by Gerohn Lanns & Michel Porter
Transformation is a mindset — a vision of the future uninhibited by limitations; a continuous, long-term evolution of the company with no finish line.
But as companies strive to continuously improve their enterprise, they may encounter headwinds in their transformation journey, asking:
Despite these potential roadblocks, one of the most pertinent challenges is transparency into how current processes are working to provide clarity. Companies may lack the tools and technology required to give an accurate view of their end-to-end processes at any point in time, leaving them saddled them with time-consuming efforts throughout the organization and inspecting documentation of processes that may not reconcile to current standards or outcomes. These scenarios lead to management having incomplete or inaccurate representations of their company’s current processes, leading executives to potentially invest in transformations that will not yield an ROI.
So, how can companies design and implement a thorough finance transformation?
First, finance transformation should be viewed multidimensionally, with people, processes and technology all major considerations. However, with the amount of data to review and process, and considering all the people and roles involved, it’s hard to fully capture and plan for the impact of a transformation.
Secondly, be aware that many finance transformation plans are driven by biases. As much as leaders try to create a holistic plan, they can’t know all the impacts of a transformation in advance. The plan develops based on each stakeholder’s point of view, where each person involved selects data and focus points that support their function.
Because of this, unforeseen problems tend to arise immediately after a finance transformation implementation — budgets start to overrun, change management lacks proper governance, and resistance from impacted individuals intensifies — turning the transformation into a larger and more exhausting undertaking than anyone anticipated. Yet there are rarely any significant changes made to the plan; companies simply stay the course, using the same KPIs and metrics used to measure success, regardless of what may have changed in the business or economy.
True finance transformation is a long-term journey — one that inevitably unfolds alongside changes in the business itself. That’s why a transformation plan should be dynamic and adaptable, evolving in step with the organization while still delivering outcomes that meet or surpass the original vision.
As a result, within finance transformations, controllership specifically should proactively identify changes within the organization and evolve with it. What is preventing controllership from charting that initial course and pivoting as the business changes?
1. The transparency challenge
A major hurdle in initiating finance transformations is the lack of visibility within finance and accounting departments. Many organizations struggle to identify where to start their transformation initiatives due to insufficient visibility into their current processes and data to know where to start after they have defined their vision. This lack of clarity can lead to stagnation, leaving teams uncertain about the most effective path forward. Operational and financial data is the cure; however, this brings about new skill set and technology requirements to improve analysis and interpretation of said data. Furthermore, it is not only controllership that needs this data. With the increasing regulatory and market changes, the tax and financial planning and analysis teams need transparency into this same data to ensure a consistent basis for making decisions across transformation programs.
2. Data complexity
As data becomes increasingly complex with more systems and layers, accessing and analyzing it effectively poses a daunting task for controllership. The market has become flooded with data platforms and optionality that can be difficult to navigate. Having the right people, processes and technology to understand the strategic use of each platform, enable such technology, and deploy it at an enterprise level can be a daunting task. The sheer volume of data generated daily can overwhelm traditional capabilities, often leaving controllership to develop approaches to extract value on their own. This not only consumes valuable time and resources but also increases cost, inefficiencies and the risk of errors. We see this problem becoming further amplified with controllership looking to implement artificial intelligence over structured data within their broader organization.
3. The pressure to optimize
Controllership is expected to optimize at an accelerated pace. However, without a clear understanding of its operations and the tools to manage data effectively, achieving this optimization can feel like an insurmountable task. To meet these expectations, organizations should foster a culture of continuous improvement. This involves not only investing in technology but also encouraging collaboration between finance and other departments. By breaking down silos and promoting cross-functional teamwork, organizations can create a more agile controllership function that can respond quickly to changing business needs.
Companies can overcome these controllership challenges with a data-backed approach to the finance transformation’s design. Companies are also seeking new skill sets within their controllership functions, such as individuals who have both accounting and data engineering backgrounds. Consider enlisting advisors with deep controllership domain knowledge and hybrid data engineers with years of accounting experience to tailor your company’s analysis to better address your specific problem areas. The result can be a financial transparency and insights platform to quickly onboard, update and interrogate data sets to help ground transformation strategies in real data and address a multitude of controllership and accounting challenges. These capabilities enable companies to:
1. Uncover the root cause of operational and accounting activities and gather results quickly and efficiently
2. Identify what is working well and where opportunity lies in real time as the business changes
3. Gain a clearer understanding of where to focus to maximize value creation
This transparency helps validate or invalidate assumptions and beliefs that permeate throughout the organization, fostering a culture of accountability and informed decision-making. When controllership has access to accurate and comprehensive data, it can challenge existing narratives and make data-driven decisions that align with the organization’s strategic goals and vision. This shift enhances operational efficiency and builds trust among stakeholders, as decisions are grounded in factual insights rather than assumptions and biases.
The challenges facing controllership today are significant, but they are not insurmountable. By leveraging data and technology, combined with accounting experience, controllership can gain the visibility it needs to kickstart finance transformation projects, manage complex data more effectively and optimize its operations at a faster pace. As your company moves forward, it is vital for controllership to embrace innovation and adaptability to be well equipped to thrive in an ever-changing financial landscape.
The views reflected in this article are those of the authors and do not necessarily reflect the views of the global EY organization or its member firms.
Gerohn Lanns is a partner at Ernst & Young LLP and the EY Americas Finance Optimization Leader for Financial Accounting Advisory Services. Michel Porter is a partner at Ernst & Young LLP and the EY Global Assurance Analytics Leader.