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Author's profile photo Clinton Jones

Find your true focus in a Finance Transformation initiative

I have been spending the last couple of days at the Hotel Russell in London at the Finance transformation and CFO conference run by the Shared Services Online Network (SSON) and have had the opportunity to meet with a couple of different business leaders who are involved in business transformation in the Finance field. Discussions with them have been interesting, not only because their businesses are household brands but also because their focus and attention on transformation is as varied and differentiated as their businesses.

These discussions got to me thinking about what Finance Transformation in particular, really means? Back in 2011 KPMG released a White Paper entitled Transforming Finance – Challenges and breakthrough solutions for CFOs. As pointed out there, gone are the days of finance simply being about collecting, paying and reporting. Finance has become more focused on faster more accurate and more insightful post processing analysis and reporting while ensuring risk and cost were managed appropriately during the entire financial data lifecycle.

In the world of SAP this achieved in a number of ways. The process starts with implementing the system and configuring it in a standardized way and sometimes doing some business process reengineering at the same time.  Applying appropriate data management strategies and data processing controls is part of this process as is the implementation of appropriate yet flexible technologies like SharePoint, browser based interfaces with backend systems and tight and robust integration with  desktop applications like Microsoft Excel.

In the idealized world of finance every interaction with the system of record is done through a single UI with a single consistent and reliable user experience. The reality though, is that these user experiences are not consistent and not always as reliable as they should be. The reason is primarily because of the fundamentally different requirements and work practices of different aspects of the finance and accounting function. Accounting is mostly focused on the historic record keeping and Finance is focused on the changes and potential outcomes of future activity. As a consequence, there is a requirement for much more granularity in the processing data in the accounting function and much more forecasting, what if analysis and aggregation in the finance function. Accounting is often also about the hard numbers and the end-to-end reconciliation whereas finance is about variances in outcomes based on dialing down or dialing up reported numbers.

3 areas of particular focus for the CFO described by KPMG were Trust, Simplify and Insight.

Focusing on the Simplify aspect of finance transformation would mean giving core consideration to accuracy & quality, standardization & reliability, efficiency, elimination of duplicates. As KPMG also point out, there are no ‘off the shelf’ transformation solutions and no universal roadmaps to success.  Success only comes as a result of having a vision and determination followed through with a methodical approach to identifying opportunities in technology, organizational change and business process optimization. This methodical approach need not necessarily be rapid or disruptive depending on the business urgency and the level of investment that is required. If there is an urgency  then it needs to be understood what the driver for the urgency is, and whether this is in fact something that requires a long term finance change or merely a temporary deviation in activity focus. Mergers and Acquisitions for example can bring urgency and process change but only be of a temporary nature.

Transformation that focuses purely on efficiency may ignore the other important facet of effectiveness, A classic example would be the delegation of back office processing to an offshore shared service center however the effectiveness of this approach may be undermined by poor data quality inadequate data governance and controlled processes or even unsuitable staffing or time zone offset issues.

Focusing on the target of improving overall effectiveness of the finance function often leads to reductions in complexity and cost reduction but these outcomes are heavily dependent on the design of the transformation objectives. With a core focus on creating additional value and driving efficiency, transformation initiatives are more likely to be successful.

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