Guest Post by Diane Davidson
The future of Finance was already changing from your typical accounting, auditing, and control functions, and that was before the pandemic hit in March. The mantra of “do more with less” has switched to “do better with less,” which has shifted companies to a lens on cost savings. As discussed in my first post regarding “What is Finance Transformation?” finance managers are expected to act as future-looking business partners and less point-in-time reporters. The guidance partner’s role is more critical than ever, with the future holding so much uncertainty and leading to spending freezes. Many companies have embarked on a finance transformation journey with cost costing as the number one objective.
Gartner, a member-based advisory company, has posted many articles centered around finance transformation and the pitfalls/shortcomings of these projects. After researching 80 finance leaders, Gartner found that two of the most common pitfalls for unsuccessful finance transformations were focusing on hitting a cost target and expecting to cut costs and improve service simultaneously. The notion that cutting costs while also increasing the scope of the finance department’s offerings has generated mixed reviews. Although cost savings is an intricate part of finance transformation, an approach centered on standardizing business practices, reducing Finance’s service offerings, and driving technology transformation has shown to be more effective.
One way to edit the services of the finance department is to determine what can fall into each of these three buckets:
- Eliminate- Eliminate tasks that are not relevant, policies have changed, or the companies’ strategic vision no longer supports this process. A large pharmacy client implemented a global mandate to no longer record journal entries under a $10k threshold. The quarterly audit revealed that there were still 200 monthly manual journal entries under the $10k limit. These journal entries are a great example of a STOP activity.
- Automate: Business processes that are manual, labor-intensive, and repetitive are good candidates for automation. These tasks benefit from the usage of RPA, software solutions, or business process management. The automation of these tasks frees up time to spend on more strategic financial guidance activities.
- Adapt- Some activities are relevant to the company and may not be candidates for automation; these tasks benefit from the adaption process. The first step in the adaption process is to fully understand the current state process and look for areas of opportunity. For example, after documenting the present month-end checklist across the accounting department, a trend appeared showing different resources performed the same task. A reorganization of the accounting department centered around end-to-end processes led to an earlier close by one workday.
These buckets may lead to monetary savings, but cost-cutting is not the ultimate goal. The finance department’s goal is to eliminate, automate, or adapt low-value activities so that they can focus on the guidance work. As Gartner stated in their article Hallmarks of Winning Finance Transformations, “reliance on third parties does not help with delivering critical finance guidance work such as building analysis delivery templates.” A Finance department focused primarily on guidance work is the mark of a successful finance transformation journey.
Works Cited:
“Hallmarks of Winning Finance Transformations” Gartner, 2019, www.https://www.gartner.com/en/finance/trends/successful-finance-transformations/.
Notes:
I am thrilled that Diane shared her thirds guest post on transformation. For those who have not read the earlier pieces. They are:
What is Finance Transformation? (12/20/2019)
Business Software System Efficiencies (2/19/2020)
Diane and I worked together at a client during 2019. I have a huge amount of respect for her knowledge and ability to make stuff happen. I am glad Diane decided to share a view of business transformation and business agility.
Diane’s bio and contact information.
Clever Fox Advisory was founded by Diane Davidson. She is a results-oriented business professional with over ten years of experience working as a liaison between IT and the business to solve complex problems. She is focused on bridging the gap between execution and strategy primarily by designing and implementing current and future state process models. She has expertise in developing repeatable approaches and frameworks that align with enterprise and IT goals. As a previous Big 4 consultant traveling around the world, she found her final destination point of Chicago, Illinois.
Contact Information:
Web: https://cleverfoxadvisory.com/
Email: Diane@cleverfoxadvisory.com
LinkedIn: https://www.linkedin.com/in/diane-davidson-75a73414/
