Change in any organisation is difficult, especially when there is a change of control, coupled with new rules and an industrialised way of working. Change is potentially upsetting and in some cases even disruptive. However, businesses constantly have to evolve to keep up with a dynamic marketplace in order to remain competitive.
ACCA has taken notice of the trend for transformation and created a report entitled “Transformation Challenges in Finance.” The report draws on the expertise of senior finance leaders from some of the world’s leading organisations to deliberate common obstacles that Chief Financial Officers (CFOs) face by finance transformation and considers what the catalyst for finance transformation is. Finance Transformation enables CFOs and finance leaders to increase corporate performance and stakeholder value while dynamically improving effectiveness and efficiency. The Transformation Challenges in Finance report suggests several good practices that organisations can follow in transforming their finance operations.
The report also outlines a number of advantages and disadvantages of various transformation scales and speeds as well as the importance of sequencing in the change process. The report highlights the benefits of different sourcing strategies and discusses how CFOs can achieve broader business support for change initiatives.
Today’s CFOs are tasked with ensuring that an organisation operates in a smarter, essentially more efficient and effective manner. Finance leaders are required to run their finance operations as cost effectively as possible, create high quality stewardship and controllership and generate critical financial and data insights that assist the CEO and the organisation to make accurate commercial decisions in what is an increasingly complex and volatile environment.
“The ultimate success of any finance transformation depends on people. Chief Financial Officers are the sponsors of any finance delivery transformation and should perform a leading role to ensure successful financial transformation” – Karen Smal, Acting Head of ACCA South Africa.
According to the report, “Effective change management is at the heart of successful finance transformation initiatives.” Yet change management is not something that necessarily comes naturally to people in finance. Transformation in the finance profession often encounters the challenge of being driven by a logical thinker who believes that if he/she ‘gets it’, everyone else will too.
Change management is a well-documented practice with critical success factors. According to the report “Enabling Organisational Change through Strategic Initiatives”, released by the Project Management Institute (PMI), “Organisations that are highly effective at change management, Change Enablers, incorporate certain practices that they deem important to the success of strategic initiatives: having well-defined milestones and metrics, having senior management committed to change, establishing and communicating concrete ownership and accountability, using standardised project management practices, and having engaged executive sponsors.”
According to Jamie Lyon, ACCA Head of Corporate Sector and co-chair of ACCA’s Finance Transformation Advisory board, effective change management capability is an essential ingredient for finance transformation success. However, effective change management in large, multifaceted organisations is often difficult to master.
The report outlined 10 key change management principles for finance leaders seeking to successfully transform their finance organisations:
1. Establishing the vision – the criticality of spending time conveying the transformation vision and goal
2. Buy in – The importance of CEO and senior management support and sponsorship of the programme
3. Communication – The need for constant communication on what is changing and the rationale for change
4. Preparation – Ensuring finance teams are bought in and committed to the change, and having an effective plan to manage the change process.
5. Resources – Access to adequate programme resources at each critical stage of the transformation process, from developing strategy to achieving ‘business as usual’ acceptance
6. Patience – Accepting that large finance transformation initiatives can be revolutionary and evolutionary with most change processes taking longer than expected
7. Organisation redesign – Remembering that redesign and use of finance shared services or outsourcing necessitates change in the retained finance function too – the imperative of changing the finance enterprise in its entirety.
8. Maintaining middle management – Successful change management is key to retaining the middle layer of finance management that is critical to core processes. Yet all too often, middle managers’ numbers are aggressively reduced to justify a business case for shared services and outsourcing, or they are lost in the shuffle.
9. Alignment between capability and ambition – Often finance leaders overstretch themselves to realise a vision that is way beyond their or their enterprises’, ability to achieve. Being realistic about the organisation’s change potential is essential.
10. Working within the culture – Those who implement complex, multi-scope, multi-geography finance transformation programmes, particularly in business-line-led organisations, will experience the greatest change challenges. Gauging the type of change the culture will allow is an imperative.
To read more about transformation challenges in finance, visit: