Finance transformation: The transformation journey

Before we start on the journey, it is worth looking at the reasons why transformations fail. Research shows that technology accounts for less than 1% of transformation failures – something which may be a surprise to many. We have found that technology is often used as the scapegoat, a re-enforcement of the ‘a bad workman always blames his tools’ saying. So, what can you do to avoid failure and make your project a success?

Mindset

This is probably the most difficult of all to address. What is required is an adaptive (or growth) mindset in leadership and the employees.

For leadership, when you know the finance team is ready for change and understand the benefits of doing so, you have greater confidence to take on the risk of transformation.

For employees, the ability to respond to change means less stress in times of uncertainty caused by transformation. Because they can let go of the past, they change with less resistance and become productive in the new situation, as well as solving problems more effectively as they transform.

In both respects, the role and drive of the CFO are critical. Firstly, to sell the transformation vision to the C-level executives. Secondly, to empower and encourage the finance team and make them central to the journey.

Vision and Scope of Transformation

At the outset, it is important to have a clear vision of what you are trying to achieve and deliver. This is where the use of external expertise is encouraged, helping you understand the ‘art of the possible’.

Once this is understood, then you should set a realistic scope with expectations set accordingly. In our experience, there is a tendency to attempt to ‘boil the ocean’ rather than taking small, manageable steps. As a result, budgets and timescales can be unrealistic – invariably on the short side. Remember, transformation is an ongoing process and it should have no time-limits.

People

There are several aspects to this. The first was covered above and is the need for people to have the right mindset. The second is ensuring resource is given enough time to focus on transformation; strategising, training, delivering. In our experience, this is the biggest cause of project failure.

The final point is about the appropriate use of third-party resources. External resource should be used to provide expertise that does not exist internally. However, it is important to prioritise the use of internal rather than external staff to deliver transformation, encouraging input and buy-in.

Delivery

Whilst transformation should be seen as an ongoing and never-ending process, it still needs the application of project disciplines i.e. communication, governance. Again, the importance of this is often overlooked and under-invested in.

The 3 steps to success

To maximise your chances of success, we advocate a simple three-step process to transformation.

Step 1 – set a vision for the CFO and the Finance Team

There are five key parts to setting a vision, a task that should be performed by the CFO and the Finance Team:

- defining how you (the Finance Team) want to be perceived by your organisation - you need to decide as a team where you want to be on the scale from ‘beancounter’ to ‘strategist’ as this impacts everything that follows. We would advocate that you canvass the organisation for their perception as a starting point.

- understand and be honest about your current position - getting into the nitty-gritty of each process and identifying where issues exist, where there are inefficiencies, and what can be done better.

- identify any potential barriers and their impact - start with a blank canvas although you need to be realistic. Some limitations may be around systems and technologies or available resources and skills.

- identify the future impact on resource and skill-sets - although we accept that this may be difficult at this early stage.

- set out a high-level plan for transformation - map out the key steps, identify quick wins, quantify benefits, and calculate an outline cost.

As noted above, this is an exercise where you may require advisory assistance. It requires an understanding of the ‘art of the possible’, what good looks like and the potential impact on resource. Also, you may require some expertise to help you with an outline cost.

The output from this is a strategic plan for Finance Transformation that can be presented to the organisation. As the key stakeholder, it is then the responsibility of the CFO to sell this vision to the CEO and the board.

Step 2 - selecting a technology platform and partner

This is a whole subject in itself so we will cover this at a high level only. You will gather, amongst other things, detailed requirements, platform restrictions and deployment methodology. This will result in a selection process to identify the technology platform and partner that best suits your needs.

Step 3 - delivering transformation

Again, we will only cover this at a high level. What we would highlight is to look for quick wins. With an initiative such as transformation, it is critical to build confidence and momentum in the early stages. Start with process improvements, thus freeing up key staff to deliver further transformation. Once you have the foundations in place, start to effect change in the organisation and the perception of the Finance Team. Remember, Finance Transformation is an ongoing initiative that never stops.

In conclusion

In summarising the transformation journey, start with setting a vision for the CFO and the Finance Team. Once this is in place select a technology platform and partner for delivery. Finally, deliver transformation as an ongoing initiative. Use the external resource to guide you where specific expertise is needed; this can prove invaluable.

Hopefully, we have met our objectives; to cut through the hype around Finance Transformation and discuss it in a language that we can all understand; to help you understand in simple terms what it is and the potential for it within your organisation; to help you visualise the ‘art of the possible’ through examples of transformation in practice. We hope that every finance team from every organisation can now set a vision and start on their transformation journey.