Why is finance transformation high on the agenda?

Finance transformation is high on the agenda for the majority of finance departments. What is driving this? There are a number of push factors that are important.

Firstly, the change in the external environment, especially in the nature and direction of competition. Technology is acting as a great leveller and lowering barriers to entry, bringing price transparency, generating unprecedented levels of analytic computational capabilities and dangling the temptation of automation as a key to unlocking efficiencies.

Secondly, customers and consumers are increasingly changing their demands and purchasing behaviours.

Thirdly, the employee experience itself is also changing as we see generational shifts around what creates meaning at work. All of this has driven the expectation that finance adapts itself to the demands of the new business realities – but at the same time, sometimes even ahead of the curve, but definitely not too late.

Is there something special about finance transformation?

The essence of finance is value preservation, protection and creation. In order to do all three, data is required and needs to be seen as a core organisation asset. However, value is not extracted from data unless decision-making exists and is of sufficient quality and timeliness. In this sense, I would argue that finance transformation is something special – something that cannot happen in isolation from a much bigger and broader business transformation. Changing the way data is created, maintained, used and decommissioned in order to support better decisions and the governance around this impacts every organisational function and business line.

What are the benefits of finance transformation?

There are several obvious benefits to a finance transformation done well. Amongst others:

• An increase in effectiveness – by being more of a strategic contributor to the organisation health
• An increase in efficiency – by providing the more process and transaction elements of the financial services in a speedier, frictionless manner and, critically, with a significant decrease in errors
• An increase in engagement – by building a more tech and process savvy finance org, which by complementing with meaningful and impactful roles can be critical in upgrading talent,
• A catalyst to broader business transformation – as mentioned before, especially if finance transformation touches data management and decision making, it can provide an enormous benefit to the rest of the organisation in becoming more focused, agile and flexible

What are the key considerations?

The first consideration for me in any finance transformation would be the Service model choices that have to be made. The second would be the organisation design. By service delivery model, we talk about really deep-diving into what key services Finance will provide in the future and how do they differ from now. The organisation design would then tackle the elements of how that is to be provided and through what kind of capabilities. Key questions to be asked here are to what extent to centralise or to not centralise, what are the process, systems and control implications, what are the capabilities required of each (key) role and how the proposed services and organisation map into the current or future business structure. 

In this sense, the clarity of context will play an essential role, as will the extent of appetite for change from the organisation perspective. Therefore, the change story assumes a very important role, as does the governance, sequencing, organisation readiness aspects, change management and risk management. Most of these are similar factors that inform most transformations.

What are the key watch-outs?

There are several – perhaps obvious watch-outs in terms of designing and successfully implementing finance transformations. Amongst others:

• The inspiring vision – the why, if this is missing, as always, it is harder to mobilise enthusiasm and commitment, 
• Change capacity, not fully understanding the extent of the change impact and the support needed to make the change happen,
• Underestimating the operational agenda, especially if in an environment where the performance is under challenge,
• Transformation design, splitting design and execution too much, for example, not involving those who have to live with design choices to be part of the design, 
• Technology as a panacea, looking at finance transformations as something that can be solved by technology and technology only,
• Failing in data space, not addressing the fundamental health of data management from an end-to-end perspective,
• Failing in process space, not linking the enabling role of sound processes versus the disruption that badly designed processes can give to the service delivery model,
• Taking shortcuts on resources, as always being too optimistic about how much can be achieved by how few,
• Flexible time, imagining that time can be created out of nowhere, allowing people to manage transformation in addition to operational duties,
• Establishing baselines, not able to set the baseline achievements pre-transformation, to be able to measure progress post-transformation

How can technology help support transformation?

Although I stated earlier that technology could never be seen as a panacea for finance transformations, it is an integral part of finance transformations. It is hard to imagine a transformed finance function without a step-change in the technologies used to support the chosen service delivery. Whether this is process automation technologies, deep analytic technologies, collaboration technologies, visualisation technologies, predictive modelling and algorithmic technologies and so on and on. What will be key will be to assess which tools are required for what purpose. One other point is essential. The introduction of technologies that either support or are part of a transformed operation does not need to be an “all-in” bet. Judicious use of pilot/use case studies should be considered.

Summary

In many ways, finance transformation is no different from any other transformation. However, given that finance transformation tends to address deeply rooted data and decision issues and tends to be at the forefront of leveraging upcoming technologies, it can serve as very positive support and catalyst for broader organisation transformation. This link needs to be positively addressed, and all the possible causes of what could derail such a transformation should be considered.