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Only an agile finance department can support an agile business

Nick Owen, Craig Rintoul and Nilesh Chandra
CIO Magazine
2 November 2009

In the past few years, finance departments have helped their firms successfully cope with unprecedented economic challenges. As companies continue to deal with the uncertainty of the current recession and position themselves for future growth, finance departments need to become more agile. And yet, leaders in Finance often lack the visibility that is needed to assess whether their existing financial systems and processes can be adapted to meet future needs.

This is complicated by the fact that it is difficult to build an objective case for change as the ingrained culture of the organisation can be resistant to change. Frequently this is exacerbated by change efforts being led by the technology team resulting in a focus on technical features rather than on enabling business outcome.

Finance leaders can make the right investment decision by developing a business case that can be proven to justify the expenditure by aligning with the overall organisation strategy and emphasising benefits across stakeholders.

Finance departments around the world face unprecedented challenges:

Companies around the world are facing unprecedented competitive challenges. The recent economic downturn has hurt profitability and there is tremendous pressure to cut costs and manage businesses more efficiently than ever before. Longer term trends of increasing globalization will ensure that these competitive pressures will not ease away even after the current recession is over.

In order to maintain their position in the market, businesses need to be increasingly agile and adept at responding to these challenges, in ever-shortening timeframes. As businesses ask employees to do more with less, their financial systems have to be reliable, usable and effective to support employees in successfully facing these challenges. For example, with the current recession, companies need to keep a very close eye on accounts receivables and cash on hand. If customers start delaying payments, the CFO needs to know immediately, to take mitigating actions to prevent the business from having liquidity issues. Finance leaders need to be able to answer the question – on any given day can you identify your account receivables, your cash position and where they are trending?

Some of the questions that leaders in finance organisations need to consider are

  • Are your financial applications sufficient to help you meet your long term strategic goals?

  • Do they enable the level of agility and flexibility you demand from your people and your business processes?

  • Do you have sufficient reporting capabilities to gather all the data you need?

  • Does your technology support the execution of your business processes?

  • Do your employees see the value of time spent in entering and extracting data from ERP?

  • Are your systems fully integrated within your business processes?

But finance leaders lack the means to assess their technology needs:

Leaders in finance often lack an objective assessment of their existing financial applications and its capabilities. Organisations are naturally resistant to change, and any discussion about altering business as normal can get lost in mundane technical details or discussions of features and functionality, rather than business needs and desired outcomes. There is also internal competition for resources and developing a compelling case means ensuring all stakeholders are on board.

This makes it difficult for a leader to fully assess the current situation and make an objective case for change based on the needs of the business.

Finance leaders can make the right investment decision by aligning their needs with overall organisation strategy and priorities and by building a case that can be proven to justify the expenditure.

From our experience, leaders need to ensure that they –

  1. Don’t get caught up in the technology

  2. Perform an honest assessment

  3. Involve key stakeholders and bring them along together on this journey of discovery

Don’t get caught up in the technology

Rather than focusing on business value, assessments can quickly turn into a discussion about technology. Proponents get excited and carried away discussing features and functionality instead of the desired business outcome. Keeping the discussion focused on desired business outcomes and always probing to understand the business value that will be realised from any technical change (whether that means refining existing applications or implementing new systems) will keep the discussion on track and ensure the right benefits driven solution.

Perform an honest assessment

Existing issues in your operating environment can sometimes stay hidden, simply because people are afraid or not aware to point them out. Issues also stay hidden because people develop ways to work around problems, rather than address them head on. Performing an honest assessment, by taking a fact based and transparent look at processes and technology can unearth such issues and help you make the organisation more efficient.

Involve key stakeholders

Assessments of an organisation and attempts to make an organisation more efficient are fundamentally transformation initiatives. Lasting success can only be ensured if people buy in to the change and embrace it. Therefore, it is essential to treat such assessments as a journey, to engage key stakeholders and bring them along. At each step, it is critical to understand their priorities and how and when they will benefit from the initiative, along with the larger organisation.

Justify the direction in financial and business terms

All too frequently the need for systems upgrades and reports are justified by negative (obsolescence, support, usage issues) rather than positive attributes. However an agile finance function makes for an agile business – systems enhancements should be justified in business terms, with a clear ROI, such as quicker closing of the books, optimised cash flow projections, greater automation of payments processing etc, translated into business outcomes and dollars and cents.

In summary, by focusing on business outcomes and not technology options, performing an honest assessment and keeping key stakeholders engaged in this journey will help leaders in finance overcome natural organisational resistance and build buy-in, avoid typical pitfalls such as presupposing a major technology change is the solution and ensure their organisation realises value by defining and planning benefits delivery.

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