Lack of Strategy as a Key Barrier to Finance Transformation

As the custodian of enterprise performance, finance is increasingly expected to add real value to the business and influence better decision-making across the enterprise.

That is, move finance from a pure reporting role towards more forward-looking analysis, decision support, and greater responsibility for managing the overall performance of the business.

In Creating a Value-Adding Finance Function, I highlighted some of the common reasons why many finance transformation initiatives fail. Lack of strategy is one of the key barriers to effective finance transformation.

Strategy is about making specific choices on how the organization will move forward and taking the appropriate course of action to achieve enterprise objectives.

Applied to finance transformation, it’s about identifying and making coordinated and integrated choices to optimize your finance structure, processes, people, and infrastructure.

Finance leaders are contending with a host of challenges including but not limited to:

• Legacy or overly complex systems and infrastructures.
• Disconnected data sets and data quality errors.
• Entrenched organizational thinking.
• Late financial close, consolidation, and reporting.
• Manual operations, duplicate work, or rework.
• Reducing time spent on core transaction processing.
• Growing finance and operations alignment gap.

Addressing these and other issues is not an overnight process considering the resources required to do so. Unfortunately, many finance leaders attempt to resolve all these problems at once resulting in poor results.

Because of poor planning, they don’t have a defined scope to recognize the challenge and a clear roadmap that focuses resources and actions on overcoming those difficulties. Having and trying to balance too many competing priorities is a sign you are not clear what your strategic focus is actually is.

It’s important to ensure the transformation is aligned with the organization’s overarching strategy and demonstrate how it will help the business achieve its stated objectives.

For the transformation to be successful and effective:

• First focus on why you are embarking on this journey then how transformation will be achieved and measured. This involves identifying and defining key finance challenges, building an inventory list of those issues to be addressed, and sequencing the inventory based on potential impact and immediacy.
• Communicate the vision. Don’t transform in isolation, the transformation must be broad enough. Considering the need to close the alignment gap between finance and operations, assess where the function is now, and work with the wider business to create a vision of where it will be in the future.
• Engage the team or employees, help them understand the benefits and communicate how specific tasks and responsibilities will change. This is key to securing employee buy-in and proactively dealing with any entrenched organizational thinking or cultural resistance.
• Make clear the skills that will be required in the new finance organization and how the organization will help employees develop the needed skills. Don’t assume that current employees already possess the skills required to perform in the future roles.
• Implement the how part of your transformation and solicit feedback from the business including employees on how the transformation vision is being executed against expectations. Continually realign your finance organization and adapt your strategy.

Because of competing priorities, it’s absolutely about defining priorities, prioritization and cost allocation, and value for money. Technology alone is not the answer.

Don’t fall into the trap of focusing all your efforts on implementation without considering all the necessary organizational changes required to benefit from the possibilities the new technology offer.

The acquisition and deployment of new technology is not a replacement for strong transformation strategy. Technology is secondary to the strategy it enables.