Driving Deeper Process Change within Enterprise Financial Management to Make a Difference

Understanding the Key Issues to Drive Efficiency

Jan 4, 2021

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Making time for change that will save us hours of repetitive work, each and every month, is one that typically eludes us due to the perception that the change process itself will consume time that we simply do not have available. Occasionally, and probably more frequently than we care to admit, events like annual budgets or re-checking those monthly financial reporting pack submissions drives our frustrations to a point of wanting to make a change, but this desire soon subsides as normal business pressures once again push us into multiple directions, and soon thereafter we are again executing the same tasks, despite our original good intentions.

 

Our productivity has of course not stopped evolving. Employee self-service (ESS) has already helped us embrace reduced Human Resources administration for leave management, as well as other numerous employee management tasks, and Expense Management has standardised processes to ensure that expenditure for T&E and other employee procurement activity is kept within a tight control before any trip or expense execution. With all decisions being made by management @anywhere with a full knowledge of budget availability, including those harder to track approved but deferred expenses, we continue to move forwards, but now we recognise that we holistically need something more radical to drive us to the next level.

 

Technology is now enabling the next round of radical improvement as financial processes can be defined end to end to leverage existing applications from data collection, through all transformational flows to reporting @anywhere, with the desired level of semi or full automation that has not been possible before within the enterprise. The fact that full financial consolidations can be automated gives some insight as to the transformational power of such systems. This will enable a step change which will be far deeper and potentially more rewarding than before, but it will involve buy in from staff more pervasively than just departmentally at all levels.

 

What’s in it for me will be heard a lot through all layers of regional management all the way to HQ, and each step of the way you will be dealing with different corporate cultures and operational regulations, which are not at all to be underestimated in execution. Deliverables from such exercises are exciting and go from those streamlined financial management processes driving margin improvement for net profit, all the way to value creation initiatives to drive change at the more material gross margin level. In essence a glue across all your solutions for process and reporting richness, the benefits of which are so often seen in retail and Fintech but not always.

 

The removal of routine tasks for staff and replacing these with more interesting work flows, roles and responsibilities is a massive benefit for the organisation in general. This is not just about automation, but an investment in building people skills to allow their transition, and that of their functional area to their next stage of skills development.

 

Adding value at every level of the organisation, whether that be locally, regionally or globally, rather than simply fixing what you have now is what this is about, all executed with increased transparency and compliance at every stage, and removing those routine transactional issues away from expensive people. In other words putting the focus into driving insights and actions instead of administrative processes.

 

Or put a totally different way if Moore’s Law historically has been driving such significant change in processing capability at a technical level, why is it that these improvements are not being seen to the same levels of efficiency on a holistic enterprise basis within the Office of the CFO, a pointer that again comes back to the fact that it has taken time to reach that next productivity tipping point, as ERP software houses catch up with years of hardware improvements with solutions that can now provide the necessary granular transformational capability, all driven by end users not IT. This will see a radical improvement from the often referenced c.50% of finance function time being spent on transactional processing and not on management.

 

More advanced and deeper process alignment, as seen for example with FP&A, is slowly gaining momentum and moves a broader set of stakeholders away from simply being focused on controllership to adding deeper operational value, but the fact remains that in so many cases too much time is consumed on transactional data management. This means that the capability for broadening out the budgeting process to make it more pervasive, or even freeing more time to assimilate existing levels of information within the enterprise is reduced or simply lagging. In fact many CFO’s today are struggling to find time for deeper report pack reviews pre submission deadline, for the sake of their own increased confidence in those numbers, or to handle new reporting requirements in financial management.

 

ROI for financial management improvements is not easy as often there are no existing benchmarks, other than those that exist at a high level for closings of both flash revenues and final reporting pack submissions. However, none of us have to look too far to see operational inefficiencies and to realise that remaining at our current operational status quo will also not work in the future as competitive pressures move to the next level. These newer solutions will give us greater opportunity for a more granular understanding in terms of transactions processed across entities to help drive an understanding of local differences in resource utilisations.

 

Spreadsheets as another risk factor also contain errors and their continued correct use can be materially impacted by staff role changes potentially affecting data integrity, so combining these with expensive operators does not work. So what is needed is something that provides the best of both worlds with both tight data integrity management controls and the familiar user friendliness of HR and Finance operation, something that new style applications bring into the mix. In fact some corporates would rather not see spreadsheets at all in a process, whilst others accept it, the former perhaps being mandated to reinforce behaviour.

 

Shared Service Centres for larger corporates enable leverage of similar processes across entities meaning that return on investment and change management might be leveraged more quickly and more consistently here, especially where the task in hand is specialist and not replicated in each business unit; examples might be allocations, consolidations, balance sheet movement reconciliations, detailed transformational flows by project to drive input for analytics etc.

 

Driving change needs to be done through two lenses of operation i.e. both individual business units and HQ, each driving through x-departmental, x-country collaborations, with a buy-in from all parties that must include a modus operandi of constant communications between each one. This must recognise that each entity might have a more finely tuned local culture, and unique in-country business requirements of their own, a fact that is not to be underestimated during change management.

 

Pervasive homogeneous processes are a myth meaning that standardisation has never been 100% possible through the myriad of corporate systems developed in house or provided over time through multiple vendors. In fact with each transaction passing through tens of different vendor solutions one can quickly see the complexity at the application level. New style applications help here because processes can be defined end to end with all locally required transformations, and segregation of duty, thereby allowing for local differences to be handled; for example different charts of account, differing year end dates, FX movement reconciliation, project code handling across sub ledgers being simple but deep examples. The fact that full financial consolidation can be automated gives insights as to the transformational power of such systems to produce the result and the insights that will come from performing it more often.

 

For the Office of the CFO the end results of reporting for decision support, compliance controls, and management activities is driven through the transformational processing of millions of component transactions that enter the system in one location and currency, and which are accompanied by numerous dimensional analytical tags. Each transaction detail, often used multiple times for specific tasks, passes through a multitude of transformational processes operated by different people in different locations to deliver end results to numerous individual stakeholders, perhaps with emphasis specific tags of their interest. New technologies are enabling a step change for corporates to reduce complexity and to unleash the power of information that is within it for value creation, by allowing processes to be defined often by end-users from data collection, through all transformational flows to reporting @anywhere x-subsystem x-entity. A game changer!

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