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There is a significant opportunity for Professional Accountancy Organizations (PAOs) to accelerate digital transformation to improve the delivery of their mandate. Based on the success of the IFAC PAO Digital Readiness Tool, the World Bank developed a project in 2021 that engaged with Board members and senior management of 20 PAOs in Sub-Saharan Africa, Middle East & North Africa (MENA), Latin America, and the Caribbean regions regarding their digital transformation journeys.
"We need to design and operate an effective digital transformation strategy supported by financial and human resources to leapfrog our service offering to our stakeholders," commented a Chairman of a PAO during the knowledge event hosted by IFAC and the World Bank on PAO digital transformation on June 24, 2021 (available in English and French). Similar sentiments were also expressed by Board members and senior management from different regions. The participants at the knowledge event and interviewed leaders expressed urgency for the profession to accelerate digital transformation by designing and implementing a PAO digital strategy to improve their service delivery.
This article highlights five pillars expressed by members as critical in designing and implementing an effective and sustainable PAO digital strategy.
1. Governance sets the tone at the top
The Board should lead in setting direction and providing oversight on digital transformation. To serve as champion and driver of the reform, the Board composition should include a person(s) with IT skills and experience to provide the necessary strategic guidance. The Board should understand the technologies impacting the PAO's operations, allocate IT resources (financial and human) and approve appropriate digital policies, especially on information security, risk management, data protection, etc.
The Board should consider establishing a Digital Transformation Committee to provide input, leadership and support to its members and PAO management on the digital strategy. With their digital skills and expertise, committee members should play a hands-on role in designing and implementing the strategy.
2. User-centric approach to developing the digital strategy
Steve Jobs said, "You've got to start with the customer experience and work back toward the technology – not the other way around." Therefore, the strategy's design should start with extensive engagement with all PAO stakeholders, including members, to identify their needs, expectations, and concerns for incorporation into the digital strategy. PAO should consider using an online survey and hosting focus group discussions with different stakeholders to obtain the required input and create relevant awareness of the importance of digital technologies.
In addition, conducting a readiness assessment would benefit the design of the strategy. The results of IFAC PAO Digital Readiness Tool would serve as input in the design process.
3. Contents of the strategy
A digital transformation strategy identifies the steps a PAO needs to take to transform and reposition itself in the digital economy. The PAO needs to analyze its product/service offerings, operations and business models to determine their appropriateness in light of competition, environmental issues, and emerging technology. During the COVID-19 pandemic, many PAOs had serious challenges delivering continuing professional development (CPD) programs and conducting in-person examinations. PAOs that proactively embraced digital transformation by leveraging emerging technologies had little or no challenge providing high-quality services in membership management, examinations, CPD, annual conferences, marketing services, and improved internal processes, notwithstanding the trend towards the new normal of remote work.
Based on the gaps revealed by timely diagnosis, PAO Boards should determine what strategic goals need to be achieved, and when. Constitute a Project Steering Committee (PSC) comprising capable persons with a change and digital mindset. Carefully select an appropriate emerging technology that will deliver the desired results. Without a culture change, the choice made may not be successful. Thus, to embrace change, involvement, and communication with employees is essential. In essence, employees must be technically prepared to take ownership of the change process in PAOs so that creativity and innovation enabled by emerging technology would succeed. With digital transformation, functions will be replaced by emerging technologies, which entails personnel retraining, reskilling, redeployment. These issues should be handled with care, tact, and empathy.
PAOs are encouraged to start small, assess the impact, and scale up. They should deliberately select an appropriate, scale-able technology solution that fits their business model and operational processes. Bespoke technologies may not be suitable. For instance, one PAO – the Institute of Chartered Accountants of Nigeria (ICAN) – mentioned how it proactively embraced online assessment of examination scripts with significant improvement in its examination lead time and operational cost. According to ICAN, the deployment of technology started with one department. Given the visible measurable impact on one unit, ICAN scaled up by moving to other departments.
The transformation plan should be implemented in an adaptive manner taking into account the cultural, technological and stakeholder-related dimensions while identifying risks and challenges that will spring up during implementation. As PAOs deploy human and financial resources, contingency arrangements should be made to address emerging challenges. Again, as implementation progresses, there is a need to obtain feedback to refine the strategy.
5. Monitoring the strategy
The monitoring of strategy implementation should be done with some degree of flexibility by being open to changes in the original plan that will facilitate optimal outcomes from the project. Accordingly, the Board and project management team should be open to suggestions. The chosen strategies should be continuously monitored and assessed such that the underlying assumptions and transformational progress to date are evaluated.
In closing, the digital transformation initiative powered by the IFAC/World Bank collaboration has been very practical and useful. The winning digital transformation strategy for a PAO must focus on creating value and exceptional experiences for its most critical stakeholders: members. As per the saying, "small streams make big rivers," starting with small actions and building on them with regularity and consistency should allow PAOs to reach success in their digital transformation journey. Therefore, we challenge all PAOs to consider the above pillars to start or accelerate their digital transformation in order to efficiently and effectively deliver on their mandates.
Christian Matt, Thoman Hess, and Alexander Benlian. (2015). Digital Transformation Strategies. Business & Information Systems Engineering. 57. 339-343. 10.1007/s12599-015-0401-5.
Diana Wu David and Sunshine Farzan. (July 2021). “Boards are undergoing their own digital transformation”, Harvard Business Review. https://hbr.org/2021/07/boards-are-undergoing-their-own-digital-transformation