A Beginner's Guide to Low-Stakes Finance Transformation
What Is Finance Transformation?
As companies grow, finance and accounting organizations struggle to keep up with increasingly complex processes, changing reporting structures, and an accelerating pace of business. Processes that worked in previous years can no longer keep up with the demands of business. More and more of the teams’ time ends up being used just to keep up with the “rhythm of business” (e.g., monthly, quarterly reporting) and ad hoc requests from stakeholders. This often results in finance teams being largely relegated to producing financial reports and trying to keep up with requests from key stakeholders. Very rarely do we encounter FP&A leaders who feel their team has adequate time and resources to engage in growth-focused, self-directed analysis.
Finance transformation, then, is the re-engineering of finance processes, tools, and capabilities to leverage modern technologies. It gives finance and accounting organizations the tools to get ahead of the curve and to build the infrastructure to support their stakeholders with the highest level of service. The goal of finance transformation is to empower finance and accounting teams to go above-and-beyond in ways they simply cannot with legacy processes and tools in place.
Why Isn’t Everyone Engaging in Finance Transformation?
Despite the pain-points described above, many organizations struggle to drive their own finance transformation initiatives. There is a very valid reason for this; CFOs and CIOs face an unpleasant dilemma. While modernizing finance and accounting organizations is critical to the business’ ability to support long-term growth, it rarely seems immediately “urgent”. Add to this the fact that digital transformation (of any sort) can often be expensive and risky and it’s no surprise that many finance organizations (even in high-performing companies) continue to operate with sub-optimal processes, stitching together numerous vendor solutions in the hopes of at least alleviating the problem.
What Are the Costs of Delaying Finance Transformation?
Delaying Finance Transformation inhibits the ability of finance and accounting organizations to grow their support capabilities at the pace of business growth. Without making intelligent investments in these initiatives, many organizations will leave their finance and accounting teams in an uncomfortable status quo. The current state for many finance organizations includes:
- Forecasting and budgeting are tedious, time-consuming processes, and often yield inaccurate results (think: Spreadsheet nightmares)
- Financial reporting is done (mostly) manually; it is labor-intensive and frequently requires revisions and corrections
- Finance and accounting teams spend large amounts of time on manual data transformation, consolidation, integration, reconciliation, and processing tasks
- Data from different enterprise systems lives in completely isolated siloes, inhibiting “horizontal” analysis of the business
- Stakeholders must make do with very slow “time-to-insight"; generating new analytics is tedious and it is difficult to answer critical questions about business performance in a timely manner
- Finance and accounting teams must “straddle” multiple systems and SaaS solutions, making collaboration and efficiency challenging
These problems are common in finance organizations large and small, so it’s important to think carefully about how to structure a solution.
What Are the Common Themes Among Successful Finance Transformation?
There are three recurring themes that we think can help; we will dive into each in turn:
- Self-service tooling
- Incremental delivery
- Leveraging platforms
1. Self-Service Tooling: Traditionally, almost all of a business’ technology needs presented the leadership with unpalatable choices. Purchasing external software is often seen as the silver bullet, but bespoke implementation and the need to integrate with an out-of-the box solution means that companies end up stitching together numerous third-party solutions to try to assemble to tools they need to operate.
The traditional alternatives are to hire (expensive) in-house or vendor-provided engineering teams to build bespoke FP&A solutions—a solution that is prohibitively expensive for all but the largest companies, and even then, one which often fails to yield the desired results.
Today, however, new opportunities allow finance organizations to mitigate some of these pain-points and take a new path. Self-service (low-code) tools are enabling business users to become “citizen developers”. It is now within the reach of a reasonably proficient financial analyst (not an engineer) to build business applications, advanced analytics, automated financial reporting, and robotic process automation solutions. This self-service ability unlocks massive opportunities for organizations that invest in the training to empower their staff to create business solutions of their own.
2. Incremental Delivery: Digital transformation initiatives often involve building complex solutions and migrating entire enterprise systems across platforms. Diving into massive initiatives can be daunting, risky, and expensive. There is a time and place for a comprehensive rethink of business infrastructure, but for our purposes (dipping our toes into Finance Transformation), there is another way.
We can break up the responsibilities (deliverables) of the finance and accounting organizations into increments. These increments include items like financial reporting, financial forecasting, data analysis, data reconciliation, and many more.
Our next step is to assess self-service applications (hint: especially ones which leverage shared platforms) that can be used to create integrated, comprehensive tooling that is completely in the hands of business users. Once we’ve identified our use cases, we need to prioritize (“triage”) them by urgency. We must identify the deliverables will yield the highest ROI in terms of either cost savings, time savings, or new capabilities they will provide the organization.
Now, the business is free to begin building self-service one business application at a time (not "black boxes” provided by third party vendors nor expensive in-house solutions). Business teams can take control of their own fate and direct their own roadmap to Finance Transformation.
3. Leveraging Platforms: When selecting self-service tools, it is critical that finance organizations think with the bigger picture in mind. We want to create solutions that integrate and orchestrate seamlessly with one another, rather than replace one “web” of solutions with another. This is why it’s important to firstly break up the work to be done into increments and then, secondly, identify the tools for each “job” in such a way that they will come together to form a cohesive picture. As we will see, later in this article, we strongly believe that the Microsoft Power Platform is well-positioned to serve finance teams in the years to come (but this subject will be covered in later articles).
What Could a Successful Finance Transformation Look Like?
As an illustrative example, let’s take a look at a mid-sized enterprise, beginning its Finance Transformation journey and explore some of the opportunities available to it. What are some of the “low-hanging fruits” that this organization could tackle first?
- Data consolidation and integration
- Financial reporting and planning
- Data transformation and manipulation tasks
- Manual, repetitive processes
Data Consolidation & Integration: Data living in different, isolated siloes makes it difficult for business teams to create a wholistic picture of the business or plan comprehensively for the future. Oftentimes, the solution to this kind of problem is categorized as either expensive data consolidation and data engineering projects or a wholesale migration of enterprise systems. However, there is a much lower stakes approach to start capturing the benefits of a consolidated, integrated data “ecosystem”.
Acterys is a solution built for FP&A teams to consolidate data from multiple systems (ERP, CRM, etc.) into one collective database (hosted on-prem or in the cloud, using Microsoft Azure). Acterys offers numerous connectors (including QuickBooks, NetSuite, Salesforce, and others) and they are regularly growing their list of connections. Using this tool, we can consolidate our data across siloes into one central database that can be used for business planning, financial reporting, and business intelligence. We can do all of this while limiting the complexity of data engineering projects and without having to migrate systems wholesale. Acterys allows us to capture the benefits of data consolidation with a much lower investment of time, effort, and money. Furthermore, Acterys connects directly to Power BI, which brings us neatly to our next Finance Transformation increment.
Financial Reporting & Planning: Financial planning and reporting often requires business teams to manually extract data, produce and quality-check reports by hand, and then re-enter them into reporting solutions. Generating financial reports that are dynamic (can be sliced according to user needs) and with near real-time data is very challenging with the infrastructure most organizations have in place. Forecasting and budgeting processes are time-consuming and lack the controls and approvals processes, as teams engage in the back-and-forth of sourcing, validating, approving, and consolidating forecast and budget figures.
A low-stakes solution to this problem is to leverage Power BI and Acterys to build responsive financial reporting and dynamic planning (forecasting, budgeting) tools. Power BI is a Microsoft analytics and reporting dashboard tool. Recall that in our previous step, we suggested using Acterys to connect to and consolidate our data into one database. Having done that, we can now connect to our Acterys data (like Salesforce and NetSuite) in Power BI and create a “horizontal” view of our business.
Taking this solution one step further, we can use Acterys visuals in Power BI to create financial reporting solutions, like fully responsive P&Ls, Balance Sheets, and Cash Flow Statements that we can “slice-and-dice" on demand. We can also use these visuals to build our planning (forecasting and budgeting) solutions—these visuals allow us to “write-back” our forecasts directly from Power BI. This is extremely powerful, because it turns Power BI—traditionally only a reporting and visualization tool—into a tool to create, manage, and update forecasts and budgets from one central dashboard. We can also use this tool to implement controls and approvals to streamline the planning process—eliminating back-and-forth and bringing transparency to the process.
Data Transformation & Manipulation Tasks: A great deal of the work done by finance and accounting teams involves the manipulation, transformation, and reconciliation of data. Continuing with our theme of leveraging low-code (accessible) tools to empower the business, we can now enhance these data-focused tasks with tools like Power Query. Power Query is a Microsoft tool built to provide powerful automated data transformation to the advanced Excel user (most finance teams already have a strong Excel background). For example, accounting teams can use Power Query to automate the reconciliation between subledgers and GL entries during the month-close process. Automating or streamlining these data-oriented tasks can add up to huge time and cost savings to busy finance and accounting teams, and it requires minimal upfront investment of time and resources. But what about other repetitive, manual tasks?
Manual, Repetitive Processes: Office workers of all types are often burdened by manual processes that are important but don’t leverage the skillset of highly trained workers. Luckily, we can continue our program of low-stakes, low-risk Finance Transformation by investing in tools like Power Automate. As you may have question, Power Automate is another tool in the Microsoft Power Platform, designed to empower business users with no-code automation tools to streamline their work, multiply their productivity, and increase efficiency. As an example, the collections team could use Power Automate to identify past due Accounts Receivable using ERP data and generate automated pre-formatted emails to reach out to customers. This is another example of a time-consuming manual task that, with a very low-stakes investment, can yield a high ROI as measured by time and cost savings.
Conclusions:
Finance transformation is critical to empowering finance and accounting teams to facilitate business growth and support the organization in a changing environment. Digital transformation is often overcomplicated and, if we are not careful, can be expensive and risky. To address this, organizations can reduce risk and increase the ROI of Finance Transformation efforts in three key ways. Focusing on self-service tools that empower business teams to create their own solutions enables the business to reduce the investment “threshold” required to achieve real results—it also accelerates transformation, reduces technology costs, and gives the business more flexibility to solve its own problems. Driving Finance Transformation by breaking it into incremental investment allows teams to reduce risk, accelerate the payoff period, and build momentum—without making massive investments of time or money. And finally, when selecting the tools and technologies to fuel transformation, leaders must always do so with an eye towards using platforms that provide “compounding effects”; those which enable organizations to create synergies between their tools to build a well-tuned, well-orchestrated organization.