New Report on Finance Transformation From AICPA & CIMA and KPMG

In the past years, finance has been undergoing significant changes in order to streamline its operations and free up more time to partner with the business and support key decision-making processes that drive enterprise performance.

Sadly, not all finance transformation initiatives are achieving the expected outcomes or return on investment outlined in their business cases.

A number of theories are usually cited for these failures, and they include – talent struggles, thinking transformation is a one-time project, concentrating too much on cost cutting, focusing too much on customer satisfaction, lack of strategic alignment, inability to leverage technology in the right way, and insufficient leadership sponsorship.

But how many of these causes are real? We must be careful and not run the risk of focusing more on symptoms, critical though they may be, without getting to the underlying causes of breakdowns in transformation initiatives.

Catastrophic finance transformation initiatives can be prevented, but only if we start thinking about transformation in strikingly new ways.

For starters, this means putting aside the widely-held notion that finance transformation is all about new technologies and systems improvement, and start looking closely at the real causes of failure – the people who lead and implement the change.

People play a pivotal role in the success or failure of any business or organizational transformation initiative. But in an increasingly digital world, are organizations neglecting the people perspective as they work to transform their businesses?

Finance Transformation: The Human Perspective, a new publication from AICPA & CIMA and KPMG seeks to provide an answer to this important question and has some interesting content on why it’s time for finance to invest in its people. Here are some useful excerpts with my comments:

  • Under-investment in people can spell disaster for transformation programmes and the wider organization. As much as employees are responsible for preparing themselves for a new world of learning and work in which people will interact ever more closely with machines, employers should not take the back seat and relax. In fact, finance leaders should take charge and start now to envision what the future finance function looks like, the talent and capabilities that would be required to succeed in this brave new world, and come up with a robust action plan to close any gaps, and be future-ready. Unfortunately, most employers are involved in more talk and less action about the organization’s future talent needs, and it’s time to flip the scale upside down.
  • The key to success is developing the digital, technical and people skills that will bring out the best in the technology, maximizing insight, influence and impact. Machines cannot do everything. In order to achieve improved productivity, a range of human skills in the workplace, from technological expertise to important social, out-of-the box thinking, problem solving and emotional capabilities are also required. Therefore, train your teams to think of new digital tools as team members rather than as competitive threats.
  • Finance professionals must commit to lifelong learning and upskilling, so they can keep pace in this ever-changing business ecosystem. The authors are spot-on. Placing continued trust in the skills, capabilities, habits and behaviors we developed during our professional training to cushion us from this ongoing change is ill-advisable and quickly makes us irrelevant.
  • It’s people not robots, who are the key to better insights and analysis. Simply buying new technology doesn’t help you to truly transform. Technology is an enabler of change, and can be used both for good and bad. The type and quality of data that goes through machine analysis ultimately determines the quality of insights, recommendations and impact generated. Garbage In, Garbage Out. Hence the need to train people in business, data governance and translation skills so that they can monitor and understand where and how these technologies are deployed across the organization. Also, if your team is not equipped to use the new tools to perform their jobs better, then it doesn’t matter how shiny the new tool is because an opportunity to create value is immediately lost.
  • While advances like AI promise to change the way we work, it is easy to forget that new technologies are driven by human responses to a changing environment. Although certain old roles are being eliminated and new ones created because of AI, the goal should be to augment human and technology capabilities, rather than reduce the size of your workforce. Identify and differentiate which tasks humans and machines are best suited for. For example, in the context of prediction, humans and machines both have identifiable strengths and weaknesses, and it’s important to understand the extent of these otherwise your organization’s analytics and AI investments will fail to deliver the desired outcomes.
  • The ability to learn, evolve, think differently and understand quickly is just as important for individuals as it is for business. In today’s ever-changing environment the ability to learn, unlearn and relearn is going to be a key currency for finance professionals to hold. Allowing inertia to creep in and deciding to stick with the tried and tested approaches definitely hampers innovation and change.
  • As old systems and processes are superseded by new ways of working, we must learn to leave our legacy mindsets in the past. Finance transformation is not a series of projects, it is a change in the mindset of the organization. Thriving in today’s new world of learning and work requires organizations to adapt its workforce skills and ways of working. This means embracing a growth mindset rather than a fixed mindset. That which made the company successful in the past is no longer valued in the same way today. Understand that the rules of the game are continuously changing and thus you need to be adaptive.
  • Leaders have many roles to play; introducing and communicating the need for change, acting as a change champion and enrolling employees in idea generation. Efficient and effective change management is a result of leaders taking action rather than doing more lip service. Most leaders create playbooks to guide their managerial action, and sometimes as much as the world changes they firmly hold on to those playbooks. Rather than respond to their challenges and mistakes, or earnestly learn from the problems of their competitors, they continue unhampered in their quest for certainty, stability, and conformity. As a leader today, are you relying entirely on preconceived fixed notions about your organization’s talent needs while ignoring or rejecting any contrary signs?
  • The future is unpredictable; ensuring that finance teams have the right mix of digital, technical, business and people skills to deliver insight, influence and impact will be essential if organizations are to successfully navigate the uncharted waters. Since the level of uncertainty and complexity is intensifying and the rate of change also increasing, it’s critical for organizations to ensure that their workforce are equipped with the right skills and capabilities to perform their jobs better. Employers themselves stand to reap the greatest benefits (improved productivity, increased morale, innovative ideas etc.) if they can successfully transform their workforce. On the contrary, not acting right now or delaying action shuts down opportunities to adapt and change in accordance with the new demands.

The authors go on to discuss the various catalysts for transformation, current digital skills gap, and barriers to skills development.

I recommend you to read the entire piece.

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