Finance Transformation: Strategies For Impactful Digital Transformations

Matthew Dziak

What is a Finance Transformation?

A transformation sounds like a daunting commitment, but the results far outweigh any perceived amount of effort. In fact, with the right partners, a transformation can even be a rapid process with profound impact on not only the finance function, but the entire organization. 

A finance transformation refers to a strategic initiative by a company to enhance and optimize its financial operations, systems, processes, and capabilities. This comprehensive change aims to improve the efficiency, effectiveness, and transparency of the organization's financial function, ultimately delivering greater value to stakeholders, including investors.

Although there is a digital component to a finance transformation, there are more pieces to the puzzle, commonly listed as people, processes and technology. It is important to note that expertise is an often forgotten or overlooked aspect of a digital finance transformation, and arguably the most important to ensure success.

People: People are essential to curate processes, partner with business units and leverage technology to drive efficiencies. People deploy a balance of proven processes, internal controls and robust technology to deliver the greatest value as a strategic partner.

Processes: Processes are the glue that hold your finance function together. We’ve honed forecasting, planning and analytical methodologies from decades of experience, so you can rely on the proven processes that are sure to make an impact.  

Technology: At the core of a finance transformation is the addition of robust tools and technology capable of consolidating disparate systems, automating reporting packages and providing detailed insights into company health and performance.

Expertise: Often overlooked, but possibly the most important aspect of a finance transformation is the need for external expertise. FutureView assembled former CFOs at leading companies with finance and technical expertise to lead and quickly advance the maturity of your finance function.

Finance Transformation Strategy and Outcomes

Any system and process overhaul requires meticulous planning and preparation to identify your specific needs, keep every stakeholder informed and aligned, and work in tandem with advisors to oversee the process.

A transformation aims to elicit a proactive approach to your business, fixating on future outcomes and measures to achieve common objectives while limiting risk and inefficiencies. As you develop an internal finance transformation roadmap, consider and plan for the outputs and gaps you must fill with dedicated solutions.

Convey Strategic Objectives: Explain that the finance transformation aligns with the company's broader strategic goals and objectives. Emphasize how it supports the organization's growth, profitability, and long-term sustainability.

Drive Operational Efficiency: Illustrate how the transformation aims to streamline financial operations, automate manual processes, and eliminate redundant tasks. This efficiency improvement can lead to cost savings and increased productivity.

Enhance Decision-Making: Describe how the finance transformation will provide timely, accurate, and insightful financial information. Emphasize that this will enable better decision-making across the organization, including investment decisions, resource allocation, and risk management.

Automate Reporting: Highlight that the transformation will strengthen financial reporting capabilities and ensure compliance with relevant regulations and accounting standards. This commitment to transparency and governance helps build investor confidence.

Provide Timely Analysis and Insights: Discuss the implementation of advanced analytics tools and techniques as part of the finance transformation. Explain how these analytical capabilities can provide deeper insights into financial performance, identify trends, and support data-driven decision-making.

Consider Risk Management: Emphasize that the finance transformation will strengthen risk management processes, including the identification, assessment, and mitigation of financial risks. This focus on risk management can help protect investor interests and minimize potential downside.

Scale and Adapt as Needed: Highlight that the finance transformation is designed to support the company's scalability and adaptability to evolving market conditions. This flexibility is essential in an ever-changing business landscape, ensuring the finance function can effectively respond to future challenges and opportunities.

Deliver Stakeholder Value: Convey that the finance transformation is ultimately aimed at creating value for investors and other stakeholders. Discuss the potential positive impact on financial performance, profitability, and return on investment.

To elicit internal stakeholder buy-in, it is imperative that you clearly communicate your vision for the transformation and how it will be beneficial to the organization. When there is a fundamental understanding of the impact this investment can have on the Company, it will be more likely to maintain support throughout the journey. 

When is a Transformation Necessary?

If you are considering upgrading an accounting system or ERP system to solve an internal control problem, or it is taking too long to deliver reports and forecasts to the board and investors, the time to act is now. Even if you have not reached that level of inefficiency, gaining control of your company data and extracting actionable insights promptly is fundamental to best-in-class finance functions

“58% of finance leaders lack the time, resources and strategic processes to clearly define a digital technology and investment strategy.” - Gartner Finance Leader Survey

Leaders of high-impact finance functions foresee obstacles that lie ahead, and take proactive measures to prepare for them. For most, this means sourcing external support and expertise who lived through the ups and downs of scaling a finance function to be a guiding resource. If you are one of the 58% who feel they do not have the time or resources to plan a transformation strategy, you will want to select a partner who has been in your shoes as a finance executive or founder, and understands the nuances to deliver truly impactful finance solutions, like FutureView has to offer.

There is also no one size fits all approach or strategy to any transformation. Just as each piece of a quality bespoke suit is specifically tailored to the individual to guarantee the best fit possible, finance transformations are designed for your Company’s needs and problems it faces and could face in the future. Firms providing transformational finance solutions should take the same approach to your business and finance function. 

The requirements of your transformation are very much dependent on the maturity of your business and finance function. Every company’s finance function, regardless of industry, is at a stage of maturity requiring specific expertise and processes to elevate its impact to that of a mature enterprise. For example, early-stage companies might have a Controller or someone managing the books to keep up with accounting complexities. Meanwhile, others will require fractional CFO support during a transition or entirely outsource FP&A duties for the most cost-effective impact.

For more on this, check out our guide on how to build a mature finance function. 

As companies grow and take on new investors, those stakeholders come to expect a specific set of reports and insights into the health and performance of the business – especially venture capital and private equity firms. Without the proper finance tools to wrangle and structure the data, and understanding of these desired deliverables, it can be an uphill battle to overcome. The last thing any finance professional or executive wants is a frustrated and dissatisfied investor. 

Controllers, with a strong fundamental accounting background, might struggle with the nuances of reports, forecasts and growth initiatives, while trying to put their finger on the business drivers to maintain the company trajectory. For most companies in this stage, there is little time to go through a trial and error phase with uncertainty surrounding the timeline and resources required to deliver.

Once a company has GAAP financials, they add a VP or Head of Finance to focus on long-range planning, budgeting, and forecasting. This person is usually an Excel-wizard capable of fulfilling the deliverables for investors; however, the lack of scale and version control of the massive spreadsheet model is doomed to fail.

The disconnect is rendered in actual performance metrics that are wildly off from the projections, forcing management to take reactive preservation measures that are near-sighted like cost-cutting and R&D contraction instead of ways to grow revenue and sustain the longer-term trajectory.

This problem is not limited to early stage companies either. Many medium and large enterprises with substantial market share and a seemingly proven business model face these same finance challenges. At some point, there comes a time when what worked for us in the past is not suitable for us in the future. 

If this scenario sounds like something you are experiencing or heading towards, reach out to our team of finance experts who can assess your situation and provide transformative tools, services and solutions.