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Report: The State of Finance Transformation

by Marco van der Hoeven

Recently the CFO Automation Experience (CFOAX) organized the webinar State of Finance Transformation. At this event, research by the Business School of the University of Amsterdam was presented on the state of the digital transformation in finance according to executives from all over Europe.

At the event recent research, the state of digital transformation was presented by Frank Verbeeten, Professor of Accounting at the University of Amsterdam. He did a survey among European participants, looking at several issues like digital business, finance operations and how they are automated. One of the subjects was the power of finance the question arose that when everything is automated and all the managers have access to data, how does that affect the power of finance in the organization?

The first item, digital business, basically means the transformation process in a company: are they digitalized? About 60 to 70% of the companies state they have a clearly defined digital strategy. However, just a few firms have a fully digital business model. So, when asked what percentage of revenues in an organization comes from online sales, 72% of respondents have less than 20% in online sales, which means about three out of four have less than 20%. Only about 8% reports all the sales are coming through digital platforms. So, there is a large part of on-site sales, rather than online sales.


Looking at finance: if a firm has a digital strategy, and if the firm is more digitalized, finance also tends to be more digital. |The researchers asked, ‘do you reduce complexity in finance,’ because if you reduce complexity, if you can automate it, this will make your life easier. But a lot of firms do not do this because they have done several acquisitions, and some of these acquisitions are not fully integrated. This means there is a lot of complexity where business units are doing different things within the firm. Asked how they deal with structural complexity 40 to 50% of the respondents say they are working on this.

The next step is fully automating processes and finance. The thing that gets automated now is transaction processing: bookkeeping, accounts payable, receivables, and reporting for the management. Non-financial performance measures are the ones that will get automated and robotized. Financial planning still requires a lot of local expertise, so that is less automated at this point in time.

Power of Finance

For one that we asked for is, what is the power of finance in the organization? And the idea was that, you know, if we automate everything the local managers can have access to this information. So, they do not have to ask finance for advice. And basically, they can do their own thing. Is that good for finance? Or is that not good? If we ask some organizations, they say, well, we are still considered to be influential. Again, mostly, the dark blue is good that the only thing this is reverse coded so to say, this top management process, the finance department less influential, well, that is about 50%. So, let us say in about 50%, the finance function is quite important in the organization, we look at the degree of automation. And what we see is that the more automated finances, the more influenced finance has in the organization.


The interpretation of the researchers of these results is that automation starts with the easy things which take a lot of time for finance, like, looking up the reports from last year sales and compare these to this week sales, and doing the analysis for that. Within finance it is the automation of standard monotone activities. If you automate them, it frees up more time for analysis. And the more automated processes are, the more important the findings.

It also has a backside: the smaller the organization, the more influential finances are so they have more contingency. But in general, if you automate things, you will become more influential as a finance department because you have more time to do the real value adding activities, rather than those activities which take a lot of time and do not add value to the organization. So, automation, robotization has helped to increase the influence of finance in organizations.

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