“The business manager of the lower-performing business would probably say finance is providing terrible service, while the guy getting the top-tier service would probably say it’s the best finance organization in the world,” says Raiswell.
3. Thinking transformation is a one-time thing.
There may be a psychological need to see a transformation as a finite process, as in the case of a multi-year ERP system implementation that’s left everyone with migraines.
But there is a problem with that thinking. You don’t want to have a culture where creating value is a finite project, Raiswell advises. That takes away from business reality, which is that finance strategy should be built around business strategy. Say the company is being very acquisitive in European emerging markets. “You’d better have some pretty fluid accounting and financial-planning resources so you can build your vision around the reality of that change,” he says.
Again using the ERP example, if you manage to a “go-live” date you won’t extract as much value from that IT as you would hope, according to Raiswell. Organizations that extract more value from finance technology are those that keep engaging end users long after that.
“Keep investing in them by saying, ‘How long did it take you to log on this week? How long does it take to do this or that manual task? Is this system saving you time or costing you time, and if it’s costing you time, why?’ That kind of investigation is low-cost, because you can do it over email, and super-valuable because you uncover lots of ways to improve this thing you paid so many millions of dollars for.”
4. Creating “shadow” costs.
Let’s say part of your transformation is centralizing accounts payable in a shared service center for all global business units. It’s likely that some business leaders will want to keep running their own AP process. They believe they have control over their terms with suppliers and can thereby hold onto cash a little longer, and they don’t trust the shared-service organization to run AP as effectively.
“This is the kind of politics that usually comes with finance transformation,” Raiswell says.
Sure enough, after AP is centralized, there are some kinks in the first few months. Maybe some suppliers don’t get paid, and they call up the business-unit leaders, with whom they have longstanding relationships. A business leader says, “Wait a minute. We’re a $2 billion unit of a multinational corporation. Forget this, I’m going to hire my own accounts payable financial analyst.”
That’s a shadow cost. The corporate finance group thinks that for all intents and purposes it’s standardized AP and thereby saved money for every business unit, but meanwhile new costs are being incurred.
“It’s more commonly something like a budget analyst, who is capable of going a level or two deeper into a unit’s financial data,” says Raiswell. “Really, finance should be footing the bill for managing and training those people, rather than the unit doing its own thing and creating those costs.”