I often hear consultants equate their ERP implementation experiences with finance transformation. This is like buying a new car with the hopes of a new and improved lifestyle. A new ERP system is just a piece of technology that automates data processing, reporting, and workflow. ERP systems rarely transform a company. It’s the people—not technologies—that transform companies.
Finance transformation is a process in which leadership collaborates to align and define how the CFO’s team supports the strategic objectives of the company. A successful finance transformation initiative should include the following:
Setting Priorities – Prioritization means defining the CFO team’s mission and what is or isn’t important. Priorities must align with what is strategically important to the company and what role the CFO organization plays in the company. We worked with a global energy company to set priorities in terms of guiding principles to guide the CFO’s team in decision-making. These guiding principles included simple statements, such as “Accuracy is more important than precision.” The guiding principles were posted throughout the finance and accounting offices to remind everyone what’s important and what’s not.
Scoping Services – A large part of the CFO team’s role is to serve company operations and sales. This includes providing margin reports, developing forecasts, processing payments, and billing customers. We worked with a production company to clearly define what the CFO’s team would provide to operations to set expectations for service and rationalize management reports. The finance team developed single-page service level charters to quantify the timing and level of service they would provide for each major service role within finance. These charters helped eliminate unnecessary requests and open lines of communication between finance and operations.
Aligning the Team – Aligning the CFO team means challenging the roles and accountability of the global finance team. This alignment includes defining boundaries of local vs. corporate accountability, assigning clear responsibilities between people and departments, and delegating decisions. We worked with a global auto parts manufacturer to align local, in-country finance teams with corporate teams to eliminate duplication. We went through an exercise to identify work that needed to be done vs. who was doing it. Simple tasks like creating financial analysis reports for operations and sales were centralized instead of duplicated locally. Alignment allowed the CFO’s team to invest more time providing much needed, forward-looking analyses for strategic decision-making.
Eliminating Waste – Eliminating waste means identifying unnecessary activities and streamlining processes. This includes examining who is involved in which processes and the value add that each step and participant provides. We worked with a global construction company to take a Lean Six Sigma approach to eliminating waste and reducing rework. We identified the monthly close process to be burdensome on the finance organization and performed a value stream analysis of the end-to-end process. The value stream analysis exposed 44% rework in the close process. The team worked to identify a new close process to cut rework and overtime in half during the first week of every month.
Rationalizing Information – The CFO team typically holds the keys to the company’s performance data, information, financial results, and projections. At times, information (volume of reports, differing data definitions, and granularity of information disseminated) can get convoluted. We worked with a chemical company to standardize data definitions and standards throughout the organization. In one instance, gross margin and gross profit were used interchangeably by operations while finance defined each term differently. The CFO team’s work to standardize data definitions helped align operations and streamline the financial planning process.
Planning the Change – Planning the change means developing an orchestrated roadmap that defines the steps and a timeline for implementing everything mentioned above (new priorities, improved services, an aligned organization, eliminated waste, and rationalized information). A roadmap should assign implementation charters to each leader on the CFO’s team. Each charter should include objectives, timing, accountability, milestones, costs, and benefits for implementation. As a part of implementation, the CFO team should develop a cadence to review the progress of each charter and address roadblocks.
Bill Aimone is a Managing Director with Trenegy and has been working with client CFOs to transform finance in all industries over the past 20 years. Prior to Trenegy, Bill was a Partner with Deloitte Consulting’s CFO Advisory Services Practice. Bill has advanced Trenegy’s Finance Transformation toolkit to fit any organization’s size and budget. To receive detailed pricing options, email info@trenegy.com.
