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Nearly $400 Billion Lost Annually Due to Digital Waste

Digital technologies can dramatically change how companies run, arguably with greater impact today than any previous transformation wave. Yet numerous well-established enterprises often cannot embrace new technologies effectively to deliver targeted return on investment.


Research from the Genpact Research Institute, for example finds that of the $593 billion companies spend collectively on digital projects annually, they waste almost $400 billion.

 Investing Intelligently

Many established enterprises do not connect their digital initiatives to measurable strategic goals adequately. A recent Genpact Research Institute study found only 30 percent of companies say they align digital interventions with business outcomes successfully.

Some enterprises are also slow to embrace digital beyond the front office. For others, the complexity of legacy technology, processes and sometime people, seems insurmountable. It is no wonder that at the current rate of change, 67 percent of the S&P 500 will exit this group in 10 years.

While digital transformation can impact business outcomes significantly, finance teams can find it especially challenging due to their legacy siloed and fragmented operating models, process definitions and technology architecture. For example, in the order-to-cash value cycle, much of the traditional focus goes into the efficiency parameters of cost optimization, cash reconciliation and “brute force” undifferentiated collection strategies.

This emphasis can underplay the impact of a differentiated multi-channel proactive customer engagement strategy, the use of agile technology for order automation and machine learning, the leverage of data aggregation and visualization technology to create “control towers” for end-to-end supply chain visibility, and predictive analytics to optimize collections and deduction management.

The trick lies in aligning technology with design thinking, which prioritizes the value to the end customer, to upscale the role of finance executives. Instead of dealing with disparate data sources, manual spreadsheets, localized processes and multiple legacy systems, new cloud-based solutions with smart analytics and automation tools can provide greater visibility.

With access to improved insights in financial planning and analysis, for example, CFOs and their teams can act as forward-thinking advisors to management by delivering faster, more transparent reporting and decision-making linked directly to business outcomes.

The crying need is for fast-paced, iterative change rather than the traditional investment-heavy transformation journeys that, in today’s fast-changing environment, are often too late and too expensive. That’s where the “Lean” approach makes a huge difference. Lean practices, used alongside advanced digital technologies and a design thinking discovery process, are effective in driving agile and iterative transformation to achieve lasting enterprise-wide results.

Based on our experience implementing Lean in technology-rich environments, we have observed large enterprises can successfully apply these principles to today’s digital implementations. In fact, it is core to achieving effective transformation from the front through to the back office. It is what we call Lean Digital.

Integrating technology and process re-engineering helps prevent the digitization of broken processes while also simplifying interventions, while still moving beyond the tendency toward small, tactical improvements often favored by more traditional Lean management strategies.

The Lean Digital Approach

From our successful implementations running operations of large finance and accounting organizations, we see proven results that the Lean Digital approach is invaluable at three levels to drive digital transformation:

 Spot the unnecessary in the design phase. - Applying Lean principles from start of a project ensures enterprises can identify complexity before digitization begins. This saves valuable time, money and other resources throughout a transformation initiative. In addition, using a design thinking approach that keeps the end user in mind helps eliminate unnecessary process steps that do not add client or overall business value.

Simplify the build phase and keep it iterative. -After identifying waste in the design stage, Lean principles, combined with cloud-based technology that can overlay improvements on existing systems, help large enterprises develop a simpler transformation plan. Project teams can develop a roadmap that displaces legacy technology, people and processes, or where necessary, eliminates them altogether, seamlessly. This helps companies move faster and adapt to changing conditions with agility.

Optimize existing systems and operations. Applying the Lean Digital approach to managing infrastructure and legacy technology makes enterprise operations more cost-effective and agile. It also helps release resources for investment for the future instead of locking them into maintenance.

Today’s challenge is not new technology; it is management’s ability to rearchitect how businesses run – at scale – by harnessing digital’s power to adapt and compete more effectively. Lean Digital drives greater benefits from digital technology through the front, middle and back office to unlock more value, simplify complex processes and impact business outcomes.

This approach also drives the emergence of more intelligent operations that can execute faster and more accurately, and adapt over time. The end result delivers digital transformation that is more rapidly attainable, with scalable and cost-effective business process platforms tied to enterprise-wide results.


Shantanu Ghosh is senior vice president, CFO Services and Consulting at Genpact; and Gianni Giacomelli is senior vice president of product innovation and head of the Genpact Research Institute.