Finance transformation and digitalisation are vital to thriving in modern business times.
With as many different approaches to finance transformation as there are accountants, there is a need to cut through the red tape and focus on precisely what’s needed.
It’s common knowledge that having both the systems and people in place is critical.
The question is, however, what is essential to make it happen?
#1 Processes and Systems
Having the right processes and systems onboard is essential.
“Right” means they are technologically up-to-date, future-proofed insofar as possible, at least as fast as your competitors and customers, and reduce lead times while eradicating errors.
Processes which are transparent to all and fool-proof constitute a significant step-change for finance departments in any sector.
The concept here is that you have processes and systems which are not only intuitive but near impossible to make errors with.
When methods such as these are used, it’s easy to see how month-end or year-end last-minute chaos can be counteracted.
Clarity is an essential aspect of finance transformation, but the clarity of what?
Simplicity, as is often the case, is your friend here.
In addition to being clear on the latest changes made and about to be made by regulatory bodies, among many others, there is also a need for clarity among employees taking part in any transformation.
Clarity on everyone’s role and responsibilities; what they need to know about and when; which is available to support and their areas of expertise are all critical questions at ground level which are often overlooked or at least not addressed in their entirety.
What do your customers need on-time, error-free and in a format that will keep them happy?
Answering this will help you to decide whether the processes and systems you have in place are fit for purpose.
Even if, in the interim, you have to use existing processes and systems, are they currently being used to achieve optimum performance?
If processes and systems ran themselves, this ingredient would be an asset to write off.
However, with even Amazon admitting that its warehousing and logistics operations will never be fully automated thanks to the human factor, getting the right people in place is at least as important as anything else. The only issue here is that not everyone sees it that way.
Whereas effective CFO’s see the necessity for both elements, there are still businesses recruiting people on personalty who don’t have the necessary capabilities, and others hiring those who are highly skilled and qualified but come with a red flag against their attitude and behaviour.
In demanding ever-more and in less time from employees, you need those who not only have the skills and attitude to effect any transformational move from red to black but who are also a cultural fit.
Jim Collins, author of ‘Good to Great’ who expounded the virtues of getting the right people on what he called the ‘bus’ cited this approach as central to transformation, be it finance or otherwise.
The only issue here is that some companies have to work with what they have got.
In this case, making sure you upskill those who need it and challenging the behaviour of employees who are not playing ball will be essential.
Targets are good and may provide some positive changes, but transformational targets are what you need to help you achieve just that.
Nothing is guaranteed in life, of course, and setting a target – transformational or otherwise – is no guarantee of fiscal heaven.
However, approaching targets in a structured way will help you to incorporate a degree of risk management into proceedings.
The acronym SMART is known to many and used by relatively few.
Organisational and personal objectives, which are specific, measurable, agreed, realistic and have a time-bound element give both clarity and focus to the bottom line.
These will also go a long way to destroying a vague, scatter-gun approach where the target is unconsciously and consciously known by all to be unattainable from the start.
A time step by step approach is also in-line with the adage ‘Rome wasn’t built in a day.’
#5 Employee involvement
Whoever heard of a successful transformation where it was only a small number of people leading the charge?
Chances are these transformations didn’t happen or at least only for the time those people were around.
The maxim of ‘no involvement = no commitment’ has been around as long as we have.
Involving everyone in your business, whether that’s seeking innovation or merely keeping people in the loop is essential. It means there is far more likelihood that they will be committed to the cause.
Getting your people to be committed to finance transformation means getting them to take personal ownership of making it happen in their area.
If this doesn’t happen in sufficient numbers, expect the lack of groundswell to be reflected as an overall lack of success in transformation.
On the ground, staff proactively taking steps to transform their particular part of the financial process is a clear sign that ownership is alive and kicking.
#6 Business Goal Alignment
Finance transformation is intrinsically valuable, but it must be in alignment with and help to deliver overall business goals; otherwise, things can turn red reasonably rapidly.
Finance departments which can collaborate and engage with other parts of the business on strategic direction in a positively challenging and inclusive way are not only needed to realise finance transformation but critical to it.
The flexibility needed and the ability to anticipate potential barriers between departments has now become central to achieving a long term finance transformation.
#7 Motivation and Belief
These two additions to the recipe are mandatory, if somewhat intangible, driving forces.
Surely, one of the main points about finance transformation is its permanency?
For some, the tears and sweat expended in getting major change off the ground are often wasted as the whole process hits the buffers over-time.
This can be (and often is) due to a lack of belief and motivation as much as for any other reason.
Ensuring that your teams know how the transformation will benefit them and believe it is possible, will avoid sending all your other efforts into negative equity.
A lack of motivation and belief can bring down any system.
Facilitating a finance transformation in your business will be as exciting as it is challenging.
Success, however, depends upon the following essential key ingredients:
- Processes and Systems
- Employee Involvement
- Business Goal Alignment
- Motivation and Belief
Adding these ingredients will help you to achieve a successful finance transformation, but as with any recipe, every ingredient must be included.
Leave one out, and you won’t get the best results in the long term.