Finance Transformation Reimagined: 7 Steps for Tactical Change


Finance Transformation Reimagined: 7 Steps for Tactical Change

In the corridors of large organizations, there is growing concern that the finance function will be “transformed” again. This often occurs as a result of previously mismanaged transformation projects that are at best inconclusive and at worst value-destroying. In reality, large enterprises demand that finance functions adopt a Kaizen “continuous improvement” attitude while also maintaining a flexible approach to support business strategy and exceed expectations in the digital world. A more tactical delivery approach is needed to manage this type of strategic change.

Unless a business shows sizeable signs of distress, the basic premise of large-scale, expensive business transformation projects must be re-evaluated:

  • In the current business climate, it is increasingly difficult to justify costly, multinational, multiyear projects of the kind popularized in the early 2000s.
  • The role and scope of the finance function has accelerated and diversified since the onset of the 2008 financial crisis, making large change programs significantly riskier as finance tries to navigate change while juggling competing priorities and agendas.
  • Change must be constant. Large-scale transformation can give the illusion that once delivered, the end has been reached. In reality, finance functions require continuous change to meet the evolving needs of various customers.

Like an expert surgeon making only the most efficient incisions, organizations must focus on smaller, incremental interventions that target operational excellence. Businesses should consider adopting a targeted view of “finance refinement” based on the following steps.

1. Set a Vision & Target

Setting a vision is central to getting everyone on the same page. The process can be a highly creative journey for the finance function as well as the business. Skepticism quickly turns to excitement as key resources debate and arrive at conclusions.

The first step in all finance transformation projects is asking the big question: Why? Setting a destination vision provides a target that articulates not only what finance wants to be but also how it will support and meet business, corporate, and regulatory obligations. With this vision, finance can identify the full menu of change requirements. Then, through a prioritization maturity matrix, the organization can select the most valuable projects based on cost and return metrics.

2. Communicate & Collaborate

Effective communication and collaboration skills can have a material effect on a project’s perceived and actual ability to deliver its intended value.

Two-way communication is critical at the onset of finance transformation to avoid mistrust and gossip. Once priorities are set, it is imperative that everyone across the business and finance understands that the process is commencing and input is welcome. Dialogue must be properly captured and evaluated. Comparing feedback from both the business and finance communities can provide valuable insight into the perception versus actual performance of the finance function.

3. Plan & Respond

Planning is vital. Project plans often look impressive but have not taken all necessities into consideration. Ignoring a problem will not make it go away and the price paid will be reflected in the level of value achieved.

Robust plans with clear project management protocols provide the level of transparency required to manage key stakeholders’ expectations. Champions across the business and finance need to drive change by applying tact and emotional intelligence to deal with blockages and resistance. Rather than ignore issues and allow change projects to stagger on, a strong mechanism is needed to respond to roadblocks that can hinder momentum.

4. Repair & Revitalize

The classic “people, process, and technology” approach is common, but optimizing these components while simultaneously helping them work together is the real challenge. Sometimes sacrifices must be made to achieve value synergies.

Systems optimized for past challenges must be repaired to support today’s challenges. Similarly, relationships and processes that have stagnated or become corrupted should be revitalized. Silo cultures often deter genuine cooperation across business functions. To repair and revitalize, enterprises must kick-start their cultures of key performance indicators (KPIs) to encourage actual business innovation.

5. Recycle or Replace

When deciding how much to invest in optimizing people, processes, and technology, judge the incremental costs and benefits. Sometimes reaching for world-class status is not desirable or necessary.

Enterprises should audit all mission-critical systems to define what can be reused and repaired to increase effectiveness. Even systems operating at 90% effectiveness can be improved. If the figure is as low as 50%, systems should be scrubbed to remove blockages and enhance effectiveness. If systems do not respond or cannot be used more effectively, they should be removed and replaced with updated versions.

6. Grow (Minus the Groans)

Harness the momentum of change programs by revisiting staff incentives. Change often makes existing approaches obsolete, which can result in unintended and counterproductive behavior.

Everyone in the enterprise must tune in to the idea of growth. A proper system of reward aligned with growth should be universally understood and implemented. Bonuses awarded for regular attendance are one thing, but proper reward for sustainable growth should be at the core of a reward system targeting the right people.

7. Reach a New Normal

Transformation does not have an end date. Continuous improvement is the status quo—and it should be applied to everyday operations as the business evolves.

A more targeted transformation approach in a multinational business brings together disparate cultures under one umbrella. A strong ethical sense must underpin growth and customer relationships. Reaching a new plateau and sense of normalcy can enliven companies and open fresh channels of thinking.

Implementing Change

The real value of finance transformation is found in changing resources’ behaviors around new, defined ways of doing business. As new processes are designed and technologies are implemented, their impacts will be negligible or even value-destroying if resources do not understand or conform to updated processes.

No single template can be applied to all businesses. The best change consultants get under the skin of a business, bringing an intuitive sense of where it can go and helping to broker the right balance of outcomes across diverse business needs. The seven steps for tactical change can be tailored to meet the needs of individual business circumstances in an inclusive environment to achieve lasting rewards.