Finance Transformation – what is it and can I achieve it ?

Over the past few years, the term ‘finance transformation’ or ‘financial digital transformation’ has gained traction in the finance sector much the same way as ‘digital transformation’ has. If you play any role in a finance team, you’ll at least have heard of this approach, if not attempted to initiate it in your own organisation.

The problem is that where ‘finance transformation’ once had a clear, targeted meaning, the waters have now become muddied. This means that in place of the expected transparency and optimism around updating the way you work, there is often now a sense of scepticism and anxiety.

Based on our discussions with many CFOs, either they’ve tried it before, with disappointing results from the technologies or provider they worked with, or they’ve heard of negative experiences from peers and want to avoid making the same mistakes.

True finance transformation comes from a combination of process, system and cultural change. It doesn’t make good financial sense to spend thousands on a technology overhaul if your finance team cannot then use that technology. Likewise, a change in your business doesn’t count as finance transformation if your team still feels overworked, stressed and pressured at month end.

A successful finance transformation positively impacts everyone across your business on a day-to-day basis. It lowers your costs and allows you to reduce headcount, doing even more with fewer people. Not only this, but it gives you greater insights into your business, offering easy-to-use data and reporting, ultimately lowering risk to make you more compliant.

With competitors raising their game, now is the time to act.

What is finance transformation

In simple terms, finance transformation, of financial digital transformation, is the combination of process, system and cultural change across the finance operations of a business, which is then implemented through new technologies, training and analysis. As a practice, it is suitable for finance teams seeking to streamline, simplify and optimise their systems through a shift in their approach, to drive strategic value.

Many vendors claim to offer finance transformation, but what this often means is that they’ll sell you the technologies to update your internal finance systems, without the operations training that your team requires. Without enabling strategic change, this often reults is businesses might spend a lot of their budget on the latest technology without being provided with a complete roadmap to transform their systems.

In additiona, it’s easy to be persuaded by ‘quick-win solutions’ which may be more affordable in the short term, but which you will outgrow quickly. CFOs know they need to make changes, but it can feel overwhelming to initiate an “overhaul” when a simpler, more affordable solution might keep problems at bay for a while. These options regularly don’t scale with your company though, and merely tick a box to help you feel like you’re taking steps forward.

Over the long term, what many businesses don’t realise is that they are going to end up spending more money with short term solutions. Proper finance transformation is an initial investment, but over five years the way they are currently doing it works out far more expensive. Sadly, a lot of finance teams work on such a ‘hand to mouth’ way that they don’t often have time to look into better ways of working.

Feeling overwhelmed by your options

Having spoken to many CFOs, we see patterns in the things they tell us: for many, they recognise that their business needs to make a considerable investment but are reluctant to initiate it. Many businesses still rely on convoluted, outdated processes which are potentially damaging to their business – but the alternatives seem too immense to get a grip of.

Being able to predict future outcomes and planning for growth are two activities that often fall by the wayside because completing the current workload feels too all-consuming. This is a regular pattern for many organisations, many CFOs don’t know where they’ll be in the next three to five years, and instead they would like to be able to picture that. To get there, many need help accessing the appropriate technologies that are available and navigating in the right direction for their business.

How financial transformation looks practically

Some practical examples of the changes finance teams can expect from finance transformation include:

• Your finance processes and systems are standardised and automated to avoid error and increase efficiency.
• Your month-end reporting becomes automated, instead of a week or more spent creating a board pack.
• Further automation across business functions will ensure cost-saving opportunities across your department.
• Collaboration across the team becomes far easier: you’re equipped with a centralised finance data hub which enables collaboration.
• Opportunities to operate as a remote team – this means potentially lower wages and more savvy payroll planning.

Understandably, CFOs need a quick, reliable and thorough service. Their team requires training, onboarding, consultation and a ‘people element’ which is often missing from finance transformation offers – it’s a change in attitude as well as a physical process.

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