Best practices for any company trying to create a roadmap so that you can reap the benefits of financial transformation as you scale operations.
Many companies outsource financial transformation to third-party consultants who take responsibility for creating a roadmap to success. However, relying on external sources to deliver internal change is not always the best framework for sustainable results. Though third-party organizations provide shortcuts to complying with accounting standards and setting budgets, they often fall short when it comes to implementing company-wide processes and transforming the way your teams work. One of the keys to lasting transformation is maintenance, which requires internal forces.
External advisors are helpful when setting templates and establishing what the best practices for your company will look like, but to get your company to engage wholeheartedly requires a different approach. This blog shows the best practices for any company trying to create a roadmap so that you can reap the benefits of financial transformation as you scale operations.
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Although many like to think of their companies as innovative thought leaders, it’s wise to be objective when judging your position on the digital maturity scale. If your company is only dabbling in agile strategies, you may be a beginner. Deciding where you sit on the scale will set realistic expectations of what a financial transformation will entail.
Companies may even notice disparities between departments, with some teams exercising fully agile systems and reports and others lagging. For the transformation to be effective, you will need to plan to bring each department up to the same standard–making changes that everyone adopts rather than just a few digitally-enthusiastic finance team members.
Gartner estimates that close to 85% of finance departments are undergoing digital transformation, yet only some will succeed in hitting their projected benchmarks. McKinsey reports that even high-tech industries like media and telecom struggle, with transformation success rates below 26%. Traditional companies have even lower success rates, with sectors such as oil and gas or pharmaceuticals falling between 4 and 11 percent. These figures are hardly surprising, given that many companies approach financial transformation as if it can be solved by simply inserting technology where once there were spreadsheets.
However, the average financial transformation is a complex process that requires a nuanced understanding of company-wide processes and vigorous change management. Understanding how to tackle the core challenges is key to avoiding significant roadblocks that companies tend to hit. Companies should invest in thoroughly educating each team and building out a plan that embraces a transformation’s true complexity.
Teams can become frustrated if the goals and targets of a financial transformation remain unclear (and they often do, leaving individuals burdened with new technology and little guidance). It’s up to leadership to figure out what success looks like, how it will be defined and measured, and what teams should expect. Transformations require the widespread adoption of agile workflows, and this needs to be supported by leadership, training and straightforward, manageable expectations.
According to the Harvard Business Review, it’s often the case that teams use agile terminology but feel skeptical as they’ve not received adequate training or communications on what exactly those terms mean for them. People will feel more engaged if a roadmap outlines what success will look like and how your team will use agile processes to help achieve company goals.
It’s impossible to execute an effective financial transformation without assembling a team to manage it. All change starts with leadership and appointing the right leaders to head the charge. Not only do these people need to be convinced of the value of switching to a more agile mindset, but they should be prepared to embrace scalable solutions and understand how to make that happen cross-functionally.
There’s no point in introducing agile processes on the finance team without ensuring that all the processes that feed into finance are updated. You cannot go “agile” without first defining what that means for your industry. The image below compares the five things successful leadership teams focus on when undergoing financial transformation and how they differ from those that fail to implement widespread change.
Building a comprehensive roadmap to success can be made easier by tweaking an existing framework to meet the demands of your company. There are many financial transformation frameworks to choose from, and each company will need to treat these as guidelines rather than something set in stone. Every single transformation will encounter unique challenges, and success will look slightly different for everyone.
The elephant that is always in the room when it comes to technology is the fear teams have of being replaced. Talk of cutting costs and streamlining processes can sound like alarm bells to many. One of the biggest challenges will be managing a cultural, and perhaps, for some, emotional change to their working life.
It’s not enough to insist on agile workflows from the top down. It’s more effective to engage change management experts to help your team effectively communicate and provide a space for people to voice concerns and receive ongoing education and training.
According to a paper by MIT, “culture can advance or inhibit digital transformation. If companies can lay the groundwork by building a culture that is more adaptable to change, then implementing new technology and business processes can proceed more smoothly.” Presenting the changes as an opportunity for all and emphasizing what new roles and duties will look like will be essential to your success.
Even for roles that technology will replace, this is an occasion to build on their capabilities. Perhaps those that mine spreadsheets to fix data errors can use that energy and attention to detail to conduct competitive analysis. Allowing your team time to embrace the changes and consider new ways to use their skill set or develop new skills will improve the adoption of your transformation efforts.
Companies shouldn’t rush into selecting the right solutions to help them on their financial transformation journey. Partnering with companies that understand the unique demands of your industry and who specialize in assisting companies to implement their solutions is preferable to jumping into a partnership with a quick-fix solution.
Taking the time to build out a custom ERP requirements checklist will be critical. As will, familiarizing your team with our ERP buying guide for financial transformations. Both these resources aim to assist you in figuring out precisely what you need from your technology and build checklists that ensure you get the tools you need.
One of the core goals of any financial transformation is to help companies scale quickly in today’s climate. It’s hard to achieve this goal if the solutions implemented cannot manage fast growth. In the previous point, we talked about the importance of deciding what you need from your technology.
In this step, you should use those lists to invest in technology that meets your requirements while also considering scalability and how the technology integrates with your current workflows. For instance, companies that rely on the Microsoft Dynamics ecosystem may want to invest in fully integrated technology that speeds up the implementation process.
Mckinsey reported that one of the issues concerning quick-fix solutions is that companies rarely look past their current year and work in a “hand to mouth” manner, fixating on annual budgets and performance. This kind of approach means they may fail to understand the long-term benefits of financial transformation and the ROI they can expect on more expensive, fully integrated solutions over time. Shifting the mindset can be as simple as remembering that any solution will be central to workflows for the best part of the next decade.
Agile methodologies can seem complicated, but leadership can speak to peers and study what the shift should entail before trying to go agile themselves. Talking to those who’ve already implemented an excellent agile strategy (scalable technology, rapid testing, learning cycles, etc.) can significantly benefit those in the early stages of the process.
Agile processes can look different across industries, and what works for a SaaS company may not cover some of the healthcare data management regulations. Looking for industry-specific mentors and insights will be vital in choosing the workflows that make the most sense for your team.
Even outside of financial transformation, one of the core challenges companies face today is data management. It isn’t always easy to know what to focus on with a literal ocean of data at most of our fingers. When various teams are responsible for collecting data and sending it to finance, errors occur. Managing data in disparate systems before consolidating it in reports creates unreliable insights based on often inaccurate information.
Companies should implement a centralized, real-time database to quickly and effectively pull the insights needed to make strategic decisions. It’s not uncommon for end-of-month close cycles and reports to require at least a week of administrative work, a speed that is too slow for the pace at which strategic decisions happen. You have a wealth of financial information at your disposal, but it’s unlikely your company will ever have the capacity to use it without centralized data management.
Unsurprisingly, some teams can spend so much time and energy implementing a financial transformation that many of the best practices fall by the wayside over the years. Leadership should prepare to continue driving change until all new processes are integrated into the workflow (think in months and years, rather than weeks). They should pay specific attention to data governance, day-to-day workloads, and continually educate and train teams on tools and agile practices.
