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Impact of Finance Transformation on Your Corporate Earnings

Finance Transformation- Future of Finance

Finance Transformation is all about the finance department taking more strategic role in the management of the company.Though it is nowadays becoming one of the focus area inmost of the large corporations however small corporations arestill lagging behind as awareness, solutioning and its long term benefits are not that easily made available to these corporations. 


The given below are the key considerations to decide upon the timing of the finance transformation:
• Does finance spend too much of time and effort in transactional activities and consolidation of data?
• Is the organisation using available technology toautomate repetitive tasks and speed execution of cross departmental functions?
• Does a company have well-defined Key Performance Indicators to track?
• Does finance department enable data and analytics at right time to leadership for right action and help in business growth?
• Is finance doing planning and analysis in your organisation or is it all driven by the business leads?
• Is finance acting as a business partner instead of booking keeping function?

               Actual Scenario in most of the Finance Department
Activities 
% Efforts spent
Transactional Activities 
50%
Reporting and Analysis
30%
Decision making
20%


Desirable Scenario 
Activities 
% Efforts spent
Transactional Activities
20%
Reporting and Analysis
30%
Decision making
50%

When an organisation is thinking about finance transformation, it is important to note here that technology is just one of the component that organisation should address tothe other important components involve people, process and information.

• Technology: All the internal systems being used across the organisation should be in sync with each other. Sales portal, Internal Timesheet system, Accounting software etc. should all be integrated. The step 1 involves listing down all the manual activities within the finance and doing a cost benefit analysis of automating these activities. Leverage technology to enhance accounting, reporting and FP&A capabilities without compromising strong financial controls.

• People: Hiring resources with right skill set with continuous focus on improving skills through training is one of the important aspect in finance transformation.

• Process: All the processes relating to finance functions should be properly documented and periodically reviewed and aligning with respect to the best practices in industry. Standard operating procedures to be preparedfor all repetitive tasks.

• Information: It is important to analyse whether right information is available at right time for analysis and decision making. Both qualitative and quantitative benefits of getting this information to be analysed first.

One of the significant ways companies can transform finance is by adopting business planning and driver based modellinginstead of traditional annual budget and forecasting process

Driver based planning involves identification of key business drivers and creation of series of business plan that will mathematically model how organisation’s revenue and cost and business is affected by different variables. 

The models can be created using advance excel or through data modelling software.
Aligning the finance strategy with broader business needs and challenges is must in today’s dynamic business environment. 

Taking a finance role from number crunching to value creation requires a comprehensive transformation strategy.Long term tangible benefits in terms of revenue and margin growth from these types of transformation which are carefully planned and executed is quite amazing provided all the excuses (such as all is working well, so why change things, transformation is costly and time consuming) and initial hiccups are overcome.

It is the general tendency to target for perfectness and ending up with lot of challenges within the organisation thereby leading to failure of entire planned transformation. It is important to take into consideration practicality into theaccount, it is absolutely fine to live with some imperfections if we are still able to achieve the desired results. 

It is generally recommended to go in phases through small projects and understand that tangible benefits can be seen only over a period of time.

Shivani M

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