The pressure on finance departments to become more strategic has meant that many companies have been embarking on transformation processes to bring the function in line with the needs of today's business environment. Much of this is to do with the streamlining IT processes and automating repetitive tasks that aid execution.
The general consensus is that continual change is now a necessary evil for big-company finance departments. It has however been claimed that only 27% of transformational projects reaped the rewards that had previously been planned for, a surprisingly low figure, demonstrating the difficultly that companies are having with transformation.
'Transformation' is a broad concept and without context, difficult to comprehend. With finance, the process is generally about executing a strategic shift that incorporates widespread IT changes.
Finance transformations often fail for no other reason than they're incredibly difficult to implement. There's a huge amount for CFOs to get wrong and as the figures suggest, a huge amount they do get wrong.
One of the biggest challenges for finance functions is accepting that a finance transformation is not a finite process and never one that should be defined within a certain timeframe. For a transformation to be truly profitable it will need to be realigned and looked at continuously to make sure that it is still adding value to the function.
Another really important issue is that finance departments often put too much emphasis on customer satisfaction. It's been suggested that if finance departments listen to their internal customers too readily they'll be subject to contradictory requests or demands that they're incapable of satisfying. This means that if a company is concentrating too readily on the desires of its customers, there's a good chance the transformation project will never be able to reach its goals.
These are just some of the problems that finance departments face when implementing a transformation project. Other major issues may include looking at finance costs as a percentage of sales and the creation of shadow costs. Transformation is without question and a difficult process to do well, but with increased productivity and quality the prizes, it's essential that it's done to the best possible level.