When thinking back on the past two years, it is evident that COVID-19 and the restrictions imposed on businesses, travel and commerce fueled widespread changes in finance functions across all industries. But the pandemic’s end — or, at least, its waning severity — hardly means that business has reverted to pre-COVID-19 norms or that those changes, finally, have slowed.
The needs and demands of internal and external clients continue to evolve amid changes in technology and automation, regulations, extended or even permanent work-from-home (WFH) policies, and environmental, social and governance (ESG) commitments and goals. Much like two years ago, today’s business climate is complex and unpredictable, and more companies are once again challenged to adapt and transform the finance function as they respond to various external and internal pressures.
If you fall into this category, three questions to keep in mind are how relevance, sustainability and growth should factor into your decision:
- Is finance operating in a manner that is relevant to today’s economy — or, in other words, is it keeping up with the times in its ability to meet the new demands of internal and external stakeholders?
- Are finance’s processes sustainable, digital and optimized, in both an environmental and a business continuity sense?
- Do business operations and the finance function have the ability to look toward the future and identify emerging risks that could impact growth?
Driven by Objectives
These questions can help businesses clearly define a finance transformation’s objectives. Companies that focus only on people, processes and technology, the core components of a finance transformation, run the risk of failing to realize all the benefits that a transformation with a broader mandate can produce. By also emphasizing relevance, sustainability, customer impact and the effect on growth, organizations will best position themselves to respond to the current business climate and demands of stakeholders.
Additionally, organizations can establish whether the transformation’s end state will produce a finance function that has the flexibility to react to any number of changes going forward, such as more stringent ESG reporting requirements, fluctuating digital expectations and demands, expanding hybrid workplace models, or supply chain disruptions.
Finance transformations can take a few years to complete, so organizations also need to be nimble enough to reorganize objectives as demands among stakeholders change during a transformation project. Often, this requires reviewing the project to ensure that the finance function of the future aligns with the organization’s overall strategic vision.
Ideas to Consider
For organizations contemplating a financial transformation, we suggest keeping the following guidelines in mind:
What makes the business unique?
Honestly assess your current state and make sure you fully understand your vision for people, processes and technology. Identify what is unique about your processes and how they operate, which is often the secret sauce during a transformation.
Internal and external customer demands of finance
Understand both business and technical capabilities to support an expanded vision for customer life cycle value delivery and operationalization across people, processes, technology and measurement.
Needs and analysis
Identify your organization’s needs and requirements by soliciting feedback and ideas from people across the business, and not just upper management. Then, determine whether your organization’s current state is meeting management’s vision and the expressed needs of the business, and locate the shortcomings.
Financial close assessment
While you may target specific areas or issues in finance on which to focus, one of the most telling signs of a fatigued finance function is the effectiveness — or lack thereof — of its end-of-period closing processes and procedures. Carefully examining this operation can help identify remediation efforts.
Road map and change management
Formulate a road map that identifies quick fixes, long-term solutions and strategic recommendations to transport the finance function to its future state. As you conduct the transformation, however, it is important to implement a well-defined and formal change management program. Often, this is an underappreciated and overlooked component of the process, but it is critical to success and comprises three elements:
- Stakeholder alignment — By maintaining the alignment of goals throughout the organization, from the executive sponsors of the initiative to lower-ranking associates, organizations can best ensure that everyone understands and focuses on the most important priorities during the transformation.
- Communication — Immediately after establishing priorities, companies need to communicate to stakeholders what they are and their order of importance. Communication should continue as needed throughout the finance transformation.
- Training — Change often brings discomfort to people whose roles have been altered or who must learn a new process or adapt to a new technology. Providing people with the right guidance to understand how they fit into the new operating model will help alleviate the unease.
New stakeholder demands are driving rapid change across all industries today, whether they stem from accounting bottlenecks, new or revised ESG strategies, a permanent hybrid workplace policy, an increasing use of automation, or various other drivers. Consequently, a growing number of organizations are undertaking finance transformations to ensure that they can meet the demands of internal and external stakeholders. But no longer is it just enough to focus on people, processes and technology, organizations must also stress relevance, sustainability and growth in the transformation process if they want to positively impact these stakeholders to the fullest extent possible.