The challenge of change – Part 1

According to the ACCA paper ‘The smart finance function in today’s complex world’, “Today’s global business environment is disruptive and volatile, creating an unprecedentedly complex and nuanced operational environment for businesses.”
To sum up what this means for businesses… change. Unavoidable change. Change can be driven by the socio-political landscape, such as in South Africa with BBBEE. It can be driven by the continual evolution of technology that brings with it a more connected consumer base, increased automation, multiple channels to market, agile competitors, increased need for reputation management, and evolving security risks. It can be driven by economic rebalancing across global markets, or by demographic and natural resource challenges. The list is endless. Whatever the reason for change within the finance function it is important to remember the key role of said finance function in any business – to support the enterprise in creating and preserving growth and value.
While this has always been the mainstay of the finance function, the constant need for businesses to evolve means that organisations will rely more and more on the finance function to support or even drive organisational change. Why? Because “it is the corporate function that has always been trusted to generate accurate, independent information on the performance of the organisation using the data it has available.”
This in turn means the evolution of the finance function itself which brings its own set of challenges. According to the ACCA report, ‘Transformation Challenges in Finance’, one of the biggest challenges is to ascertain whether the organisation is a builder or a buyer. Should the organisation operate from an independent finance function model or from a shared servicing or outsourcing model?
The report also states that “finance leaders believe several factors affect the ‘make or buy’ decision: the vision for the finance function; scale; the need for expertise/capability; process maturity; whether there is a follow-the-leader mentality; culture; and risk tolerance.”
Key questions need to be answered in order to decide on the best model for the business. Does the organisation want finance to be primarily a centre of expertise or a business partner? Do we have the scope to outsource? Are our processes mature enough to handle outsourcing? Do we have the expertise to move to a shared service or outsourcing model? How do our business locations drive our operating procedures? Are we changing to ‘keep up with the Joneses’ or because it is in our best interest? What type of change culture do we have? Are we solution driven or collaborative?
Once these questions are answered within the macro and microeconomic context of an increasingly complex business world, the organisation – and finance function – will realise where it sits in terms of shared services and outsourcing and be able to transform accordingly.
Then the fun begins. How does the finance leader convince the finance team to buy into the change in model if there is change? That we will cover in Part 2 which will be posted on Friday.

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