The digital transformation movement has helped the world of finance evolve in recent years. Now, as we move into another era of evolution, digital resiliency is stepping into the spotlight.
We want to help you better understand what digital resiliency is and how it can help your business become more secure, better prepared for future business disruptions and ready to capitalize on new opportunities.
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What is digital resiliency?
Digital resiliency is being defined around the industry in a few different ways. IDC is a company taking a leading role in formulating this definition and fleshing out the concept.
“Digital resiliency refers to an organization’s ability to rapidly adapt to business disruptions by leveraging digital capabilities to not only restore business operations but also capitalize on the changed conditions,” said Stephen Minton, IDC’s vice president for customer insights.
“As the COVID-19 crisis has shown, the ability to respond quickly and effectively to unexpected changes in the business environment is critical to an organization’s short-term success.”
McKinsey offers a slightly different take on what digital resiliency is all about.
“Our experience suggests that leading companies are working toward a state of digital resilience, in which they design their business processes and their information-technology systems to facilitate the protection of critical information and to implement strong cyberdefenses and effective plans for responding to cyberattacks.”
Here at AvidXchange, we see digital resilience as an enabler for businesses to rapidly adapt, rather than just respond to future disruptions.
“We believe there is a direct correlation between how finance teams leverage technology and their ability to mitigate this anxiety,” said Dan Drees, chief growth officer at AvidXchange. “The more digitally resilient an organization is in its back office – which means the right technology is in place to grow and scale with business – the more supported and confident finance teams will feel about the future.”
Digital resiliency also plays a major role in increasing efficiency, which was an overwhelming concern for the 500 finance leaders we surveyed earlier this year.
Eighty-one percent of respondents said they felt some level of anxiety about the second half of 2021. In an effort to ease that anxiety, 40 percent said they are actively modernizing back-office operations to boost efficiency,
The Relationship Between Anxiety & Efficiency
Why digital resilience is important to finance pros
So, how can digital resilience improve the performance of your financial team?
Finance departments operate differently now because of changes caused by the pandemic. More finance team members work from home, and the way invoices and payments are processed is shifting toward automation.
As these changes continue, it’s helpful to think of digital resiliency in terms of investments and what you gain from them.
For example, a second-layer tech investment like AP automation software can integrate with your current accounting system and provide numerous benefits that help save money and increase long-term revenue without major (and costly) overhaul.
That’s what digital resiliency is all about, leveraging what you have and adding capabilities in smaller, smarter ways to enhance security and capitalize on revenue-generating business opportunities.
Automation’s role in digital resiliency
“To become a truly resilient digital enterprise, you need to go beyond redundant systems and processes and adopt extreme automation with intelligence everywhere … You need automated provisioning, intelligent monitoring…and analytics and insight that can understand complex relationships…and identify threats and identify the root cause of problems.”
Beyond these capabilities, digital resiliency should not just be about securing your business. It’s also about generating revenues and exploring new business opportunities, according to TechBeacon.
“One final characteristic of digital resilience is the ability to rapidly deliver new business services or offerings to market…When the environment changes, your resilient digital enterprise will adapt, grow, and thrive. You’ll be able to rapidly deliver new services or switch to conducting business in a different way and, ultimately, your organization will strengthen its ecosystem and secure its place within it.”
In our recent survey, 49 percent of respondents said they believe AP and AR automation is the No. 1 technology that could help their teams work more efficiently long-term. Other technologies leaders identified are expense management (19 percent), payroll (12 percent) and tax compliance & reporting (11 percent) … in case we can design a small list
The CFO’s role in digital resilience
For digital resilience strategies to take hold, it’s key for Chief Financial Officers to climb on board.
“The COVID-19 pandemic has reinforced the importance of the office of the CFO,” according to SAP. “IDC has tracked the evolution of organizations through the pandemic and found that they moved from digital adaptation to digital acceleration to building digital resiliency.”
But the buy-in extends beyond the CFO.
According to McKinsey, companies aren’t strengthening their digital resilience because CEOs and boards “often don’t view digital IT resilience as a business problem until it has a financial impact through customer attrition or they’re confronted by regulators.”
Despite these challenges, McKinsey notes there’s been a change in culture towards resiliency with conversations more focused on risks to businesses.
With all this in mind, here are a few ideas you might consider to gain the most value from digital resiliency:
First, understand that digital resilience is not digital transformation. Transformation is about wholesale, end-to-end changes across a broad spectrum of business functions such as finance, operations, technology, supply chain and beyond.
Digital resilience ensures businesses overcome disruptions and run seamlessly without having to completely overhaul the technologies they use. Digital resilience is about smaller and more targeted changes and upgrades to your business.
Second, digital resilience is not all about cybersecurity prevention. Yes, that’s an important part of this, but it’s also about figuring out new ways to generate revenue using your existing digital technologies or with minimal additional investments in digital technologies.
Third, you’ll benefit from getting ahead on this digital resiliency trend. Learn all you can about it. Take steps to make sure your finance team knows what it is and how it can benefit them.