What is digital transformation?

As you may have noticed, for several years now we have been experiencing a change in our businesses, whether in the field of Human Resources, Finance or Purchasing. We are experiencing a digital transformation that the COVID-19 crisis has accelerated. We were faced with the need to transform our organisations in depth in order to respond to the challenges that telework represented for employees and customers.

It is a real growth and innovation issue for companies. Despite this, according to Gartner, although 87% of executives say that digitalisation is a priority for their company, only 40% of them have put in place appropriate digital initiatives. And that’s not a wise choice for the remaining share. In fact, according to the Accenture study “Make the leap”, companies that invested the most in new technologies grew twice as fast as the others. Now, as a result of their continued investment in technology, they are growing 5 times faster.

Definition :

Digital transformation is a strategy of transitioning a company to digital technologies in order to improve its processes, its agility and its ability to innovate. It allows to personalize its products and services and to increase its competitiveness and to differentiate itself on an increasingly competitive market. The AFNET (Association Francophone des utilisateurs du Net) describes it as the transformation of all the components of the company (processes, trades, culture, organisation, etc.) under the influence of ICT. It often involves new technologies such as artificial intelligence, data analysis, blockchain, virtual and augmented reality, cloud computing, etc. According to Gartner, 91% of organisations are engaged in some form of digital initiative.

In short, digital transformation is continuous and constantly evolving, involving the integration of new digital technologies into different areas of an organisation to improve its growth and responsiveness to the strategies of the economic and technological environment. It has various benefits for companies and customers such as:

• Improved operational efficiency: streamlining and automating processes reduces errors and improves productivity.
• Cost reduction: according to a study by Capgemini Consulting, implementing digital technologies to automate processes can reduce transaction processing costs by up to 80%.
• Better user experience: by providing faster, more convenient and more personalised ways to interact with customers
• Better decision making: digital technologies enable better data collection and quality, allowing for better analysis and more accurate decision making.
• Risk reduction: better risk management by providing businesses with tools to quickly identify potential threats and take action to minimise them. This can help reduce disruption and maintain business continuity in the event of a crisis or incident.

As we have seen, digital transformation is a real challenge for companies with many benefits. However, it is not always welcomed. We will see what the obstacles to digital transformation are in the field of Human Resources, for the Finance function and for the Purchasing function.

Human Resources Information Systems (HRIS) have been making their mark on the human resources function for decades: in addition to the power of their memories and their computing capacity, which make it possible to automate administrative tasks, they have recently been joined by the multiplication of terminals and the sophistication of decision support tools, which open up their use to all employees, both operative employees and decision makers. We talk about Digital Transformation of the HR function. Its challenges are as much about a better Employee Experience as they are about the necessary Data Quality, not to mention Privacy, in the interconnected world that the recent pandemic is accelerating.

However, obstacles to the digital transformation of Human Resources have been observed, particularly in the adoption of the new digital solutions implemented.

• Resistance to change
• Application constraints, a need for support
• Compartmentalized operation and complex governance
• The obstacles to HRIS adoption specific to the various HR domains

A) Resistance to change

Resistance to change is primarily human

Contrary to what has sometimes been observed, resistance to change is not simply a matter of age. Indeed, you can have a young population in a company and still have better adoption than a more “mature” population. You can have 25-year-old refusers and 55-year-old adopters. Conversely, younger people can be more dynamic.

Resistance to change is directly linked to the human factor, to fear of change. With an already heavy workload, many people find the effort of learning a new tool or adapting to new processes too much of an additional burden. Some HRIS professionals agree and point out that this fear of overload is due to a lack of investment on the part of employees who are not ready to make the required effort to adapt. A company is like a society, some people are curious and want to evolve while others are recalcitrant and reject evolution on principle. We then find the “it was better before” effect, which is particularly sensitive when the tool is imposed, without any consultation with the employees on the transformation of the tools.

… But it is also historical and structural…

Resistance to change is observed during mergers and acquisitions, particularly during the integration phase of the taken-over company into the acquiring company. On this occasion, for example, structural resistance on the part of highly unionized staff was noted by some professionals in the field. These categories were an obstacle to the adoption of digital tools to the extent that, following the acquisition of their company and a growing deficit of trust with their employer, they were resistant in their daily lives.

Moreover, if a company-led initiative has led to failure, the impact of this failure will be reflected in future initiatives because it will be remembered by employees.

…Especially among staff without digital identities

Particular attention should be paid to people without a digital identity, i.e. employees who do not have access to a fixed workstation, or who do not have an email address from their company to connect to the HRIS. Their access to HRIS is a determining factor in digital autonomy. It is then more difficult to get them on board.

B) Application constraints, a need for support

A lack of intuitiveness of the applications

Applications can sometimes be the cause of their own poor adoption. First of all, poor HRIS usability is a factor that can greatly slow down the adoption of an information system. Indeed, HR software that does not meet the needs of the user, whose interface seems off-putting, all the more so if the path to access the functionalities is complicated, will hinder the effective use of the tool.

This is what is known as the “user experience“, which is now at the heart of companies’ concerns. It is important to understand users’ needs in order to develop better ergonomics, promoting the experience, and therefore a more optimal use of the tools.

In addition, employees who feel better about their use of the tool will be more inclined to adopt it because they will more easily see the benefits. A high level of service must be provided so that digitalization allows for greater efficiency on a daily basis. Also, the user experience has another virtue : that of improving the employer image, the attractiveness and the reputation of a company. Hence the importance for HR to properly assess this risk when deploying an HRIS.

A project that underestimates the importance of change management

Assuming that the ergonomics of the new tool are well thought out and that it is sufficiently specified according to the needs of the end users, the deployment phase still needs to receive all the attention it deserves. Supporting users in learning how to use the new tool and, more generally, managing change is one of the dimensions of any HRIS project.

One cause of resistance to change is located upstream of the deployment, during the collection of requirements. When it is not done, adoption is more difficult.

In addition, it is important that the project must be taken in hand by the user teams from the very beginning of the project, even before the specifications. We have to think about use, from the very first studies, and put a lot of effort into convincing and discussing, to take into account the opinions of each user and to engage them in the project.

We can thus understand that the obstacles to adoption are rooted in a failure to anticipate the extent of the changes at the time of the project’s launch, in insufficient ergonomics, a lack of intuitive use, or a hasty deployment, not sufficiently attentive to local particularities. The balance is difficult to find between user expectations, business needs and the potential of applications available on the HRIS market.

C) Compartmentalized operation and complex governance

Barriers to HRIS adoption stem from the fact that the system operates in compartments, which makes it difficult for the various applications to work together, and from complex governance for which HR and IT departments must work together, particularly in terms of data quality, especially since employees are reluctant to enter their own data.

A compartmentalized HRIS operation

Some HRIS juxtapose applications and databases, at the risk of limiting their interoperability and making interface management more cumbersome. The compartmentalized architecture can result from the history of the company, especially when, in the event of an acquisition, a new subsidiary arrives with a system that is not very compatible.

The compartmentalized operation of the HRIS is not without impact on the quality of HR data. Indeed, when the various applications and databases are not well connected, there is a risk of duplicate entries, in different formats, or missing entries in a database, not to mention the ever-present possibility of entry errors. The quality of the data is affected. It takes more actions to extract the data from the social reporting and more actions to check the quality of the data.

Complex governance, between HR and IT departments

Reluctance of employees to enter their own data

Personal data are easily perceived by employees as “sensitive”, even those used in the systems are not included in the list that the regulations keep adding to, and for which the General Data Protection Regulation (GDPR) frames the recording and processing.

HR professionals note the reluctance of employees to enter their own data into employee portals. It appears that they are not very keen to spend time filling in the systems, sometimes because of a lack of explanation of the final use of the data. Some of the obstacles to HRIS adoption stem from the fact that it operates in compartments, with governance involving HR and IT in a complex balance, and that employees are reluctant to enter their own data.

D) The obstacles to HRIS adoption specific to various HR domains

The testimonies of the HR and HRIS professionals who participated in our survey allow us to identify the main obstacles to HRIS adoption in their companies.

Firstly, we have Time and Activity Management (TAM), reported at 31% in our survey. This is the first area in which there are particular adoption problems. Its adoption would be complicated by the size of the workforce (TAM applies to all employees in the organisation), the large number of management options and the associated legal constraints.

In second place, the management of annual interviews and objectives for 25%.This position may come as a surprise given the contribution of their digitalization to the processes concerned. However, difficulties in adopting the module stem from the cyclical nature of its use, so that learning it has to be repeated periodically.

Coming in third, Training is an area where adoption is difficult, first of all because of the lack of intuitiveness and functionality of the software used. In addition, this process requires greater support from HR and HRIS teams.

The Payroll process came in seventh place in our survey, but the professionals interviewed in our White Paper on the subject often returned to this area. Between complex regulations, resistance to change and harmonization, many adoption issues have been raised. Payroll regulations are a first obstacle because, as for training, they differ from one country to another. The calculation rules can therefore be complex to set up, due to the many specificities. In addition, many of the leading solutions on the market are not French, representing an adoption challenge. Payroll is undoubtedly more sensitive than other HR areas to the renewal of practices that it imposes on payroll technicians, for example in the event of tool obsolescence. This creates a particular need for training.

However, it is not only the population of payroll managers that is concerned by the change in HRIS-payroll, but all employees: the dematerialisation of the payroll process and in particular of the pay slip poses problems, as we have seen, for staff without a digital identity.

The digitisation of the recruitment process, for its part, has made it possible to save time by structuring the formulation of offers, facilitating their mass distribution and shortening the processes. However, it is no longer only Human Resources who use it, but also managers, who must now appropriate the digital platforms and make their requests. One difficulty in adopting the system is the lack of support and training for these people.

Finally, the user experience and in particular the candidate experience (internal and external) must be taken into account in the development of recruitment platforms. It is a question of ease of use, satisfaction and therefore of the employer image for future talent.

The Finance function, one of the most digitized in companies

Finance functions are highly formalized with typical processes requiring rigor and transparency, perfect for digital!

Indeed, with such a need to make data more reliable, Finance Departments were the first to benefit from digital tools. Digital transformation is also the second strategic priority of Purchasing Departments worldwide, the COVID-19 crisis having accelerated the digital transition according to 68% of CFOs.

Also, data being, at all stages of the chain, the raw material of the Finance function, the implementation of appropriate and well-adopted digital processes and tools is essential. But also accessible with the arrival of new remote working methods. Finally, the tools must be well adopted by internal and external collaborators, in order to make reliable and centralize data in a world of Big Data, IT disruptions, information silos, and a stronger need for collaboration between professions and people.

The performance gains brought by digital have reinforced the weight of the Purchasing functions in the company

1/3 of CFOs believe that they have gained credibility with senior management as a result of COVID-19. Thanks to the time saved by digital tools in the production and consolidation of data, an upheaval is observed in the role of finance employees. Their missions are more oriented towards tasks with higher added value such as strategic advice. Thus, 25% of CFOs are becoming digital transformation leaders thanks to their position at the confluence of business functions. The Finance Function must therefore be a pioneer and an undisputed master in the company on digital transformation, to ensure its management and performance.

When we know that nearly 1 out of 2 Finance Departments has difficulty selling their transformation project internally, in particular because it is difficult for them to justify this investment in relation to the cost savings required from other departments, and that 80% of CFOs invest 50% or more of their budget in the maintenance and upgrading of systems, it is not surprising to say that the proper adoption of the digital tools deployed must be a priority to secure projects.

However, the function is facing new challenges to secure its digital transformation.

Let’s take a look at the obstacles to the digital transformation of the Finance function and the adoption of new digital solutions.

• A more heterogeneous population 
• Inherent limitations of the applications
• Governance and data quality issues

A) A more heterogeneous population

A varied digital maturity

The digital transformation of the Finance function is older than the Purchasing function. Thus, the financial population is more comfortable with the use of digital. But this is only true for its own financial population. People in financial systems are no longer just internal and experienced, but also occasional and external to the Finance function.

The populations of financial systems are no longer only internal and seasoned, but also casual and external.

Issues such as data quality and the adoption of business software therefore remain relevant, since all these profiles must be addressed.

B) Inherent limitations of the applications

Digital tools were meant to simplify processes. However, the software suites developed by publishers are now standardized and adapted to the majority. They are spreading more and more, and are thus becoming difficult to maintain and adapt to the specific internal uses of each company.

Second, some processes are difficult to learn, especially by occasional or external users of the systems, because of their functional depth and the rarity of their use.

Third, companies want to invest in simple, flexible, and agile solutions, requiring almost no training, which naturally fit into the daily lives of their employees like an Amazon or Netflix.

However, the solutions deployed no longer provide a high level of satisfaction, due to ergonomic shortcomings, while the projects are often more complex than expected. The intuitiveness of the solutions and the support provided either by the company or by the publisher are often disappointing. Since users are not (or not well) continuously supported, they do not feel involved in digital projects, and are therefore not very active on the tools. Thus, deployment projects often end in failure due to low user adoption.

Finally, it should be noted that the source of the problem is not always related to the applications, but to the absence of a change management plan from the start of the project in 57% of companies, of training for 30% or the mismatch between the needs and the tools chosen.

However, the rule is well known: without appropriate change management implemented upstream, there will be no success in projects.

C) Governance and data quality issues

Information systems operating in silos

The Finance function is at the crossroads of the company. To function properly, these departments need reliable, complete, and up-to-date data, distributed across several departments. However, each of these services may have its own system(s). This is called a data silo.

However, Data Governance is itself the responsibility of different departments depending on the company (it would be managed hand in hand by the Business Departments for 45%, 30% mainly by the IT Department, 17% by the Finance Department, and 8% by another Department).

It is necessary to succeed in ensuring the centralization of the data of each service, each entry, to have reliable and unique data. To do this, using technology to integrate data from different systems and break down internal silos is a primary goal for 51% of finance leaders. Similarly, 61% of CFOs say that unifying data from different departments in an organization is fundamental to facilitating decision-making and accelerating digital transformation.

Because data silos hurt overall business performance. Several consequences are to be deplored:

First of all, a dispersion, duplicates or even a loss of data. This therefore implies many re-entries, which are tedious and costly for the company: in time to collect the data rather than analyzing it, in results since the reports will not necessarily be reliable, and therefore in money.

Data: raw material, yet of low quality

Collection of needs, study of markets and suppliers, negotiation, invoicing, management of supplies, documentation and performance, reporting, predictive analyses, budgets, … Information is, at all stages of the chain, the raw material of the Finance Function.

However, the data is not always of good quality, or even existing to justify investments. As the saying goes “Garbage in, garbage out”: tools being more and more collaborative and open to other functions, if we enter bad data, we will have a bad use of it.

The performance of the Functions is therefore directly dependent on the coverage of the processes, the maturity, the performance and the quality of the data feeding the information systems.

But where do these data quality issues come from?

Beyond the scattering of data due to silos, 76% of data quality problems have their origins in user input, which is the first reason mentioned in many studies for decades. 73% of senior executives in France now even trust an AI more than a human being for the management of their finances, and 76% than their own teams. If these same people also want AI to help them with their financial tasks (85%), it nevertheless results in a breach of data entry, even before any digital assistance.

Several causes can explain these data entry errors: poor knowledge of the software, the fields to be filled in, the company’s internal rules, the diversity of possible formats for entering data, but also and above all the diversity of user profiles using the systems. For example, some processes also vary according to the geographical area for companies with subsidiaries abroad.

Also, with the democratization of teleworking and the possibility of carrying out financial activity off-site, digitalization is crucial to provide access to data, maintain activities and secure results regardless of where employees work. Reinforced management of remote process control, centralization and securing of data, and an increase in digital skills are inevitable, especially since 90% of CFOs want to perpetuate telework.

The purchasing function is one of the most digitalised in companies

The Purchasing function is among the most digitized in companies, due to the massive implementation of ERP software more than 30 years ago.

Digitization has made it possible to simplify processes, rationalize costs and deadlines, and automate low value-added tasks in order to free up time for value-creating activities such as innovation, supplier relations, and above all to analysing all this data for better decisions.

2/3 of companies have adapted their processes to take advantage of new technologies, 95% of Purchasing Departments agree that digital tools will be much more present and important in the daily lives of buyers. Digital transformation is also the second strategic priority of Purchasing Departments worldwide, the COVID-19 crisis having accelerated the digital transition according to 68% of CFOs.

The performance gains brought by digital have reinforced the weight of the Purchasing function in the company

At the crossroads of internal relations (marketing, finance, human resources) and external relations (suppliers) of companies, the Purchasing Function is at the heart of these challenges, and naturally follows developments. The deployment of Purchasing IS must therefore be secured to facilitate this enhanced collaboration between business lines.

Thus, 65% of the digitization projects of the Purchasing Department are considered critical or strategic for their companies. They are so important that in more than half, the CEO or General Management are involved.

64% of buyers say that the COVD-19 crisis has enabled the Purchasing department to collaborate more with other strategic functions. 65% even consider that this will allow the strategic repositioning of the Purchasing Department within their company, with a view to giving it more weight.

The purchasing function faces new challenges

First, because the populations connecting to the Purchasing and Finance information systems are increasingly varied.

Unlike HR ISs open to the entire organization and to multiple user profiles, Purchasing ISs are hybrid by being open internally but also externally.

CSR is thus today at the heart of the concerns of this function: brand image and responsible value chain for one, new reports and indicators to be consolidated for the other.

However, the function is facing new challenges to secure its digital transformation.

Let’s take a look at the obstacles to the digital transformation of the Finance function and the adoption of new digital solutions.

• A more heterogeneous population
• Application constraints, a need for support
• Compartmentalized operation and complex governance

A) A more heterogeneous population

The digital transformation of the Purchasing function is more recent than that of the Finance function. However, the recent opening of its tools to other departments (HR indicators, data quality, safety, environment, Purchasing, etc.), has brought its share of challenges, similar to the Purchasing function. It is becoming more and more difficult for employees to master and understand the meaning of all the data requested. We must therefore support them in adopting these changes.

Users external to the company, such as suppliers, also perform tasks in the tools. Sometimes having a system to master per customer, they too must be supported in this digitization.

Thus, the users of each department connecting to the Purchasing IS must be able to contact business/functional support, which pilots the processes and administers the tools. However, very often, online help is confined to application explanations, while the majority of user requests today are not of a technical nature, but arise from a lack of information (training) on the business instructions: closing, package entry procedures, definition of indicators, purchasing categories, etc.

B) Application constraints, a need for support

Processes should be simplified by digital tools.

However, the software suites developed by publishers are now standardized and adapted to the majority. They are spreading more and more, and are thus becoming difficult to maintain and adapt to the specific internal uses of each company. 50% of Purchasing Departments say they are constrained by the standards imposed by the tools.

Second, some processes are difficult to learn, especially by occasional or external users of the systems, because of their functional depth and the rarity of their use.

When we know that 50% of buyers themselves still spend 20 to 40% of their time on the order process, we can easily understand that an employee who comes to make a purchase request once a year has surely forgotten the process in the meantime, when it itself has not changed since the last time.

Third, companies want to invest in simple, flexible, and agile solutions, requiring almost no training, which naturally fit into the daily lives of their employees like an Amazon or Netflix.

However, the solutions deployed no longer provide a high level of satisfaction, due to ergonomic shortcomings, while the projects are often more complex than expected.

The intuitiveness of the solutions and the support provided either by the company or by the publisher are often disappointing. Since users are not (or not well) continuously supported, they do not feel involved in digital projects, and are therefore not very active on the tools.

Thus, deployment projects often end in failure due to low user adoption.

Finally, it should be noted that the source of the problem is not always related to the applications, but to the absence of a change management plan from the start of the project in 57% of companies, of training for 30%11 or the mismatch between the needs and the tools chosen.

The rule is well known: without appropriate change management implemented upstream, there will be no success in projects.

C) Compartmentalized operation and complex governance

Information systems operating in silos

The Purchasing function is at the crossroads of the company. To function properly, these departments need reliable, complete, and up-to-date data, distributed across several departments (trade, supply chain, production, HR, etc.).

However, each of these services may have its own system(s). This is called a data silo. A buyer may himself have to connect to several information systems to perform a single task.

For their part, suppliers sometimes have as many portals to master as they have customers.

It is necessary to succeed in ensuring the centralization of the data of each service, each entry, to have reliable and unique data. To do this, using technology to integrate data from different systems and break down internal silos.

Because data silos hurt overall business performance. Several consequences are to be deplored:

First of all, a dispersion, duplicates or even a loss of data. A collaborator can forget to replicate an entry in a tool other than the one she/he is working on. Then, data errors: information can be entered incorrectly when it must be entered in several places. This therefore implies many re-entries, which are tedious and costly for the company: in time to collect the data rather than analyzing it, in results since the reports will not necessarily be reliable, and therefore in money. Only 15% of Purchasing Departments have solved this problem.

Data: raw material, yet of low quality

Collection of needs, study of markets and suppliers, negotiation, invoicing, management of supplies, documentation and performance, reporting, predictive analyses, budgets, … Information is, at all stages of the chain, the raw material of the Purchasing Function.

However, the data is not always of good quality, or even existing to justify investments. As the saying goes “Garbage in, garbage out”: tools being more and more collaborative and open to other functions, if we enter bad data, we will have a bad use of it.

The performance of the Functions is therefore directly dependent on the coverage of the processes, the maturity, the performance and the quality of the data feeding the information systems.

According to a PwC5 study, the level of Purchasing data quality would be directly linked to the rate of digitization of the department in the company. Digitization is therefore a real lever for value creation.

There is therefore a link between the level of digitization of a company, the quality of its data, and the positioning of the Functions in the company. Indeed, the investment of the company in their digitalization reflects the confidence and the weight it gives to create value and manage risks.

But this automation of processes will only make sense if the data is reliable. The question of data reliability therefore remains at the center of concerns, since incomplete or false reports will be counterproductive in decision-making.A quality database saves time and increases agility for more efficient strategy management and better predictions.

However:

• less than 1 out of 10 Purchasing decision makers consider their supplier database sufficiently qualitative,
• 1 out of 3 never performs an audit of this data quality,
• only 6 Purchasing departments out of 10 believe that their teams’ commitment to data quality is good.

The challenge is therefore to acculturate the teams to this data quality issue, from their collection to their use, but especially at the time of their entry. Buyers and financial employees thus become a kind of community manager to ensure the cooperation and results of all stakeholders on these tools.

But where do these data quality issues come from?

Beyond the scattering of data due to silos, 76% of data quality problems have their origins in user input, which is the first reason mentioned in many studies for decades.

Several causes can explain these data entry errors: poor knowledge of the software, the fields to be filled in, the company’s internal rules, the diversity of possible formats for entering data, but also and above all the diversity of user profiles using the systems.

Occasional users can come and carry out processes such as a purchase request, with a different digital maturity, and be unacquainted with the subtleties of the rules (which purchase category to choose from the hundred choices?). Some processes also vary according to the geographical area for companies with subsidiaries abroad.

Also, with the democratization of teleworking and the possibility of carrying out financial activity off-site, digitalization is crucial to provide access to data, maintain activities and secure results regardless of where employees work. Reinforced management of remote process control, centralization and securing of data, and an increase in digital skills are inevitable.