Evolution of the finance function! Not Finance Transformation!

Why ‘Finance Transformations’ don’t work!

The Evidence:

There is plenty of evidence to suggest that on an average +70% ‘Finance Transformations’ fail.

AICPA and CIMA1 in their most recent research in partnership with KPMG noted that “underinvestment in people can spell disaster for transformation programmes and the wider organisation.”

“Finance teams are constantly asked to do more with less. As a result, 85% of finance teams are currently undergoing or planning a finance transformation. However, 70% of finance transformation initiatives fail to deliver the forecast benefits to the business” as per Gartner2

Raconteurin their research have also found that, “…. the majority of these (finance transformation) projects do not deliver the expected benefits. Research by member-based advisory company CEB shows that 70 per cent of finance transformation projects fail, with the cost of a failed project averaging $13.2 million each year.”

The Insider Perspective:

Some of the key reasons why finance transformations fail are:

  • Transformation suggest a definitive start and finish time, people’s behavior takes time to change. In most cases after the ‘transformation team’ moves on, people fall back into old habits and work arounds as they have never truly bought in
  • Implementing ‘technology’ without buy-in on part of the team and with the team having technology skill gaps, supplemented by business processes which are not clearly mapped, and accountability not clarified are all contributing factors to transformation failure.
  • Senior finance leaders are seduced by the greatest and latest technology but miss the detail requirements of the grass root levels
  • Technology providers provide their solutions in a, ‘I have a hammer, so everything is a nail’ approach without clear understanding of the specific business needs

What does ‘Evolution of the finance function’ mean?

Evolution is a gradual development of something. ‘Rome was not built in a day’ and similarly the finance leadership and function needs to focus on an evolutionary approach where they progress towards a digital finance future.

  • Finance leaders need to have a clear strategy on what kind of a function do they want to run. It is pivotal they have clarity, whether they communicate the same or not, on what kind of culture, behaviour and legacy they want to create, how they want to be represented by their teams.
  • Assess the current capabilities of their team and make sure they have the right understanding of the starting point. Understanding the team’s soft skills, technical (finance) skills and their technological abilities along side their ambitions and ‘what makes them tick’ are central to the success of their function.
  • Following on from there, the leadership then needs to understand the scope of the current activities undertaken by finance, what are they doing, why are they doing it and how are they delivering the same? Also, getting an outside in perspective from supporters and fierce critics from other functions can help clarify the and balance for bias
  • Develop a core team, which can help leadership get buy-in from across the various sections of the business and also bring in grass-root intelligence which is pivotal for success. These may not be the people with best technological knowledge but certainly need to be the team members who possess the most positive mindset to change – they can be your ‘change promoters’

How does one take their first steps in the evolution journey?

Taking the first steps in helping evolve your finance organisation evolve are the most crucial. Hence here are some tips that might help:

  • Key pain points: identify the key processes that cause the most amount of pain and anguish within the team and work on those first. Once the team and the business start to see how the evolution helps make their day-to-day work life more value adding, it will be easier to get support
  • 1 process at a time: make sure you work on 1 process at a time and fix the same as this will then give you better understanding of the interdependencies and the logical next step will present itself. Additionally, as you achieve success in making your first process (e.g. say the annual budget cycle) efficient and effective then you can use that as a ‘proof of concept’
  • Getting outside help: it is important to identify the skill gaps within your organisation and get temporary external help from experts where needed so as to ensure you can help the team upskill. Always, try and work with providers who ‘engage’ with your team so once the experts have left, the team is well aware of the course of action and improvement
  • Preparing a platform before technology implementation: people are the key asset to any organisation. Clear processes help bring the best out of the teams and improve engagement and job satisfaction. Such an environment can be the ideal platform for implementing futuristic technological solutions and enable the achieving the desired levels of value add from the implementation


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