Finance transformation without new software or shared services

Transform vision in Finance first

This article was inspired by a comment that Andrew Jepson made in response to Part 2 of my series on Innovation and Finance, which spoke about the attitude that Finance should have to innovation within its own function.

He said (in commenting on my LinkedIn post), “Can innovation in finance be as simple as: Put away the spreadsheets! Get off email! And absorb yourself in the business! It seems simple but is it innovative…?”

That struck a chord with me. I think he is onto something. It would be quite a new and different thing for many Finance people to spend more of their time with the business. It’s not what we’d normally class as innovation, but the definition of ‘innovation’ is just the application of something new to bring about an improvement.

The big question is ‘why?’

Why is Finance in business?The big question is ‘why?’ What benefit would there be from Finance people spending more time with the business? Are we saying that there is more value in simple conversations with non-Finance business managers than the spreadsheets we love (and love to hate)? How can that be?

Many people may respond with frustration, saying, “these spreadsheets are produced for the business! And they already max out my time, and I end up working late to produce them because they want them! If I spend less time on them, I’ll get beaten up for being late with it, even though I might have a very nice conversation with my business colleagues!”

Without the context of the ‘why’, it can push our unappreciated Finance colleagues further into despair, telling them that they ought to be doing something else as well.

Finance Transformation… transforming our vision

So, here’s where I think we need to rethink Finance Transformation.

Why do I bring Finance Transformation into it? Well, because the reason why it possibly jars a bit when people like me, and Andrew Jepson, and others, make statements like, “get out from behind your spreadsheets”, is because we have a fundamentally different view of what Finance all about. So, the reason I bring Finance Transformation into it is because, primarily, what we really need is a transformation in our understanding of what Finance is in the business for.

The problems with classic Finance Transformation programmes

Finance Transformation programmes are normally (in my limited experience) all about getting Finance work done better and more efficiently. It’s about time savings, cost savings, synergies, system integration, speeding up month-end processes, shared services and outsourcing.

There are a couple of problems with that approach:

  1. It makes Finance people feel like Finance Transformation is all about overhauling Finance processes, so that we can produce numbers quicker and with less people.
  2. It leads to the impression that the only way that Finance can add more value to the business is by being cheaper.

Finance Transformation as a paradigm-shift

get a different perspective on Finance functionWhat I’d like to see is (without necessarily putting aside the transformation of processes and technology) a transformation of Finance vision.

The ‘stop hiding behind your spreadsheets and get out into the business’ mentality sounds alien, because it comes from a completely different vision for Finance. It’s a paradigm-shift. It’s advocating a purpose-driven Finance Transformation to deliver purpose-driven Finance.

It’s purpose-driven in the sense that we are not just seeking to transform how we do what we do. We are looking for a transformation in our understanding of why we do what we do.

Are we in the business just to keep the score? To control the transactions? To make sure there’s enough money in the bank? To do the tax returns and talk to the auditors? Is that what we’re in the business for?

I’d say, that’s only part of what we do. It doesn’t tell us why we do it, not fully at least.

The purpose of Finance is to drive business performance

So, here’s my stance: The purpose of the Finance function is to drive business performance. Not just to report on it. Not just to create budgets for it. Not just to do the bookkeeping, the payroll and the tax returns.

And it’s not just my view. “Driving business performance” was the slogan for Finance in one of the biggest, and the best, business I’ve ever worked for. It just took me a few years after I left to realise that it wasn’t just a slogan, but a real vision. In fact, I’ll be honest (embarrassing fact) – it was so many years later that I didn’t even remember where I’d heard the phrase until someone reminded me!

Once you understand that, it becomes absolutely obvious that to drive business performance we need to be spending time with the business. Because we need to know how the business works and we need to be able to help and influence the business in the right way.

Helpful resources

If you want to go into this in more depth, and find out what driving business performance is all about, there are two resources I can recommend:

Firstly, my free mini course, How Finance Can Drive Business Performance. This takes you through a framework for business performance management, and an approach that Finance can use to applying the framework to drive business performance.

Secondly, a slightly more advanced course, Driving Business Performance Further in Finance. Boost you business by boosting Finance!This covers the same foundations, but then takes you through four areas of specific application:

– Strategic performance measurement

– Focusing performance reporting and analysis

– Keeping business change on track

– Rethinking Finance Transformation

Let me know what you think? And in the meantime, think about how you can use your spreadsheets as a way to start conversations with your non-Finance colleagues about what they do in the business.

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