The Next-Level Finance Function

Defining a vision of finance that captures the essence of what needs to change, motivating staff and mobilizing stakeholders to commit and support the transformation. 

What does a next-level finance function look like?

Although the vision, strategy and road map will differ from company to company, there are some common building blocks to successfully shape a Finance Transformation program with the desired end state of a finance function to become a true Business Partner: 

—   Strong data and systems foundation: Focus on establishing a strong data and systems architecture as an important basis for automation, integration and realization of efficiency benefits.

—   Robust process and stable control environment: Core processes and controls will become 60-80% automated (with RPA/low-code/A.I.) to enable operational excellence in terms of efficiency and quality.

—   Integrated design and metrics: Drive an integrated design / blueprint across all metrics, between actuals reporting, planning & forecasting including controls.

—   Driver-based insight: Finance can make the drivers transparent to the Business, driving a stronger partnership for results and is a critical enabler for adding more value.

—   Predictive & Prescriptive analytics: Once a driver-based approach has been embedded, it will evolve and enter a new frontier in predicting drivers and modeling to identify optimal results.

—   New ways of working: Finance teams need to change how they think about data and should transform from task-driven to output-driven to realize value of their data and systems foundation

—   Modern workforce: While core skills such as accounting are still required, the Business needs Finance to have capabilities of the future: a deeper business understanding, commercial acumen, data modeling, design thinking, and the ability to communicate and drive change.

Finance Transformation is a challenging proposition for a Financial Institution

First of all, it requires multiple stakeholders including the active participation of Risk, IT and – to a further extent HR and business (considering, for example, CSRD) – to realize an effective, holistic transformation. 

Secondly, the programs require a strategic vision and a relatively long-term road map. Naturally, intermediate milestones can be set, but ultimately, the transformation requires a firm commitment, solid sponsorship at board level and strong leadership from the CFO and the finance management team.

Thirdly, given the duration of such transformation programs, it is not a given that the transformation will be completed with the same people who started it. People move positions and companies, and
– perhaps more profoundly – not all people make the cut, complete the journey, or have the required skills and competences to see the change through.

And finally, strategic priorities can change in light of supervisory pressure from year to year, and so do the budgets and change capacity. There is continuous internal competition from these other strategic priorities for the scarce resources, completing the circle back to the point about leadership and sponsorship.

Practical tips: building blocks for arriving at a supported vision and committed objectives

So, while the drivers and building blocks for a Finance Transformation are apparent, the investment is often substantial, and the challenges are big. Fortunately, there is a lot of experience in the market, as many companies both in the Financial Services and in other sectors have successfully been able to transform their finance function and realize their strategic vision. In our experience, some of the critical enablers of successful Finance Transformation Programs are:

—   Holistic business-led transformation approach: The finance function does not operate in isolation. In fact, the starting point of finance is in the business transactions and transactional data itself; therefore, an end-to-end view is essential.

—   North Star and KPI’s targets: Develop a clear vision that staff and stakeholders can buy into, define targets and make sure that benefits management is in place to steer on outcomes.

—   Visible top-down sponsorship: Given the aforementioned complications, make sure that Finance Transformation is owned and sponsored at board level.

—   Dedicated transformation teams including change management: The ‘business-as-usual’ finance department is the object of the change, so it is not wise to drive it from there. Set up a dedicated team, and do not economize on change management, since it is the people who determine the outcomes.

—   Initiate the Finance Transformation process with a pragmatic start: Perform a rapid diagnostic with leading practices as a starting point, and document the current state sufficiently to support a fit-for-purpose implementation, prioritize areas of highest impact and value, define a realistic vision, identify quick wins to realize short-term results, develop a strategic and agile road map and mobilize teams with diverse skill sets.