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The digital finance function

Mark O'Sullivan Mark O'Sullivan

Whether you are an early-adopter or a laggard, technology continues to offer the possibility of re-shaping the way we work across finance.

There are multiple drivers too – speed, cost, accuracy, insight, risk and control will all appear high on the business cases being put forward every day by chief finance officers.

This is an exciting time to work in finance

The reason most of us chose to work in finance was because we enjoy reviewing and interpreting data; providing insight and meaning; helping to solve questions and make decisions through analysis. However, for many the reality has been that most of their time is spent reconciling data from one system with another, or undertaking processes manually that ought to be automated. This need not be the case any longer. Finance functions have the ability to automate and focus effort on delivery and interpretation of high quality financials and business information, making for a productive and happy team.

The classic finance transformation approach has been disrupted

Traditional approaches focused on gathering all of the finance change projects into a large, single programme, which would then be managed in a waterfall manner over a period of years with an ROI expected to emerge at the end. However, Political Economic Social and Technological (PEST) conditions change so fast, as do circumstances within a particular industry or specific supply chain. Traditional programmes fail to respond adequately to these changes, meaning they often fail to deliver against the original business case.

Leading businesses are delivering finance change in smaller, incremental blocks with faster returns

This approach, which leans on some of the underlying principles of agile thinking, focuses on identifying a specific pain point (e.g. the close and consolidation process) and working through a smaller project to deliver the required improvements. Focusing on successful delivery of smaller projects is a fantastic way of building organisational confidence around change; it also means transformation can be delivered iteratively and managed around business-as-usual commitments. A recent research report by The Standish Group showed that agile finance transformation programmes were three times more likely to achieve success than traditional waterfall programmes.

Often the most difficult decision can be choosing where to start

I have seen a consumer goods retailer halve the time taken to deliver month-end close and consolidation over a ten-week period. Another manufacturer was able to go from being unable to monitor profitability by product category, to having full activity-based costing at an individual product level and being able to run it on a matrix basis across different plants and by region. I advise clients to start with something that can clearly be measured (I am an accountant after all!). We have been working with an international business that recently reduced the annual budgeting and three-year planning exercise from 16 to 9 weeks with a simultaneous uplift in the amount of time that could be put into reviewing assumptions and undertaking scenario planning. That is the kind of change that really grabs the attention of the whole business.

Unfortunately I still see lots of business cases being put forward for leading edge digital investment that just don’t stack up

The problem is that companies have been sold a dream of what is possible, without truly understanding what it will take to get there from how they operate today. Take Robotics and Process Automation (RPA) as an example; one of the critical enablers to making RPA work is the ability to join robust, accurate data from multiple systems, at speed. It is not as straightforward as it might first seem from a high-level business case and activity analysis. There is no shortcut for good planning – it doesn’t have to take forever but you have to work through the detail of the practical steps needed to make these projects successful.

Keep it simple, stay focused, manage cost and don’t ignore organisational capabilities

These are my key tips to anyone embarking on finance change projects. The final point is worth elaborating on. Eventually the advisers will have to leave – you need to make sure you have the organisational capability to take things forward at the end of the project. I am a huge believer that the business needs to own the change in order for it to deliver sustainable value in the long-term.

For more information, please contact Mark O'Sullivan.

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