1、Digital leadership: Leading finance digital transformation Authors: Howard Cui,，Senior Analyst, Alibaba Cloud Research Center Clive Webb, Head of Business Management, ACCA The authors would like to thank those who kindly participated in workshops and interviews during the development of this paper.

2、Pick up any journal or review any business website and you will find articles on digital transformation. It has become a significant force in the business world. One estimate in 2016 suggested that it could be worth in excess of US$18 trillion in added value to organisations1. economy are the rapidl

3、y emerging technology and full realisation of value of data. Digital technology and data are also profoundly affecting all walks of life in the digital economy, which is the fundamental reason why organisations need to embrace digital transformation. The evolution of technology is set to continue. T

4、he development of 5G and edge computing will enable us to capture and process even more data. Data that we must closely link to our business model and strategic objectives. The use of virtual and augmented reality, in combination with advances in computing power, will enable us to develop digital tw

5、ins2 of organisations, products and processes such that we can envisage the impact of alternative business decisions. The finance leader needs to appreciate and embrace the changes in forecasting and planning that the advent of these technologies can bring. By utilising both front and back office da

6、ta they can model business performance in ways that we have not previously seen. As those whose inherent skill, in part, is the appreciation of data as information this is a key role in the organisation that is key to understanding consumer behaviour. However, digital transformation is not just abou

7、t the use of technology, it is also about the culture of the organisation itself. How it responds to customer needs in increasingly faster timescales. How it develops a mentality of try, learn and retry, constantly adapting to a changing business environment. The organisation needs a robust set of b

8、usiness processes that are sufficiently flexible to adapt to change, yet robust in integrity. Whilst for many organisations the lens of competition has moved from process efficiency to optimising the customer interaction, the absence of robust processes will still negate the competitive edge and inc

9、rease a potential for disruptive entrants. For the finance function some of these traits may be counter cultural. However, digital transformation is not a respecter of traditional boundaries; it impacts all aspects of the organisation in varying degrees. Finance is no longer an island in this. 2 Whe

10、ther the organisation concerned is large or small; irrespective of the industry involved, it will be on a digital journey. The nature of that journey may vary but for many in the finance community there is a challenge of change and adoption. In this article we explore how finance leaders must play a

11、n important role in this process. What does it take to be an effective digital finance leader? WHAT IS DIGITAL TRANSFORMATION? Many organisations are undergoing some form of digital transformation. They are using digital technologies to create robust and efficient business processes that optimise th

12、e effectiveness for the various stakeholders, be they customers or employees. In the era of the digital economy, data has become the core asset to drive economic growth. Digital technologies such as cloud computing, Internet of Things, and artificial intelligence are building a new digital economic

13、infrastructure and the tools to accompany it. Therefore, the drivers of the development of digital Digital leadership: Leading finance digital transformation 1 IDC FutureScape: Worldwide Digital Transformation 2017 Predictions accessed 4 October 2019. 2 Digital twin a digital replica (using virtual

14、and/or augmented reality) to represent the physical world. In combination with data collected from devices this enables us to model the physical world. 3 Nor is digital transformation a finite process. With the developing scale of opportunities of cloud-based computing, with the increasing use of ar

15、tificial intelligence and machine learning as part of day to day organisational activities, organisations will continue to need to improve and focus on their core purpose. The constant evolution has arrived, and the standalone project has departed. Yet the pace and nature of change is very different

16、 between economies. In mainland Digital leadership: Leading finance digital transformation | ACCA / Alibaba Cloud Research Center joint article China, for example, the cashless society is very much the reality, as it is in parts of eastern Africa; other economies are still catching up. For global or

17、ganisations being able to adapt to these varying paces of change is important. The evolution of the finance function itself is enabled by this transformation. This is considered in ACCA / PwCs paper Finance: a journey to the future?3 which considers the transition from a pure stewardship to a more s

18、trategic role. With the developing scale of opportunities of cloud- based computing, with the increasing use of artificial intelligence and machine learning as part of day to day organisational activities, organisations will continue to need to improve and focus on their core purpose. 3 ACCA/PwC: Fi

19、nance: a journey to the future 2019 accessed 28 November 2019. 4 A Unified data service platform is a set of technologies that work together to move data throughout an organisation irrespective of size, structure or source of the data (either internal or external) to the organisation thereby merging

20、 fragmented data sources into one central view. Digital transformation is a huge challenge. Success and failure often alternate in the digital transformation of organisation. The constantly emerging disruptive technologies and the business model innovation of new competitors not only intensify the u

21、rgency of digital transformation of organisations, but also further bring uncertainty. The digital transformation of each organisation is closely connected with the characteristics of the organisation itself: For example, a retail enterprise focuses on the improvement of the consumer experience, a m

22、anufacturing industry pays attention to the high level of automation in production and quality inspection, and a financial industry applies the digital technology to build strong middle-back offices. But the experience they have accumulated through years of exploration can still serve as the referen

23、ce for the digital transformation of most. Digital transformation is a top-level design and strategic decision-making process, which should be led and guided by the Chief Executive Officer (CEO) and the senior management team of the enterprise. Digital transformation should not be regarded as a larg

24、e-scale project nor should it be assumed that if the executive layer uses the digital technology, the organisation has embraced digital transformation. The CEO and top management team of the enterprise should focus on digital trends and be bursting with curiosity and be adventurous. Digital transfor

25、mation experts at all levels should be introduced. Companies should invest in capabilities for digital transformation at all levels including the top management team, middle management, and grassroots management. It should encourage employees to enhance their digital capabilities and transformationa

26、l thinking in different business departments (not just within IT teams). Organisations should recognise the value of digital skills and cultivate the digital expert culture. For example, beyond the management scope, strengthen the promotion or career of professional experts, especially strengthen di

27、gital literacy indicators such as digital leadership, digital technology and data insight. Data capability is the basis of digital transformation. Strong data capability is the basic guarantee of digital transformation of organisations. Its capability in any field (such as data acquisition, data sum

28、mary, and data standardisation) determines the success or failure of digital transformation. Organisations need to build a unified data service platform4 to provide stable, efficient, and secure universe data services; transfer continuous data energy to various business demanders; continue to enable

29、 data to support digital transformation, and gradually establish a global, unified, and general data system to drive business innovation. Chief Financial Officer (CFO) for digital transformation. Digital transformation is accompanied by large-scale or continuous technology investment. CFO and its te

30、am actively participate in investment decision-making, management, monitoring and service, which can effectively reduce investment risk, improve investment effect and establish good cooperative relationship between the business team and finance team. For organisations that have experienced this proc

31、ess, the finance team has often been an active supporter of new technology investments and redefinition of corporate cost modes. Digital transformation: Lessons learned and trends 4 BUSINESS CASE FOR CHANGE Establishing the business case is often a challenge. Finance seems to suffer from a perspecti

32、ve that investments in enterprise solutions in the late 1990s and early 2000s failed to deliver the suggested returns. In a completing, cost conscious, world the need for effective and efficient processes is paramount. Organisations are now increasingly competing on their ability to know their custo

33、mers preferences not on the quality of the core business processes. Cloud based solutions facilitate this as exemplified by the Alibaba Cloud business model where the membership data is shared across multiple divisions of the business through the unified data service platform. Optimal processes and

34、quality data are essential components of the business case. Yet for the finance team this should be an element of an organisational wide transformation project. The return on the investment in digital transformation is measured by the achievement of these goals. Digital leadership: Leading finance d

35、igital transformation | ACCA / Alibaba Cloud Research Center joint article Whilst the application of technology is fundamental to the digital transformation of an organisation there are two other elements that are essential for success; a digital culture and effective leadership. AN AGILE ORGANISATI

36、ON? This speed of change requires a different approach from the traditional organisation. The phrase agile is often used in conjunction with digital transformation, although is derivation in this case is from an approach to software development. Being able to respond quickly to changing customer dem

37、ands and market trends requires a different form of management. It requires a clear focus on what the organisation is seeking to achieve, its purpose, and how it is structured in a way that supports this level of evolving change. Technology is often at the heart of that process, it is not, however,

38、the means to the end. The data component of digital transformation is as important and effective governance needs to be established. All this needs to be part of a strong culture that supports innovation and manages both success and failure effectively. Whilst the application of technology is fundam

39、ental to the digital transformation of an organisation there are two other elements that are essential for success; a digital culture and effective leadership. Organisations undertaking digital transformation should consider having a shadow organisation that embeds disruptive characteristics, a so-c

40、alled networked liquid organisation. This enables the organisation to optimize decision-making efficiency and response speed, while activating individual values, and ultimately reaching the synchronisation with the change of the external environment. This organisation should have four key features:

41、New core driving force: Transform to a customer-centric “outward-looking” perspective from internal enhancement and focus; New innovation method: Transform to collaborative creation and diversified and decentralized model from vertical integration and large enterprise dominated innovation; New organ

42、isational infrastructure: Transform to mobile interconnected office mode from fixed process; New development pace: Transform to appropriately accelerated iterative development and cross-boundary competition from stable and sustainable business model. The digitalisation of the organisation is the key

43、 to digital transformation. Organisations should establish an agile culture oriented by digitalisation, intellectualisation and business innovation, to promote continuous innovation inside and outside the organisation and create a digital innovation ecosystem. The organisation should also gradually

44、realise online organisational structure, online organisational collaboration and digital organisation, and gradually realise the digitalisation of human resource management, talent supply and human investment. Disrupting with Network Liquid organisations 5 A DIGITAL CULTURE Organisational culture ha

45、s long been recognised as one of the essential elements in delivering on business strategies and goals. For much of the late 2000s organisations were focused on developing visions and mission statements. In the digital world this has transitioned to a more simplified view of its purpose, as referred

46、 to earlier. What is it that the organisation is seeking to achieve? Aligned to this are personal goals that reflect the contribution of the individual to that common purpose. Performance management systems, both at the operational and the personal levels, are being thrown away and replaced with sim

47、plified goals aligned to purpose. Leaders need to respond to the changes brought by digitalisation in a different manner to which they are used. Nick Petrie in his First Law of Leadership Development5 explains that, every leader continues in his state of rest, or in the habitual direction he was hea

48、ding, unless compelled to change that state by external forces acted upon him. The impact of digitalisation on the organisation is clearly one of those external forces that require the leader to modify their behaviours. WHAT IS A DIGITAL LEADER? What may therefore constitute an effective leader in t

49、he digital age? Clearly there are different leadership traits that are required. The transformation of roles inherent across organisations, but especially in the finance function, means that a different set of skills is required. The traditional hierarchical models are being transformed into more flexible, flatter, structures. The career paths of yesterday are being transformed into variable career structures where promotion is not automatic, and skills and capabilities reign supreme. The digital leader is somebody who is a human and not a tool. The