- Each of the three CFOs have their own unique methods for developing and defining programme goals, but they’re all in agreement that having targets is an important part of a finance transformation programme
- There is a simple reason for starting a finance transformation, and it’s all about supporting the business
- A finance transformation program needs to align both with the overall strategy of the organisation and the expectations of your key stakeholders
By Phil Howman, CA
A finance transformation is a fundamental change in how the finance function operates to achieve a significant improvement in current performance by delivering services that better meet the needs of the business. This is based on a definition Behnam Tabrizi, an expert in organisational transformations, used in his book Rapid Transformation: A 90-Day Plan for Fast and Effective Change.
While definitions may vary, getting people in agreement about the project is a crucial ingredient in a successful transformation.
Acuity spoke to three CFOs directing finance transformations at their organisations to find out key features of a finance transformation, and top tips for success.
Sue Tindal, group CFO of the Auckland Council, launched a transformation of the entire finance function at the largest local government organisation in the Southern Hemisphere. Alison Harrop FCA, CFO of DEXUS Property Group, is overseeing an all-inclusive transformation of her department and Stuart Comino CA, CFO Australian beverages of Coca-Cola Amatil is leading a function-wide transformation of the finance division he leads.
Key features of a finance transformation
1. Having a destination or goal
Harrop, Tindal and Comino agree there is no point initiating a finance transformation unless there is a clear objective. Each of the three CFOs have their own unique methods for developing and defining programme goals, but they’re all in agreement that having targets is an important part of a finance transformation programme.
2. Broad in scope
In each case the scope of the transformation was broad and included every function covered under the CFO's remit.
3. Take time
At DEXUS, Coca-Cola Amatil and Auckland Council, the finance transformation programmes have been running for more than a year and are not yet finished.
4. Multiple projects
In each case the transformation programme is made up of individual projects. This enables benefits to be realised progressively. This also helps with garnering business support for a finance transformation program, including funding, and it creates momentum for the project team. It gives the programme the flexibility to change direction if required.
In addition to the above common features, to support the program Harrop and Comino have committed dedicated resources to the finance transformation, including a full time programme manager to help drive the change.
Reasons for beginning a finance transformation
There is a simple reason for starting a finance transformation, and it’s all about supporting the business.
“We’re not here for ourselves, we’re here to support the business and to drive performance. So if you’re not doing that, you need to question what you’re doing,” says Harrop.
Scratch below the surface and there are usually more specific reasons for implementing a transformation. It could be the goal is to provide better service to the business — this might, for example, involve changing the focus from delivering data to providing insight.
Alternatively, a decision to seek cost savings could trigger a transformation as it contributes to more value for customers and better returns to shareholders. Or it might simply be about improving how the finance function works — for example having more clearly defined processes and reducing rework. The transformation might also address ways the finance department could become a better place to work.
Moreover, the trigger for starting the transformation programme might be simply the result of looking at finance through a fresh set of eyes. Tindal, Harrop and Comino were new to their roles when they recognised significant change was needed.
How to be successful
This list of factors to consider when launching a programme comes from conversations with Tindal, Comino and Harrop about what they’d learned from their own successful finance transformations, and what advice they’d like to pass on to other CFOs.
1. Vision and clear aspiration
Coca-Cola Amatil’s Comino was very persuasive about the need for a strong vision as it gives people a compelling “anchor point” for reflecting on every day as they work towards that vision and aspiration.
2. Programme alignment and support
According to Tindal a finance transformation program needs to align both with the overall strategy of the organisation and the expectations of your key stakeholders, with the warning that “if you don’t get that sorted out up front, you’re on a path to failure.”
Comino agreed with the importance of alignment and says being aligned with the overall business strategy and having the support of the executive team was fundamental to the successful progress of a programme.
3. Strong change management
Having a strong change management focus was highlighted a number of times as crucial to a successful transformation. The importance comes from the impact these programmes have on finance and the wider business.
4. Take an operational view
For Comino being clear about the future operating model is crucial to the success of a finance transformation — seeing how all the pieces are going to come together effectively. Understanding their business processes helped enable Tindal’s team at Auckland Council to make changes, while managing risk to the organisation and its reputation.
5. Great people
Having the right people in place is critical, Comino says.
“Successful change doesn’t happen without great people,” he says, and that includes people working directly on the project and those in the leadership team.
6. Get things in the right order
For Harrop this meant breaking up the programme into phases, with the first of these getting the foundation set up right. This meant looking at data, technology, process and people, and identifying what needed to be worked on first.
7. Measure progress
In this age of Key Performance Indicators (KPIs), measurement is everything in business. It’s no different for a finance transformation. “We’re developing objective benchmarks to measure our progress, it’s not going to be just about words, it’s going to be fact based” says Comino.
An ongoing journey
After a transformation program is completed, it is not the end of the journey.
“I don’t think anyone can ever say that you are not continuing to improve what you are doing,” says Tindal. The transformation at DEXUS has a December 2016 deadline, yet Harrop predicts that it’ll be a case of “we’re not done, but we’re done for now”.
At Coca-Cola Amatil, Comino says at some stage his team will get out of “transformation mode”, shifting to a continuous improvement focus, consistent with the culture and capability change he is also driving.
Whether you’re at the beginning of a finance transformation journey, or someway down the track, it’s always worthwhile recapping on why you initiated the programme, and the goals and the milestones you’re looking to meet, to ensure you keep the programme on a successful course.
Phil Howman CA is the founder of finance transformation specialist Allevo.
This article was first published in the December 2016 issue of Acuity magazine.