How Do You Run A Successful Finance Transformation?
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Finance transformation is a crucial undertaking for any company aiming to meet modern demands and drive long-term business success. In today’s rapidly changing business landscape, finance functions must adapt and evolve to remain relevant and contribute effectively to the organization’s overall strategy. With the impact of digital transformation and the need for agility, finance functions must embrace change, invest in technology and analytics, optimize business models, adopt digital solutions, and leverage new data sources. This evolution enables finance to gain better insights, support decision-making capabilities, and drive performance.
How do you transform finance?
A finance transformation project is a significant change initiative that aligns the finance function with the company’s overall strategy. It entails changes to core processes, operating models, systems, technologies, structures, reporting, and communication. Recognizing the warning signs, such as manual processes, spreadsheet reliance, slow reporting, outdated systems, and insufficient reporting, indicates the need for a finance transformation.What makes for a successful finance transformation?
Successful finance transformations require careful project planning and effective change management. External specialist support may be necessary to design the roadmap, create a detailed plan of action, manage timelines and costs, and ensure stakeholder buy-in. These projects can take years to complete, depending on their scale and complexity. Clear communication strategies are essential to overcome resistance to change and ensure the project’s success.
Building the right project team is crucial for finance transformation. It should include internal and external specialists with a diverse range of skills and experience, including finance, IT, change management, data analysis, and process optimization. Involving influential stakeholders within the organization helps create a collaborative culture and ensures full support for the project.
Technology plays a crucial role in enabling finance functions. It should be carefully selected to meet specific needs and goals, considering scalability as the business grows and evolves. Integration of different systems and data flows is vital for maximizing the value of technology initiatives.
How do you lead a finance transformation
Kevin Appleby discussed this topic with Hannah Munro on the GrowCFO Show. You can listen to the whole episode here.
To drive successful finance transformations, finance professionals must acquire additional skills beyond traditional accounting. Strategic planning, process optimization, change management, technology automation, and data visualization are essential competencies.
They discuss in length about managing change. If you want to deliver a successful finance transformation then you need to understand how to lead change. Hannah highlighted John Kotter’s book leading change.
The 8-Step Process for Leading Change was cultivated from over four decades of Dr. Kotter’s observations of countless leaders and organizations as they were trying to transform or execute their strategies. He identified and extracted the success factors and combined them into a methodology, the award-winning 8-Step Process for Leading Change.
If you want to find out more about Kotter here’s a great article
You need a great finance transformation team
Investing in training programs like GrowCFO’s Finance Transformation Boot Camp . Course leader Oliver Deacon equips finance teams with the tools and techniques to embed best practices, drive change, and execute successful finance transformation initiatives.
Oli explained how boot camps provide pragmatic and useful training that participants can implement immediately when they return to the office
But why do many finance transformations fail?
Kevin Appleby spoke with Anthony Perrozzi on the GrowCFO Show to explore why many finance transformations fall short of expectations. You can listen to the whole episode here.
Anthony, an experienced finance transformation leader, outlined five key reasons for failure:
1. Internal under-resourcing: Transformations require dedicated resources committed full-time rather than expecting existing staff to take it on alongside their regular roles. Understaffing is a major cause of missed deadlines and subpar results.
2. Suboptimal RFPs: RFPs brought to consulting firms may not consider the level of strategic expertise and dedicated project management needed. Responses focus on headcount rather than strategy. Client-side advisors are important to oversee consultants.
3. Lack of cross-functional impact analysis: Finance departments like AP, AR, reporting often operate independently without understanding downstream impacts. Transformations must analyze interdependencies and integrate processes across functions.
4. Failure to apply rationalization initiatives: Issues like data inaccuracies must be resolved before transformation to eliminate non-value activities and lay the groundwork for process improvements. Cleaning books is crucial but often deferred.
5. Lack of finance enablement: Current process gaps and deficiencies are not well-defined, so transformations do not properly identify and enable changes needed to close those gaps. Process documentation is also frequently lacking.
In conclusion, finance transformations are imperative for finance functions to remain competitive, provide critical insights, and support strategic decision-making. By embracing change, investing in technology, and continuously evolving, finance functions can position themselves as true partners in driving business performance and creating long-term value.
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