Finance transformation – the industry has been talking about this for a number of years. But what does it take to evolve Finance with agile Finance Transformation? Where should you start in your Finance process transformation? And lastly, what are the benefits of Finance Transformation?
These and other questions were the focus of a recent blog by Planful. Based on our work with over 800 customers on Finance process transformation, we shared Finance best practices and even held a discussion with two of those customers.
Here are seven traits common in organizations that have successfully executed Finance function transformation and moved from back-office scorekeeping to becoming strategic business partners, driving and supporting decision-making across the enterprise.
What Is Finance Transformation?
Before we dive into the definition, let’s think about what’s driving Finance transformation. Here are some of the drivers we hear about from customers:
- The need to do more with the same or fewer resources
- The need to respond better to fast-changing economic and business conditions
- Pressure from management and external stakeholders – for faster and more detailed information to support decision-making
- Exploding volumes of data – from internal systems, websites, and external sources such as social media
- The need for better Finance and operations alignment – getting operational plans and models aligned to financial plans
The general Finance Transformation meaning in the market is the notion of Finance moving from backward-looking scorekeeper to forward-looking business partner. Achieving Finance business transformation requires changes in people, processes, and the technology.
This includes getting the right people involved in the project – Finance, IT, and line of business (LOB) stakeholders. It includes driving efficiency in Finance and operational processes, and ensuring they’re aligned. And then it involves using flexible Finance Transformation technology platforms to support improved business processes.
This is good general guidance, but where are organizations really focusing their Finance Transformation efforts?
The 7 Tenets In Transformational Finance Organization Best Practices
Based on our work with hundreds of customers over the past several years, helping them achieve Finance process transformation, here are 7 common tenets of Finance Organization Transformation:
- Standardize ERP systems and ensure efficiency in transaction processing
- Eliminate reliance on spreadsheets and email for financial planning and reporting processes
- Streamline the annual budgeting process
- Implement rolling forecasts to periodically update budget assumptions
- Empower managers with self-service management reporting
- Automate and accelerate financial close and reporting
- Shift time from data collection to more analysis and supporting LOB executives
We elaborated on each of the 7 tenets of Finance Transformation, highlighting finance department best practices in each area and the business benefits they provide. These benefits include reduced costs, improved data quality, increased business agility, and improved overall business performance. Another key benefit is allowing Finance to become a better business partner– providing better support to LOB executives.
Real-World Finance Transformation Examples
I had the pleasure to interview two of our customers on their Finance transformation initiatives. My guests included Stephanie Buyck, Director of FP&A at Latham Pool Products, and Jean Dane, FP&A Manager at Room and Board. During the interview, we spoke about what drove their need for Finance process transformation, where they began the projects, change management issues they encountered, the role technology played in the projects, and the impacts of the projects on their businesses.
One of the key points we discussed is that there’s no strict recipe regarding where an organization should start on its Finance transformation program. It really depends on the goals and objectives of the organization, and where the initial pains may be.
For example, Latham Pool Products focused its initial transformation efforts on the financial consolidation and reporting process, then expanded into budgeting and management reporting in a later phase. Room and Board focused its initial efforts on budgeting and planning, then expanded into financial reporting.
In both cases, the customers saw great benefits in Finance Transformation, including improved data quality, faster reporting, shorter budgeting and forecasting cycles, and the ability to do more work in less time.
Want more insight into Finance best practices and to discuss your organization’s Finance Transformation? We’d love to hear from you here at Planful.