Digital Transformation in Finance and Accounting Accelerated by Pandemic, ISG Reports
Finance and accounting departments globally are undergoing a digital transformation, aiming to streamline and automate processes, as highlighted in the 2023 ISG Provider Lens™ global Finance and Accounting Outsourcing (FAO) Services report. The push for digitalization was notably accelerated by the COVID-19 lockdowns, which necessitated a shift from traditional methods to accommodate remote work requirements.
The research indicates a growing reliance on external providers to assist in formulating digital strategies. Robert Stapleton, a partner at ISG, mentioned, “Organizations are creating connected finance teams with the technology to collect and analyze larger data sets for long-term decision-making.” This technological empowerment has positioned CFOs to play more strategic roles within their organizations.
The report also sheds light on the challenges businesses face due to disruptions since the pandemic, such as inflation and supply-chain issues. To navigate these challenges, many are turning to new operational methods and technologies. Notably, there’s a surge in the adoption of tools like SAP S/4HANA, generative AI, blockchain, and the metaverse. Recognizing the potential vulnerabilities of integrating these new technologies, there’s an emphasized focus on bolstering cybersecurity measures.
A significant shift in the FAO sector is the preference for outcome-based contracts, where both risks and rewards of digital transformation are shared between companies and FAO providers. Jan Erik Aase, global leader at ISG Provider Lens Research, stated, “FAO providers are becoming strategic partners that collaborate with clients in addition to delivering services.”
Furthermore, the report explores the importance of global delivery models for FAO services and emphasizes the need for clear strategies surrounding environmental, social, and governance (ESG) initiatives.
The comprehensive 2023 ISG Provider Lens™ report evaluates 28 providers across four key areas: Procure to Pay (P2P), Order to Cash (O2C), Record to Report (R2R), and Financial Planning and Analysis (FP&A). Leading firms such as Accenture, Capgemini, and Cognizant have been recognized as leaders in all quadrants.
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