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The 5 key pillars of a finance transformation

The 5 key pillars of a finance transformation

Adam Gates, Head of Odgers Connect, discusses the common challenges organisations face when implementing large-scale transformation across the finance function

In the mind’s eye of many senior executives, the notion of transformation is often associated with customer experience or improving sales and aspects of distribution. It is a concept that does not readily translate into benefits realised from enhancing the organisation’s finance function. What is more, finance is a cautious area of the business by nature, with ‘change’ being unfamiliar territory for many teams.

It means that finance transformation can suffer from a lack of senior leadership buy-in and from internal resistance. However, for those that get it right, finance transformation can offer a bounty of business insights that lead to greater forecasting and unparalleled decision making. What traditionally covered events from the past, becomes the lynchpin of how the business drives itself into the future. 

As a provider of highly-experienced independent consultants, this is an area we know extremely well. We often find ourselves at the epicentre of the ‘change’ environment, sourcing independent consultants with critical skills and hard-won experience in the finance arena in order to help organisations realise the myriad benefits of transforming their finance function. With that in mind, this is how you get it right.

1. Never transform your finance function in isolation

You need to be very clear about the relationship and value add that the future finance function is going to have with the rest of the business. It requires ‘buy-in’ from both other functions and teams so that the transformation journey is wholly supported and adopted.   

Robert Sinclair, an Odgers Connect Ambassador and change leader with extensive experience in finance transformation, tells me, “You need to build a vision of what the future finance function will look like in collaboration with the wider business. That way they will be on-board with the change and understand how it will benefit them and how business and finance will work together in the future.” 

If this doesn’t happen, functions closely aligned with finance, such as IT and sales will quickly come into conflict with any transformations. For example, an analytics project that requires data analysis from sales is unlikely to be realised if the sales department don’t have the capabilities to provide that data.

Huseyin Alakca is an independent consultant and CFO advisor. He agrees; “Finance transformation needs to fit into the wider organisation’s strategy, whether that’s increasing market share, business growth or driving efficiency.”

2. Communicate the transition of responsibilities and tasks

Finance transformation is often driven by the desire to bring about resourcing efficiencies, ‘freeing up’ employees to 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.

“As you can imagine, unexpectedly off-loading reporting and clerical tasks to other teams is not going to go down well,” Robert says, “you need to have a clear public and agreed approach for what you’re going to do with this work”. A clear communications strategy that cascades across a business is critical, as is strong change management capabilities.   

3. Understand the skills and capability needs of the future finance function

If you are going to successfully deliver a finance transformation you need a very clear understanding of the skills and capability requirements of the future state. Given that most finance transformations aim to dramatically change the work that is carried out in the function, don’t assume your current employees are going to be able to perform the tasks in the future roles or that their customers in the business will necessarily think they can perform those enhanced roles.  

“Organisations with a classic finance function will be very ‘numbers oriented’; with individuals skilled in reporting and making sure the finances add up,” Huseyin says, “these individuals may not have the investment or business forecasting skillsets required for 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. Additional assessment of the people involved is often required to ascertain whether the current organisational structure is fit for purpose for the future state.

4. Secure senior leadership buy-in

 “Prepare your senior leadership and finance management team to go on the transformation journey. They’re not a group of people who regularly go through change so you need to educate and coach them to be managers of change, not just managers of work,” Robert tells me.

Finance transformation is something that needs to be communicated and championed from the top of the organisation and throughout management levels. Junior team members are too distant to relate to the CFO or other senior leaders and therefore managers need to be communicating the necessity for change.

“You often see finance transformation carried out by the organisation but it doesn’t have executive or Board buy-in,” Huseyin says, “if you don’t have them behind you, the transformation won’t be taken seriously and won’t be accepted by the wider organisation.”

If you don’t have the senior leadership on-board, the 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 and morale can drop.

5. Don’t let technology take over

When the end goal is to automate many time-consuming tasks, it is very easy to get caught up in the technology that is going to achieve this. However, without managing the people, culture and senior leadership aspects of the change journey, too strong a focus on technology can consume energy to the detriment of the organisation and it’s workforce.  

“With finance transformation often being driven by the desire for efficiency gains, there’s a temptation to focus on automation and reducing manual work. However, a successful finance transformation won’t be about new systems or processes. It’s more important to change mind-sets which requires, time, effort and senior-level buy-in,” Huseyin comments.

Organisations that put technology first often find that it takes over the transformation journey, drawing it out with the end result that they don’t have any money or energy left to complete the project.

Finance transformation is not something that can happen in a vacuum. It requires a clear vision of where the function is now and where it will be in the future. This means engaging the senior leadership team of the whole business and managing both the mind-set and skillset change within the workforce. If this happens, then the prize comes in the form of a business that is better equipped to make forward-thinking decisions, more able to predict market events and is ultimately more resilient.

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