Harmony and change: The treasury and finance perspective on digital transformation

As organisations begin to transform digitally, a partnership between treasury and finance teams would bring financial rigour to the change process and link front office and back to drive enterprise-wide advances. The involvement of these functions is helping businesses secure vital benefits, but new research from DBS finds there is still plenty of potential value to be unlocked.

Finance and treasury stepping up

Treasury and finance can take on even more responsibility, which means building new partnerships and collaborating with other functions across the business. The research finds that it is the organisations where the treasury and finance teams are working closely with their commercial colleagues on transformation that are far more likely to be experiencing better results.

The good news is that treasury and finance are stepping up to the challenge. Most treasury respondents (53%) say their influence on non-core areas, including digital innovation, has increased over the past two years. And 57% are satisfied with the way in which transformation is driving profitability.

There is scope for treasury and finance to go much further. For one thing, executives in both functions are currently less happy about digital transformation’s contribution to other areas of business performance, notably customer acquisition and supply chain efficiency. They have also yet to reach alignment with their commercial colleagues on what the key objectives for transformation should be, with the latter being more likely to focus on targets such as improving the customer experience.

Resolving misalignment requires treasury and finance leaders to get closer to the rest of the business, says Kristian Skovfoged, Vice President and Head of Global Treasury at Danish facilities management company ISS. 

“We have nominated one of our team members as a business partner to each part of the business,” explains Skovfoged. “In the past, treasury never employed business partners. We were risk managers or analysts. Now it is all about changing the mindset of the team.”

Closing the gaps in skills and goals

In order to exert even greater influence, treasury and finance should address two problem areas: skills and goals.

First, skills shortages are holding some teams back. In DBS’s research, 43% of treasury and finance executives warn that gaps in talent, including technical expertise and change management skills, are a barrier to transformation. Solving that problem, either by upskilling existing staff, by recruiting, or by seeking support from third parties, is vital.

Treasury and finance teams have two priorities when it comes to talent. About half say they need to improve their data analytics capabilities so they can better support organisation-wide digital transformation. And many in treasury and finance say they need to acquire an innovation mindset – to learn how to think differently about processes and business models.

When it comes to the first of these priorities, Mehran Nikkhoo, CFO for Asia Pacific & Latin America Marketplace at Nike, believes that better use of data will enable treasury and finance to build, validate and evolve the case for transformation. 

“At Nike, we have shifted to a direct-to-consumer business model,” he says. “We therefore need to understand the lifetime value of our customers in much more detail. That is the muscle we have been building, and now we’re constructing our financial models through that approach.”

The second area for finance and treasury to focus on is adopting a broader range of transformation goals than in the past. Right now, many teams appear to have the kind of objectives that have always resonated with their function. Driving efficiency through tools such as automation, for example. 

Not as many treasury and finance teams believe that outward-facing goals, such as improving the customer experience or supporting new product development, are important. It may be time for a rethink.

Adopting these goals does not require a leap of faith – partly because treasury and finance are already their key enablers. “Look at how new payments tools are changing the customer experience,” says Peter Rathgeb, Group Treasurer at Siemens. “And think about how treasury is developing new charging models as business models shift to as-a-service rather than upfront purchases, or even to digital customers or machines, rather than humans making purchases.”

Confidence for a new age

If treasury and finance teams can look beyond their traditional priorities, they will be in a position to help their organisations benefit more from transformation. Expanding their horizons will also encourage a more collaborative relationship with commercial teams, which really value these customer-facing transformation objectives. 

The bottom line is that now is the time for treasury and finance to show greater confidence. In DBS’s research, just 51% of these teams agree with the suggestion that they have an opportunity to take on a bigger role transformation strategy. That is good news for them, but it is time for the other 49% to step up, too.