The State of Finance Transformation
As new business models evolve while whole industries develop and destruct in shorter and shorter time spans, the concept of finance transformation to help leaders chart the course of their future has sprung up.
Finance transformation includes these key points:
- Move decision making from the heuristic to the algorithmic as much as possible. (largely dependent on the breadth of our imagination and size of our wallet).
- Being more effective at delivering our core standard services.
- A greater focus on human capital (talent) as our main source of competitive advantage.
- Using Technology systematically to create more effective processes.
- Use our talent for the complex decision making businesses need to thrive in today’s environment.
Thank you to those who helped with our research on finance transformation by filling out our brief poll: How Far Into Your Finance Transformation Journey Are You?
The image below summarizes the results of the survey:
There is widespread recognition that to stay in front, or even stay competitive, significant improvements in our finance operations is a must. However, nearly 50% of finance leaders are just getting started on their transformation journey. Another 30% have made investments in transformation but not seeing results yet. Thankfully, 20% of finance teams are a beacon of hope for the 80%; with 15% of finance leaders reporting they are achieving results from their transformation and 5% exceeding their transformation goals.
The message for finance leaders is don’t be discouraged if your transformation is just getting started, you aren’t far behind the leaders and the journey will be worth it.
We asked finance leaders which transformation initiatives will have the most impact on their operations.
Their responses are included in the image below.
Over 50% believe data analytics will have the most impact followed by new technologies and finance business partnering. Creating efficiencies, improving controls and better governance are no longer enough to pave the way to career success for finance professionals.
The message for finance leaders is the transformation will require:
1) a mindset to make data based decisions,
2) the acquisition and development of data analytic skills and
3) investment in tools to complement the analytics mindset and skillset.
We also had a number of comments from global experts in finance transformation. Here are their thoughts and some follow on comments from Steve:
Anders Liu Lindberg: Finance transformation is indeed a journey and one that I have experienced to be never ending. Now it seems more companies are moving into the human capital space though instead of only looking at tech and processes.
Steve: Yes, the journey is one of the most exciting parts about it. It’s an adventure whose destination keeps changing.
We are aligned on talent as a key driver of finance transformation. I listed it as the #1 key point above because without it, a transformation has zero probability of success.
Jesper Hybholt Sorensen: Transformation is a continuous process which needs to be assessed and benchmarked, followed by a new target is set. I will be surprised if anyone is close to 100 or else they might have set the bar too low.
Steve: It will look different for every company and every CFO, Jesper and I agree with you - the journey is a continuous one. Once we have met the goals we set today, there will be new challenges and objectives that will restart the adventure. That is one of the aspects of finance that makes it such a great profession to be in today.
Anand Soni: The process is continuous and will need intervention , new benchmarks, as we go forward. We can probably also consider weighted average against each ingredient constituting finance transformation to arrive at an improved result.
Steve: I could not agree with you more, Anand. ‘Continuous improvement’ doesn’t sound as fancy as ‘finance transformation’ but it is the mindset required to get us across the transformation chasm.
This story about British cycling performance director Dave Brailsford and his “aggregation of marginal gains” is a great complement to all we read about regarding finance transformation, https://jamesclear.com/marginal-gains
Enjoy Your Finance Transformation Journey!
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