FINANCE TRANSFORMATION: 5 KEY TIPS TO ENSURE SUCCESS

Adam Gates, Head of Odgers Connect, explains how organisations can overcome the common challenges of implementing large-scale transformation within their finance function

 

Very rarely is finance the first port of call for an organisation’s transformation agenda. For many senior executives, the notion of transformation is more closely associated with customer experience, improving sales or some form of e-commerce development. What’s more, ‘change’ is unfamiliar territory for what is by nature a cautious area of the business.

It means that finance transformations can suffer from a lack of senior leadership buy-in and from internal resistance. However, for those organisations that prioritise finance as a business-critical enabler, the benefits can be extraordinary. Business insights leading to more accurate forecasting, clearer decision making and effective risk mitigation are just some of the outcomes of transforming a finance function from what traditionally covered events from the past, into the lynchpin of how the organisation drives itself into the future.

 

However, a finance transformation is not without its hurdles. These are some of the common challenges organisations face and how they can overcome them:

  1. Don’t transform in isolation

Organisations need to start by working with the wider business to build a vision of what the future finance function will look like. This means securing buy-in from other functions to ensure that the transformation is wholly supported from the outset. Explaining the value-add to the rest of the business is the quickest way of securing cross-functional support and alignment.

If an organisation fails to do this, functions closely aligned with finance, such as IT and sales, will quickly come into conflict with any of the changes being implemented. For example, an analytics project that requires data analysis from the sales team is unlikely to materialise if the sales team don’t have the capabilities to provide that data.

Importantly, whether it’s increasing market share, business growth or driving efficiency, a finance transformation should align with the organisation’s overarching strategy and demonstrate how it will help bring that to bear.

 

  1. Communicate how tasks and responsibilities will change

Finance transformation is often driven by the desire to bring about resourcing efficiencies; the ‘freeing up’ of employees so that they can conduct more strategic and insight-led tasks. A noble pursuit for any finance function but one that means the traditional reporting tasks are often distributed to other areas of the organisation.

The unannounced off-loading of reporting and clerical tasks to other teams is not going to be met with enthusiasm. Business leaders need to have a clear public and agreed approach for what they are going to do with this work. A clear communications strategy that explains the rationale behind workload changes is critical.

 

  1. Build a picture of the skills required by the future finance function

Given that most finance transformations aim to dramatically change the work that is carried out in the function, an organisation should not assume that its current employees are going to be able to perform the tasks in the future roles.

Organisations with a classic finance function will be very ‘numbers oriented’; with individuals skilled in reporting and making sure everything ‘adds up’. These individuals may not have the investment or business forecasting skillsets required for what will become an insights-led finance function.

When mapping out the future finance function, training and upskilling of current team members or even a workforce reorganisation, needs to be a consideration. During the planning stage, a workforce assessment will be necessary to ascertain whether the current organisational structure can effectively transition to the future state.

 

  1. Secure senior leadership buy-in

Prepare the senior leadership and finance management team to go on the transformation journey. They are not a group of people who regularly go through change so the team directing the transformation need to educate and coach them to be managers of change, not just managers of work. Facilitation is critical here to ensure all are on board with the direction of travel.

Organisations need to ensure that the senior leadership group communicates and champions the programme from the top and throughout management levels. Junior team members are too distant to relate to the CFO and other senior leaders and therefore managers need to communicate the ‘why’ and ‘how’ through robust change management discipline so that the plans cascade from top to bottom.

If an organisation doesn’t have the senior leadership on-board, its workforce won’t be engaged and employees won’t see a reason for carrying out the transformation. The project meets resistance as employees are asked to carry out tasks they don’t understand, morale can drop and ‘change-fatigue’ can set in.

 

  1. Don’t let technology take over

With finance transformations often being driven by the desire for efficiency gains and the reduction of manual work, it is very easy for business leaders to become consumed by the technology that will achieve this. However, senior leaders must ensure the focus on technology does not come at the cost of managing people and culture. It is far more important to change mind-sets and secure buy-in from stakeholders than to implement a shiny new platform.

Organisations that get this wrong often find that the technology engulfs the transformation journey, drawing it out to the extent that there is often little money or energy left to complete the project.

There are many different technologies on the market, so the big challenge for CFOs managing a transformation project is ascertaining whether it is ‘fit for purpose’ and coinciding these with the longer-term needs of the business. A strong relationship with the CIO is crucial in achieving this.

Finance transformation requires a clear vision of where the function is now and where it will be in the future. It means engaging the senior leadership team and managing the evolution of skillsets and mind-sets. If this happens, then the result is a business that has a true capability to make forward-thinking decisions, is more able to predict market events and is more resilient.

 

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