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How to Transform the Finance Function

One thing's for sure: Your business will undergo change. Chances are that finance will have to change along with it.

Finance transformation: two words that draw out the skeptics, particularly from finance organizations that consider themselves mature and efficient.

Excuses for not undertaking a finance transformation are plenty: all is working well, so why change things; the organization is experiencing too much change, so now is not the time; transformation is too costly and time consuming; the businesses don’t want/need it; we don’t have the resources, and so on. 

Some of those may be valid, and a dose of healthy skepticism is good. As any CFO who has undertaken finance transformation knows, it is hard and time-consuming. It requires careful planning and resources, and it can be costly, especially without proper planning. But finance transformation also is critical if finance is to keep up with the changing needs and strategies of the business.

Finance transformations can take many forms, varying from company to company. But all successful programs have one common principle: alignment with, and support of, the organization’s strategic direction over the next five to 10 years. That requires a thorough understanding of what finance talent, processes and technologies a company will need to accomplish the strategic vision.

With CFOs becoming more engaged in corporate strategy, finance transformations are a critical path for them to prepare their organizations for the changes that strategy execution requires. How can organizations enter new markets, offer new products, acquire companies, assess customer behavior, find gaps in supply chains, and take advantage of big data and today’s analytic tools without some form of finance transformation? And what about cyber-security? Are today’s finance systems as prepared as they should be to manage cyber-security risks?

Win Over the Skeptics
It’s the CFO’s job to lay out in a clear and concise manner the business case for why a finance transformation is essential and the value finance will be capable of delivering as a result in order to support the corporate strategy. CFOs need to demonstrate how anything short of a finance transformation would put the corporate strategy at risk, as well as other potential lost opportunities.

Solid relationships with business-unit leaders and gaining their buy-in are critical, especially for a finance transformation that may be more far-reaching or ambitious than others. Business-unit leaders need to understand how the finance transformation will directly help advance their business plans and goals. They also must know how it will provide them the data – and analysis ­– needed to execute their individual responsibilities in achieving the corporate strategy. Be prepared to answer the question, “What’s in it for me?” and do the homework to make a compelling case.

Anything short of that has may not gain the business unit leaders’ confidence and could undermine the transformation’s success.

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