Five Finance Transformation Success Factors

Ascendant digital technologies, concerns about a global recession and rising customer expectations are triggering a wave of finance transformation activity. A full-on transformation initiative is a monumental effort. However, some finance functions are much better at achieving their objectives than others. But why?

Through our research and work with clients, we have identified five traits that distinguish more adept “transformers” from those who fall short:

#1: They select a balanced and cross-functional project team

Often, finance leaders assign the project to available staff and do little to reduce their other job responsibilities. As a result, the project is under-resourced. A best practice is to select team members based on complementary skills, and include some who can focus on the project full time. It’s helpful to supplement the internal team with outside expertise. And it’s critical to assign a dedicated project leader who will oversee the transformation from start to finish and work closely with the CFO.

#2: They establish a project-management infrastructure and governance framework

Large change efforts are susceptible to scope creep; they also include multiple projects. While there may be a project charter articulated at the highest level, it’s wrong to assume that high-performing staff will simply run with it. Organizations that are better at transforming are much more likely to establish a project management office (PMO) or transformation management office (TMO) that documents the roadmap, coordinates different initiatives, ensures that projects remain aligned with the charter, and provides cross-process orchestration.

#3: They assign clear responsibilities for value-creating work

In their early stages, TMOs typically focus on documenting the transformation plan and coordinating disparate activities. But to excel, finance organizations must evolve their TMOs to become providers of decision support and help the different parts of the organization assess and prioritize projects, manage resources, and learn how to track progress through appropriate metrics.

#4: They consider trade-offs between meeting deadlines and doing things right.

It’s easy to conflate meeting deadlines with being successful. But fast doesn’t mean effective. A project delivered on time, but lacking functionalities or capabilities, will not fulfill its mandate. Successful finance functions weigh deadlines against accomplishing their mission, and alter timelines if necessary.

#5: They measure their progress against the project plan

Unfortunately, many organizations do not run periodic checks to see whether they’re progressing on schedules and as important, whether they are meeting the objectives defined in the business case. The transformation process can be easily derailed by unforeseen events and change fatigue.  So it’s often difficult to stop, step back, and take stock.

However, running intermittent post-mortem analyses is essential for two reasons. First, today’s transformation initiatives are executed on a much more agile basis, i.e., they’re rolled out faster and are then refined through an iterative process. It’s therefore important to regularly assess success and identify early wins to build momentum and credibility. Second, by running recurrent status checks, the TMO can find out fast what’s working and what’s not (and why) and adjust its approach to better accomplish its business objectives while sharing common pitfalls and best practices across projects.

Toward Continuous Transformation

The five traits above are important enablers of transformation success. But perhaps the most critical feature is the realization that change is not a finite process; the “future state” of finance is constantly evolving. What’s world-class finance today will not be what constitutes world class in 3-5 years. So, transformation is transmuting from a set of discrete preordained initiatives to an organizational mindset. Mature finance TMOs are evolving from overseers of a project to continuous improvement, or innovation centers of excellence. To keep pace with the ceaseless introduction of disruptive technologies and business models, and a volatile global market, TMOs must become nimble and persistently redefine the next iteration of the finance service delivery model.