Effective digital transformation requires finance professionals, technologists, and senior management to work together, believes Don Peebles of CIPFA
Digital change across an organisation is not as simple as just buying the latest tech.
Like most of you, my life has been transformed for the better by developments flowing out of Silicon Valley. GPS, cloud computing, wearable tech, and ultra-fast streaming are exciting and useful and life changing.
But it is one thing to embrace change at home, where you can figure out how it works in your own time. It is quite another to do it within an established and complex organisational structure, especially one where the outputs of that organisation are the vital services that so many people rely upon.
Public-service leaders have a responsibility to taxpayers to ensure money is spent effectively and efficiently. But this creates a certain tension when it comes to digital technology. On the one hand, there is a clear argument for upgrading to new digital operating models, to improve automation and to overhaul out-of-date IT systems, but on the other, transformation carries risk and to misjudge it could mean high costs or loss of services.
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Effective digital transformation should not be limited to redesigning the website or being active on social media. It is about understanding the organisational needs and knowing the right applications to best meet those needs. It requires careful planning and resource management. It needs vision, strong leadership, and a raft of new skills, as well as risk control. It requires different departments working together and it requires oversight to ensure a smooth implementation.
If we take local government as an example, while the basic organisational structure has been established for a long time, today many councils are facing enormous financial strain, along with rapidly expanding service demands. Under these circumstances, change is needed to ensure services are delivered and finances are put on a sustainable footing.
A new IT system will undoubtedly be faster and cheaper, but digital change should be more than just bolting on better technology. Ultimately it is about redesigning how the council operates – its approaches to governance, culture, practice, policy and risk appetite. This change needs to be structural, and involves rethinking how the services of the future are designed and delivered.
For a council chief executive, this can sound radical, expensive and steeped in risk. But it’s not impossible, providing the right steps are taken through preparation and implementation. In particular, leadership from finance professionals is essential for help with risk modelling, resource allocation, business-case development, prioritisation, and corporate alignment to securing benefits realisation.
However sophisticated and exciting a digital solution looks, finance leaders need to manage the hype and ensure value for money, and accountability of resources and assets. Of course, new skills will be needed, but so will the traditional accounting skills. Finance leaders will need to consider which controls and processes in their team should be re-evaluated from a digital perspective: from finance regulations to policies, to standing orders on contracts, internal finance reporting, and operational financial support activities.
There is a clear argument for upgrading to new digital operating models… but transformation carries risk
There will need to be a high-level digital delivery plan, whether from the finance team or the IT team, and it will need to be agreed at the corporate level and be resourced as well as linked to short, medium and long-term ambitions. Because of the scale of change and the number of likely impacts, this planning is more complex than typical IT projects, and the risks need to be assessed and agreed at executive board level.
In light of this, digital transformation should be less about focusing on a single piece of upgraded tech and more about the journey. It’s a journey that needs to be based on close collaboration between leadership, finance teams, and IT – from vision, to business case, to implementation.