How to overcome the 5 key challenges of a finance transformation

Adam Kyriacou and Alex Burr at Odgers Interim, explain how to overcome the common challenges of large-scale finance transformation programs

In the collective mind’s eye of CEOs, the perception of the finance function can differ significantly. For those that view finance as a processing function, it is little more than a reporting capability; a cog in the procurement machine and the means with which to pay employees. Others see it as so much more; an asset that can provide invaluable insights, unmatched business-wide forecasting and act as a stimulant for improved business performance.

For those that prioritise finance as a business-critical transformation agent, the benefits can be extraordinary. However, even with the CEO’s backing, transforming the finance function is not without its hurdles. This is an area that we are well-versed in, having provided over 20 executive level finance interims in the past 3 years for this very purpose. With that in mind, we wanted to share our experiences, as well as the experiences of two of our interim executives. These are 5 of the key challenges organisations face when transforming their finance functions, alongside some ideas on how to overcome them:

1. Don’t leave your employees behind

Employee buy-in is critical for a successful transformation programme. Members of the finance team need to understand why the transformation is taking place, how the function will change and what it will mean for them.

Stephen Sweeney, a finance transformation specialist and the current Interim CFO at the Victoria Opera told me that the biggest challenge is to bring employees with you on the journey: “Transformations by their very nature result in uncertainty, ambiguity and demotivated employees. The more a transformation is seen to be freeing them up from ‘processing’ to enable them to provide better decisions, the more buy-in you get.”

To ensure this ‘buy-in’, these benefits need to be communicated and championed throughout the function. Frank Shapter, a former CFO and the current interim finance lead at TAFE NSW, explained: “Without the right leaders, motivators and coaches, finance individuals can feel isolated and keep to the way of how things are always done”.

2. Assess current skills and capabilities

Members of the finance function are the primary agents of their function’s change. They are the ‘boots on the ground’ that will identify the initial problems, provide you with feedback and importantly, implement the transformation.

However, to ensure these individuals are in a position to do all of this, the current skills and capabilities of the function need to be assessed, otherwise the change risks tripping up over itself as employees are unable to drive it forward. “One of the most common barriers to change I see is where the finance team does not have the capability to meet the existing required compliance responsibilities and cannot support the business to meet performance requirements, such as a lack of planning systems and processes,” Frank said.

3. Secure senior leadership buy-in from the start

A finance transformation is something that needs to be communicated from the top of the organisation and throughout management levels. If this doesn’t happen, the workforce won’t be engaged, the project meets resistance as employees are asked to carry out tasks they don’t understand, and morale can drop.

“A critical consideration for any transformation program is to have a project sponsor, preferably someone at board level or from senior management; a guiding force that supports the aims of the project, provides continuity and is accountable,” Stephen said.

Frank agreed that you need senior leaders with “skin in the game”, so that they can, “acknowledge the issues, manage the disruption to the organisation and support the change with investment, including funding, resources and procurement.”

4. Have a roadmap

The most effective way for you to mitigate the bumps in the transformation journey and increase your chances of success is to define and implement a roadmap. Within this should be a prioritised list of initiatives mapped to specific outcomes in the strategic plan. It should include the key elements around technology, data, process, culture and working methods.

“Undertake a high-level view of what the current issues are, a high-level staged roadmap of how the issues can be resolved and what the outcomes will be. Any roadmap needs to identify how the issues will be resolved through quick wins, and optimally chunked projects,” Frank said.

Stephen agreed, pointing out that the roadmap needs to detail and consider the time it will take to solve problems and the resources this will require: “The most common issue I have observed with finance transformation projects was setting unreasonable timelines combined with not providing sufficient resources.”

5. Don’t get lost in the technology

In almost every functional transformation project, technology will underpin many of the changes that are set to be implemented. As a result, it is very easy for both leaders and teams to get caught-up in the ‘potential’ of that technology. However, too strong a focus on technology can consume energy to the detriment of the organisation and its workforce. 

“Many leaders imagine that you can purchase a system and without much effort it can be up and running within minutes. The problem is ‘dirty data’, inflexible structures, lack of controls and flexible process flows,” Frank said. “Ensuring the master data is centralised with the correct structures and upfront controls in place, and that workflow is designed properly is as important as the technology used.”

Stephen is of the same opinion, viewing technology as an ‘enabler’: “With many different products and technologies on the market, the big challenge for CFOs considering or managing a transformation project is the ‘fit for purpose’ argument and an honest assessment of the longer-term needs of the business”.

For more information please contact Adam Kyriacou and Alex Burr.