication within the C-suite, as well as the entire organization. CFOs stepping in as critical advisors for a variety of business decisions must have the technology in place to seamlessly cope with these new demands.
CFOs will need technology to support a whole new checklist of data and reporting requirements. And they will also use technology to improve process efficiency within their team, freeing up resources to deal with these new requirements. Accounts Payable is one area that often consumes significant time and resources, especially with regard to manual invoice processing tasks. This situation is a common headache for any CFO. By implementing a modern AP automation solution, many of these manual tasks can be handled by the system, sometimes allowing for a fully automated and touchless invoice management process. The transition is a considerable cost-saving opportunity for the CFO. And the company can use knowledgeable AP staff for more value-adding tasks - including monitoring process performance metrics and implementing improvement tactics and support with reporting requirements from the entire organization.
As CFOs take on more power and responsibility, they help drive the necessary changes within the team, and ultimately, redefine organizational culture. The change in cultural dynamics will transform the finance team from a back-office function to a business intelligence hub, a crucial advisor for strategic decisions, and a driver for change.
Changing culture means redefining beliefs
Modern technology will only make a difference to the business bottom line if it is accepted and adopted throughout the entire organization. The CFO who invests in an advanced AP automation solution to speed up invoice processing and reduce costs will only experience these benefits if everyone is onboard using the system - including C-level peers that need to approve invoices within the system. If this kind of resistance to new automation technology exists, the CFO will not be able to serve the C-suite and organization as needed.
Implementing technology to replace an existing manual workflow implies a cultural change. It can be tricky if the people involved are not ready for it. The classic culture change model involves three stages: “unfreezing” the beliefs in an organization through critical events; “change” through role-modeling and setting new behaviors and beliefs; and “refreezing” the organization to lock in a new culture.
Unfreezing beliefs starts with the analysis and diagnosis of the current culture, identifying positive and negative behaviors and outcomes. In accounts payable, this could mean mapping out the current invoice process, including which steps are manual vs. digital, the number of people involved in each stage, and where bottlenecks often appear. Sometimes this phase reveals that a process and culture has been established because “we’ve always done it this way”, inherited by generations of leaders.
The first step of the change phase is to communicate what is valued at the outcome level as well as at the belief level. Communication around the behavior change needs to be clear and consistent. In this phase, it is crucial that the C-suite and management lead the way by acting in a manner in line with the desired culture. For CFOs implementing the transition to automation technology, this means communicating the benefits to the team from their perspective. It’s important to understand that some individuals implementing automation may perceive it as a threat to their job. The key to success is focusing on the more rewarding tasks they will be able to take on instead of manual, repetitive chores.
To establish a new set of behaviors and beliefs in a sustained way - “refreezing” - revisit incentives and performance management policies and align them with the new culture. For accounts payable, this means adopting new process performance KPIs that focus on the level of automation within the team and function. Metrics such as “touchless invoice processing rate” and “automatic distribution rate” will help AP teams drive adoption of the new AP automation solution. And they will initiate fine-tuning of the system configurations to enhance automation levels in support of the overall goals.
How the C-Suite can initiate meaningful changes
The C-suite must be the role model for change, communicating and acting in line with the new culture and behavior. The CFO can easily take on a champion role here since the changes and technology adopted within finance often affect many parts of the organization. As such, benefits of a new process or tool can be widely communicated and understood.
One of the most visible values of a new AP automation solution is the shortened invoice processing lead time. This reduced time enables faster vendor payments, which will benefit procurement as well as buyers and cost center owners in their communication with vendors. In addition, everyone involved in the invoice management process will have access to modern tools to accomplish their part of the process as well as full visibility into a digital archive and reporting. All this means saving lots of time and effort in the day-to-day work, translating to value realized on the bottom line. Again, it’s essential that leaders adopt these tools, including mobile functionality, to ensure company-wide adoption and support.
In the new role as automation and change champion, the CFO should work closely together with the CIO to improve the technology used as well as to prevent fraud and security breaches. The CIO will need this partnership; 72% of CIOs polled as part of IDG’s 2017 State of the CIO survey are struggling to balance business innovation and operational excellence, and 87% admitted the CIO role is more challenging than ever. Through the savvy use of automation technology, the CFO can help the CIO tackle the challenges of innovation and operational excellence.
Cultural change brings the C-Suite and AP department together
The process of adopting cultural change brings the C-suite and AP department together to initiate change, learn and implement technologies, and exchange meaningful ideas. Communication is a critical factor in a smooth-running C-suite and AP department. As pointed out in an article from the P2P Network, “the increased visibility that comes with the implementation of technology, particularly in terms of being able to measure key metrics, has had the effect of pushing an underlying opportunity into the daylight.”
Key Performance Indicators (KPIs) are great communication tools when implementing new technology as part of a cultural change. It is crucial to select a checklist of KPIs that are easy to understand, relevant to the C-suite and that indicate the success of the project. When implementing an AP automation solution, the KPIs should include those that are measurable in a pre- and post-implementation value, such as invoice processing lead time, approval lead time, touchless processing rate and automatic distribution rate, and so on.
The changing dynamic of the C-suite implies that the CFO will transition to a more significant role as an overall business advisor and consultant not only to the finance organization. As such, CFOs must be ready for the added responsibility, and lead the change management process with technology and people. The management team will be looking at the CFO to adopt technology and streamline operations to modernize the company culture. Implementing an AP automation solution is a smart place to start. It will help the CFO get up and running with automation quickly and generate tangible efficiency and cost-saving results within weeks from go-live. It is also a process that most managers are involved in, making the change and benefits visible on a day-to-day basis.
In honor of International Women’s Day: women in finance & future trends in accounting