Choosing a Starting Point for Finance Transformation
When discussing potential transformation opportunities with clients, the question that inevitably comes up is "Where do we start?" Given the myriad of challenges in the typical finance organization, it's a natural question to ask. And often the answer is not the obvious one people often expect.
Many companies, particularly if they have a benchmark project commissioned as part of a transformation project, will often focus on the areas that offer the greatest cost savings or perhaps meet a critical delivery need that is not currently being addressed. Under appropriate circumstances, these may not be bad choices. However, there are other considerations for the leadership group evaluating a portfolio of improvement opportunities.
Generally speaking, the following factors should be evaluated as part of the decisions as to how and where a transformation initiative should be launched. In my experience, a company should choose an initial transformation project where:
There is strong executive support for change. Very little will happen if the senior executives in the area under consideration won't back the project in word and deed. Transformation teams should find a specific area: a business unit, a region or a specific process, where the executives in charge of that area have publicly recognized the need for change and are clearly willing to support transformation efforts.
The barriers to successful change are not huge. Let's face it. Some transformation opportunities are tougher than others. It often makes sense to get a transformation program started by choosing an initiative that doesn't have huge obstacles to change. Typically, transformation programs that involve large technology implementations can take a year or more to fully compete. Project like that can take too long to build momentum. Or perhaps a particular initiative lacks executive support. That can make it difficult to get the budget and personnel to make the project successful. The point is, you and your project team don't have to climb Mt. Everest on your first hike.
The scope can be clearly defined. Actually coming up with a proposed scope is typically not the problem. Far more often the team proposes a scope and then over time the scope increases, typically because management is pushing for the greatest value for as little investment as possible - without a corresponding increases in the budget and project team. There's nothing wrong with challenging the assumptions in the business case, but projects with constant scope creep after deliver less than expected. It's critical to define the scope in such as way that it is clearly defined and relatively achievable. Which brings me to the next point.
The initial project has a strong chance of succeeding and can succeed in a relatively short time frame. Nothing is more frustration to senior management and to the project team than to be a part of a project that drags out with no discernible benefit to the organization. I personally believe that first victory should occur within six months. Any longer than that and you risk grumblings in the company about how money is being poured into a project with no realized benefits. This first win is critical to prove to the broader organization that the transformation team can in fact deliver value. Once that occurs, you'll find more managers jumping on the bandwagon.
The chosen scope of work has a strong project team members behind it who actually have time to be involved. Few things can stall out a project faster than a "dedicated" project team that in reality is working their day job and performing transformation opportunities on the side. Your company's first project should have sufficient resources dedicated to the project to virtually ensure success. Some positions may need to be back filled on a temporary basis, but that is a cost of successful transformation.
The project chosen can serve as a model for future transformation efforts. The transformation program should look for a project that can serve as a model for future efforts. That means the project has to be large enough to make an impact, but not so impossibly large that benefits are delivered late, if at all. This initiative needs to be your "case study" of how your team can transformation finance and drive real benefits to the organization..
No project has a 100% guarantee of being successful and delivering on the promised value. However, by following these steps, the project team has a good change of success, driving confidence from future project sponsors that tangle benefits can be realized within a reasonable timeframe.
