Part 6 of the “Finance Transformation” series that explores how finance can take the lead in driving their companies towards an intelligent enterprise

In the experience economy, business models are rapidly changing. Products are increasingly being delivered as services. Customer outreach is becoming more direct. Everything is connected. Partners are collaborating across the ecosystem. And customer behaviors and expectations are evolving.

Technology accelerates these changes, but it does not act as the foundation of any evolution. True digital transformation is possible only when it is built upon three primary areas of the business: sales, supply chain, and most importantly, finance.

It’s easy to see the need to transform the customer experience. Companies want to build customer trust and loyalty. They strive to deliver a delightful buying experience.

To support this shift, the supply chain must also be transformed. It’s important to connect buyers, suppliers, and third parties to ensure that delivery meets customer expectations. Companies also want to modernize production using data from IoT-enabled devices. And a modern supply chain can help enterprises optimize product selection, fulfillment, and payments.

Yet the frequently overlooked third leg of transformation is finance. To succeed with any enterprise transformation or customer experience initiative, you need the right financial processes and solutions. What’s more, only finance can ensure the viability of any transformative change.

Consider this: You can create a phenomenal website that delivers an impressive customer experience. But if a consumer places an order for something you sell and the business lacks the right billing, payments, or collections mechanisms, the transformation will not be financially viable. What’s more, the experience must enable digital trust. Unless customers have confidence in their data privacy and usage, the transformation – and the enterprise – will fail.

Thrive in the ever-changing experience economy

Finance is a mirror image of the real world. Sales and supply chain transformation can only progress as fast as the finance organization can support change.

Several key capabilities can help ensure the financial viability of enterprise transformation. To gain forward-looking customer, supply chain, product, and service profitability insights, you need the ability to drill down into any profitability dimension using analytical and transactional data.

In addition, you need innovative billing-management solutions to help you create a flawless payment experience when offering new digital business services and pursuing new revenue-management models. You should also be able to manage comprehensive recurring revenue streams as well as customer-focused, subscription-based invoicing and billing. And you need embedded controls, monitoring, and data protection features that engender trust.

Today, few organizations have all the solutions needed to meet these goals. Hence, many leaders are finding that financial transformation is a critical part of their overall digital transformation. Leading executives tell me that they are looking for three things from their financial systems. They want in-the-moment financial insights that help them:

Provide a seamless billing and payment experience – This includes transparent, consolidated billing; immediate payment and payment confirmation; and flawless interactions such as rebates, concessions, and returns.

Ensure the financial viability of business model transformation – Companies want to be able to avoid revenue leakage using modern billing technologies; balance the immediate customer experience with the cost-to-serve, which affects customer lifetime profitability; and minimize the end-to-end supply chain cost for maximum product profitability.

Prioritize cybersecurity and data privacy – Priorities include preventing cyber fraud, reducing the opportunity for IP theft, and ensuring customer data privacy.

The impact of finance on transformation

It’s very common to see digital transformation guided by a “think tank” of representatives from a company’s sales, marketing, and supply chain teams. But these groups need guidance from finance to understand the financial reality of transformation.

For example, finance can help a transformation team answer questions such as:

How can we monetize new customer experiences?

What are the end-to-end supply chain and service costs of transformation?

What is the time to profitability of new business models, assessing both the immediate and long-term viability?

What is the return on investment for our transformation?

How can we make the right decisions about continuing relationships with customers that don’t meet our profitability goals?

With the right processes and solutions, you will be able to analyze business performance in the moment, at any level of detail, and identify the root causes of specific trends. Modern approaches can also help you understand and assess costs and revenue by transactional line item. Most importantly, you will be able to make the right decisions, supported by concrete data, to ensure better business performance for your future.

Join the second SAP Intelligent Finance virtual event on Tuesday, Feb. 11, and explore the new reality driving finance transformation and the type of solutions companies are using to support it. Register now.

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Read more about this at: digitalistmag.com