There are plenty of excellent reasons for companies to transform their Finance and Operations organizations.  Market downturns, globalization, IPO readiness, hyper-growth or repeated financial restatement are just some of the drivers that convince CFOs that transformation is necessary.  The ability to re-engineer Finance during prosperous times is an intelligent decision because it helps the company become more competitive.  This usually comes in the form of enhanced transaction efficiency, improved decision support and access to real-time metrics.  By embracing the ideas of both transformation and constant improvement, organizations can execute the initial project to create a strategic roadmap, and then establish appropriate governance that will perpetuate added capabilities and service upgrades.

CFO as Corporate Architect

A CFO’s ability to maintain financial operations and compliance throughout the company is now considered basic table-stakes.  True Finance transformations happens when drastic improvements are made in both strategic and operational decision making.  Modern CFOs are increasingly being asked to be a Corporate Architect and re-invent their businesses instead of just being a care-taker of the company’s finances.  CFOs are now directly responsible for creating or destroying value for the company at the point of strategic and operational decision making.

Financial Operations

The ability to focus on key operational value drivers (micro-drivers) is essential to the business.  Cost efficiency, compliance, flexibility and innovation all count towards the bottom line.  The primary value drivers include:

• Efficiency and accuracy of transaction processing
• Increasing speed and accuracy of reporting
• Maintaining systems and controls to conform with laws and regulations
• Enhancing decision-making (projects, budgeting and forecasting)

Strategic Operations

The second half of the CFO’s focus needs to be on more strategic aspects that directly impact business growth. These relate to the longer-term goals that directly impact revenue generating activities.

• Business Unit turnarounds
• Corporate restructuring and monitoring
• Mergers and Acquisitions
• Organizing for Global Strategies

While there is a need to transform both operational and strategic capabilities in most organizations, the ability to partner with the business to develop a holistic transformation blueprint that aligns with the business strategy is critical.  A great place for many organizations to start is in identifying cross organizational end-to-end performance gaps.  As an example: The Quote to Cash Mega-process requires coordination of many organizations including Marketing, Sales, Sales-Ops, Finance, Supply Chain, Legal and Tech Support and has the ability to optimize and de-risk major components of the business.  Projects that ensure efficiency and standardization across end-to-end processes drastically improve financial performance (Revenue/Margin), customer experience (UX), controls (SOX) and accountability (Trust) throughout organization.

Modernize Legacy Environment

Unfortunately, most Finance functions suffer from a combination of legacy systems, lack of end-to-end policies and complex business practices that comprise efficiency.  These manually intensive processes, systems and data structures do not effectively integrate across organizations.  In order to ensure efficient and accurate financial operations, it is necessary to agree on standard operating procedures (processes and policies) prior to modernizing and integrating legacy systems.  The ability to rationalize disparate Finance, Sales, HR, Procurement and Supply Chain into a cohesive architecture is key.

This ultimately frees up resources to devote more time to value producing activities.  By building a comprehensive strategy and plan around People, Process and Technology, transformation can significantly reduce costs and grow revenues.

Execution

Another critical success factor of transformation is establishing a skilled re-engineering team to re-architect and simplify processes, business practices and tools.  These resources are typically not found inside Finance or Operations organizations as they require cross-disciplinary skills.  The ability to agnostically benchmark and rationalize processes can significantly reduce an organization’s risk profile and improve the value-add to the business.

The key elements of planning a Finance Transformation include:

• Develop a strategy (Assessment)
• Assess and benchmark current performance
• Develop a Blueprint for the end-state
• Develop a detailed plan
• Create a business case

If your organization is interested in undergoing a Financial transformation, HBSC Strategic Services can help.  Please contact us at client-development@hbsconsult.com or call us at 800-970-7995.