FP&A Digital Transformation: Balancing Risk & Outcomes

When embracing better-practice, balancing risk to return can be complex and choosing a path that delivers high business value, with minimum disruption is not always easy.

Whether saving costs or improving revenue, FP&A digital transformation projects must provide strong gains in productivity and effectiveness. If you have been through sluggish ERP and CRM implementations, you may have seen how far projects can go wayward before they stop draining time (and money) and start being useful.

Jedox conducted a global Survey with ACCA and discovered only 35% of organizations have a digital transformation roadmap in place. There are many reasons. One challenge is when leadership don’t have technical knowledge – a reason why technical projects can fail. Another is underthinking the people aspect – change is a process, not an event. A third reason is not knowing where to start. This is where I look at below.

The best finance teams I’ve worked with apply very simple principals, even in complex transformation projects. The CFOs understand that the result must be embraced by both the leadership team and other departments to be successful. Here are pragmatic approaches for successful initiatives that think big, start small and consistently deliver value:

Don’t Boil the Ocean

Aim for rapid results that achieve business outcomes early – no drawn-out ‘big bang’. Instead, short projects (or ‘sprints’) that iteratively deliver value and create the momentum for change – and allow time for learning. Learn while doing – it’s more than new technical skills. To operate differently from today, your team need new thinking and new approaches – so they need to be ready, and have the space, to learn. One organization I worked with had very broad goals for optimizing supply chain planning, inventory analysis, executive reporting, integrated business planning across HR, Operations, Sales, and along Supply Chain.

Most existing processes were manual, which meant they were running as fast as they could to stand still. Some teams spent 30% of their month just adjusting forecasts, while others took 20 working days to deliver static report packs that showed the ‘what’ but didn’t explain the ‘why’. They stood to gain a lot by digital Finance Transformation.

Initially they captured a long wish-list from every stakeholder. The risk was that the project would experience ‘death by committee’ trying to please everyone (some team members even though they needed a new ERP – another 5 years of headache). In any event we needed to define the problem before jumping into solution mode. So, when our team began working with them, we started by confirming the business outcomes they sought, from the CEO down. They circulated a high-level concept paper: less structured than a business case, this was critical to get early engagement and buy-in from different departments. It became the lens through which we could understand and assess how specific requests supported achieving this overall goal.

We agreed on the success metrics, and then began to distill each area’s needs and prioritize by comparing complexity to the potential business benefits – looking for quick-wins and tipping-point activities that would critically free-up time in finance to come up for air (i.e. free up time) and start to work on higher-value activities.

Next, we looked across their requirements for commonalities. Actual and forecast sales numbers, for example, were used by a range of processes (sales were quite important it seemed) so if we got one reliable version of the truth on these, it could immediately be used by different teams, even while we were getting on to their specific requirements.

This approach meant they avoided the risk of waiting 6-12 months to get any result. Instead, every additional deliverable added value of what they’d already achieved, as they removed silos and began to collaborate in a common and cohesive approach, while addressing specific departmental needs.

Minimize Disruption – Make it Easy for the Business

While the end-goal of transformation is to do just that – a transformation, that doesn’t mean everyone must start from scratch. Transformation is good in theory, but in practice, many people will be comfortable with the status quo and prefer not to change. The best measure of success is if people and teams actively embrace any new approach you introduce.

For example, if you currently have a steam-driven budgeting process, first get the house in order. According to Mckinsey, a consultancy, 70% of Finance processes can be fully automated. So, streamline your process to free-up time while retaining what business users are familiar. This minimizes change-management and makes it easier for other departments to embrace.

An organization I worked with, re-engineered their integrated planning process, with driver-based models that automatically calculated and consolidated all their information and at the same time strengthened governance through security and data privacy, and audit.

It was sophisticated and immediately meant FP&A was more productive and enabled them to quickly run scenarios and recut plans through the planning cycles.

For end users, however, they decided to run the first new budget cycle keeping the same familiar spreadsheet planning and reporting templates. This is not unique – in the Jedox ACCA survey, 75% of organizations said Excel is still main technology skillset in the Office of the CFO. Users were happy with them as they’d refined them over the years.

It was low-risk and required minimal training. This meant they finished the project more quickly, just in time for the next budget cycle.

The difference was the spreadsheets were directly connected to the new planning models, which meant they had the best of the both worlds – a robust and highly efficient planning process with more confidence in their numbers, combined with something familiar and easy for so business users continued to work comfortably at their own speed. This minimized the risk of them rejecting all of Finance’s efforts.

Better practice with Finance Digital Transformation means starting small, delivering quickly towards the big goal. You get your brightest people engaged on high-value activities to retain the best talent. In my next post, we cover how being flexible helps ensure your initiatives stay relevant and how to forge a reliable partnership with IT to align with technology strategy.