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Telekom Strategy Consulting Team


From data provider to strategy consultant – the digital transformation of corporate finance

What is expected of corporate finance today? Business-critical decisions are increasingly based on data analysis. In addition, volatile global markets often require immediate action. This is why its transformation from a mere financial role to a strategic driving force is a success factor for companies in order to remain competitive. In this two-part series, we will describe what this means, what our contribution is as an internal consultancy and which fields of action can be tackled in practice. 

Management decisions are usually based on figures provided by the finance department. Financial experts regularly deliver reports on the financial performance of the company, individual divisions or products. Usually, such reports are prepared on a quarterly or monthly basis – accordingly, it takes a long time until action measures can be derived and decisions can be made based on them.
However, in order to be able to evaluate the performance of campaigns or the acceptance of new products in global markets and to be able to react appropriately, data and analysis on a daily basis are needed. In today's fast-moving business world, static reporting based purely on historical data is no longer a suitable tool for optimizing profitability and shareholder value. So, what is the need for adaptation?

Man is holding a dashboard with visible charts.

Data-driven finance means turning key financial figures into strategic decisions.

The changing role of finance

The heart of finance, i.e., traditional management accounting, will in future be automated and made accessible whenever it is needed. The management of Excel spreadsheets and the consolidation of data collections sent by email will give way to digitalized, data-driven reporting: relevant information – updated on a daily and flexible manner and containing all required details – can be viewed instantly on dashboards.

This makes it possible to offer a comprehensive overview of the performance and profitability of the entire portfolio and the contribution of individual segments, products and services, as well as the correlations between key figures. In addition, further analysis options can be added, such as competitive benchmarking, monitoring of resource efficiency or profound projections of key financial KPIs. Furthermore, prescriptive modelling can be used to evaluate scenarios such as product launches or changes in demand.

However, digitalization is by no means putting accountants out of work – rather, their role is evolving from that of a financial supervisor to that of an advisor and initiator of strategic decision-making, which is of great benefit to companies: thanks to their financial expertise, CFOs and their teams no longer just provide financial figures, but also point out trends and make recommendations for actions that are closely aligned with the businesses they work for. The words “we have a turnover problem” turn into “we should push triple play in the segment with a campaign to counteract the slump in turnover”.

Five steps to data-based financial analysis

Unfortunately, it is not enough to simply buy a new software solution to meet the requirements, even if the features may appear appealing and all-encompassing. A successful digital transformation requires a customized solution as well as the commitment of staff and management alike. 
The following five steps outline a structured path to a digitized, data-driven finance function:

Status analysis
The first step is to determine how a company is currently organized in terms of its financial processes, what kind of data is processed in which cycles and which insights are derived from it. It is also important to get an overview of the tools that are currently used to collect, process, and visualize data and to assess the existing skills of employees. Management and staff interviews can then be used to determine which additional functions and tools would be helpful to improve the reporting quality for decision-makers. 

Benchmarking and identification of best practices
Which areas offer the greatest potential for digitalization and which quick wins can be achieved in the short term? Once these areas have been identified, a benchmarking process can be initiated: Comparisons with other industry-related companies or segments that are further advanced in the transformation of their financial operations help to identify best practices and flagship projects.

Developing targets
This is where things become more specific: targets need to be set that clearly define the results, analysis, and reports that the finance function is expected to deliver in the future. Moreover, what added value can be generated for the various stakeholders? Which additional tools are needed, and does this match the skills of the staff and the calculated budget? It is important, however, to exercise caution: If there is too much of a gap between the defined goals and an organization's level of digital maturity, it is necessary to adjust. Sometimes less is more – start small!

Converting targets into a transformation plan
Based on these preliminary considerations, a detailed plan can now be drawn up that encompasses all stages of the transformation, including the training of staff, hiring programs and tools. Each phase needs to be tested by means of small pilot projects before the roll-out. It is also particularly important to ensure that the cultural transformation is not overlooked. After all, the transformation to a data-driven organization does not happen all by itself, and it must be carried out at all levels. Decision-makers must be willing to give up the use of paper and use digital, flexible dashboards. It is an iterative change process that does not happen overnight. 

A clear mandate and coordination with partner departments form the foundation for the implementation phase. A dedicated transformation office, as well as the support of experts, are helpful to successfully implement the transformation. In addition, employees need to be actively involved and interim results need to be continuously aligned with the overarching corporate strategy. It is important to note that the transformation plan should not be carved in stone to allow for flexible adjustments as new insights emerge.

Our role as internal consultants 

Our task is to provide end-to-end support for transformation processes. We survey the status quo, develop a suitable target picture with the department and drive the implementation forward - together. After all, the solution should not only be efficient and meet current standards. Rather, it is important that the employees can identify with the new tools and governance system so that they do not fall back into old patterns after the end of the project.

To help shape the agenda of finance, financial expertise, experience with transformation projects and internal and external benchmarking are not enough. The development and expansion of digital skills is becoming immensely important in the consulting industry. Automated reporting processes, the visualization of (live) dashboards and the development of AI-supported forecasts are no longer in the territory of IT. If we want to drive sustainable change, we need to engage more closely with these issues. This does not mean that we must replace our consulting skills with coding skills. However, we must have a good overview of the latest tools and standards and develop and expand excellent data skills in individual disciplines. We are convinced that this will enable us to prepare the puzzle piece “finance” for the transformation into a “leading digital telco”.