Navigating the Challenges of Technology-Enabled Finance Transformations
 

Finance often faces the reality of transformation. Today, technology-enabled transformations, such as those centered on ERP implementations, might lead to process efficiencies, enhanced analytics capabilities, or automation.

CFOs consistently aim for their organizations to become more analytic and strategic enablers in their companies.¹ They often look to technology-enabled transformation to achieve this. However, a Gartner survey indicates that 70% of CFOs² reported their finance transformations are either less impactful or moving slower than expected. It could be that finance functions are not appropriately defining, measuring, and tracking their transformation objectives.

For half of the CFOs interviewed³, the scale of ERP implementation overwhelmed the “nice-to-have” finance function improvement opportunities. Others reported⁴ a lack of quantitative KPIs or finance transformation limited to financial systems, preventing broader efficiencies and data sharing at scale. Sometimes, KPIs were ignored altogether after the business case was created and executed. Still other CFOs wished they had invested more in change management and adoption.⁵

This is not a new problem in technology-enabled finance transformations.
 

One fundamental challenge in finance tech is breadth. Nearly every action in a company eventually flows into finance, but solutions may only encompass segmented areas, like accounting data, disregarding tax, treasury, financial planning and analysis (FP&A), or other functions.

A second challenge is that finance systems do not inherently fix data created or maintained outside of finance. Automation of processes and granularity of data often depend on teams like sales, procurement, or operations. Acquiring the data can become a manual process, taking finance teams out of their core system.

A third challenge is an administrative one. Fundamental systems like ERP implementations should force teams to examine and change processes and policies to ensure they match the risk, rigor, and effort required to meet new business objectives.

By not considering these challenges, technology-enabled transformations may result in frustration, missed expectations, or lost opportunities.

Our thoughts on the solution
 

While there is no perfect approach, we have observed common CFO activities that can lead to success.

Start with role and function: CFOs should develop a detailed vision for how the transformation delivers value to the broader organization. CFOs can then formulate an integrated view of the skills, resources, policies, information, processes, and tools needed to deliver on this vision.

Get specific about KPIs and measure them continuously: Key performance indicators (KPIs) allow leaders to monitor baseline shifts in process, technology, policy, and other changes. KPIs can be macro (e.g., number of employees to process payroll) and micro (e.g., days to close), and they can bolster business cases for investments.

Examine policies, processes, controls, and data: Early technology had limitations in data storage and processing power that forced functional separation or restricted business capability. Modern enterprise-grade systems can enable most functionality to meet business objectives. Today’s limitations today tend to relate to cumbersome policies and processes, inconsistent data quality and availability, and competing controls.

Enable top performers to participate: Tech transformation offers opportunities to establish critical skills, training, and job rotation programs. These programs allow experienced team members to expand their skills, bring knowledge to the challenges, and encourage adoption.

Transform continuously and commit: CFOs should prepare for technology projects to be point-in-time transformative activities rather than major determinants in achieving business objectives. They should allocate dedicated resources that continuously work on process and technology improvement, viewing each major systems investment as a step in the process.

Final thoughts and questions
 

Over 10 years of data collected from CFO Signals Surveys⁶  shows that CFOs continually look to be more automated and strategic enablers for their organization. Yet, according to our interviews with CFOs⁷  and Gartner research⁸ , CFOs continue to fall short of these goals when relying primarily on technology as a catalyst for transformation.

As you begin your transformation or ERP program, challenge your team with the following questions:

• Can they define their goals in measurable ways?
• Do they understand how dependencies among distinct functions create manual work?
• Do they understand the data they need and the analytics they seek?
• Are they prepared to evaluate policy and end-to-end processes as improvement levers?
• Are the most appropriate people going to be on the project?
• Do you know what work will be left to be done at go-live?

Technology is not a panacea for a CFO’s myriad challenges and improvement objectives. It can merely spark thinking about the people, process, policy, and data changes necessary for transformation. As we learned in our interviews, improving the finance function is a never-ending job.