What Makes a Good Finance Transformation?
10 reasons why finance transformation may succeed or fail
Put simply, finance transformation is when an organisation uses strategic initiatives to improve the pounds, shillings and pence within it.
The difficulty comes when it’s put into practice!
Metamorphic has recently garnered opinion from a handful of leading clients and candidates to create a list of important areas to get right in order to ensure a successful finance transformation:
- Understanding the Situation
In order to succeed in finance transformation, businesses need to fully understand what is to be implemented. It’s likely that many challenges will occur, but if they are identified early on they can easily be conquered. Planning and organisation is the key to success when it comes to finance transformation. The chances of success will be more achievable if the end goal is clear and plans are followed at every step of the transformation process.
For example, in 2014 Coca-Cola set about transforming the company. They executed a set of strategic priorities, operating with a clear vision and end goal. The company had a concise vision that was reflected in in their everyday work – as it gave staff a strong focus point and an aspiration to work towards.
- Time Frame
When looking into finance transformation, time is a major component to the success or failure of the task. If the task at hand is too large for the timescale that has been set then it will be extremely difficult to complete the proposed changes within the allocated timeframe. Therefore, it is important to ensure time allowed fits with the plans ahead and that the work can be done to a high standard to guarantee success. When there is not enough time allocated to the project, it is likely that corners will be cut and important aspects of the process will be missed, resulting in failure.
The success of finance transformation can also be dependent on the budget that is allocated. When implementing change, it is fundamental to have all of the resources needed to ensure that the program runs successfully and does not exceed the budget set. However, cutting costs whilst trying to heighten services is a major error made by companies.
For example, if there is poor sponsorship from senior management who do not appreciate the changes being made, less budget will be supplied and there will be a shortfall.
- Create Clear Goals
A major downfall, which could be considered the biggest mistake that a company could make in finance transformation, is setting themselves unclear goals. Vague and unmeasurable goals, using popular terminology such as “world-class” finance makes it very difficult to measure success. Benchmarking against these metrics can lead to problems if companies try to attempt to cut costs but also increase the services they provide at the same time. In order to succeed, there needs to be a clear and conscience end goal that is achievable to reach in the timescale provided.
- Promote Awareness
Each area of planning and research requires a vast amount of information and knowledge. To avoid confusion during the transformation process, it’s best to involve all team members in the plans, so that everyone at the company understands the changes that are happening to the business at every step of the way.
- Implement Change Correctly
Implementing change within the company can make or break a project. If implemented correctly, with force, it will bring success. However, implementing change may cause issues, as a lot of time and resources are spent. Businesses can manage the risks in a more efficient manner, making implementation easier to carry out.
Through extensive research, the BBC decided that they needed adapt to its audiences behaviours and created a new enterprise model. In order to support these changes, the finance department created an agile and responsive process that reacted to their business needs. They used a single technology system and by implementing change in the correct fields that need work, had a successful finance transformation.
- Putting your focus in the right place
Placing too much emphasis on customer satisfaction and having it as your highest priority could lead to failure. Customers can tend to make requests that do not fit or contradict with your ideals and way of working.Trying to reach all of these requests is virtually impossible and could lead you down the wrong path. Customer satisfaction in turn should be used as one of many ways to evaluate finance performance but should not be the only focus of the program.
Boeing created a focused vision for its finance and accounting. The company shifted its interest to value-adding activities and also identified and prioritised the improvement opportunities that they required. Consequently through putting its focus in the correct place they managed to achieve their goal in having a successful finance transformation.
- Inappropriate Resourcing Decisions
Inappropriate resourcing decisions can be the downfall to finance transformation. Certain aspects need to be recognised in order for it to end in success rather than failure. Most businesses may not have undertaken finance transformation before, which could mean that they do not have the expertise within the business to carry it out. Therefore it is an idea to outsource and bring in external support, for example bringing in a interim specialist who is experienced in finance transformation to ensure success, even if costs are higher.
- Poor Stakeholder Engagement
Having a low engagement level with your stakeholders could lead to the failure of the finance transformation. If regular contact is not made and stakeholders are not kept in the loop with the changes that are being put in place, rumours could be construed, causing tension between the business and the stakeholders.
Sue Tindal, CFO of the Auckland Council, states that transformation programs need to meet the expectations of the stakeholders, if the company and stakeholders are both on separate pages then failure is imminent. Keeping stakeholders up to date will minimise unhelpful rumours and will build a strong foundation of business and financial support that is needed to finish the finance transformation.
- Identify changes and mitigate risk factors
To succeed in finance transformation, it is crucial to identify the key changes that are happening within the business. This could range from infrastructure to systems and processes. All of these factors need to be accounted for in order to assess the risks that they could pose during the transformation. Through mitigating these risks if they occur then they can be resolved as quickly and effortlessly as possible.
Like anything, no single constituent will ensure successful Finance Transformation – it’s all about getting every aspect of the mix just right. If just one aspect isn’t, the whole thing can end in catastrophic failure. So why do we keep on trying? Because when it succeeds, the rewards it brings far outweigh the potential negatives.
Key to success – as you would expect – is people. Metamorphic specialise in finding exceptional Finance Transformation experts for our clients. To find out more about us, please visit our website
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