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4 Must-Do’s for Transformation Success

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5-minute read

Making the Move to F&A Digital Transformation

For controllers, CFOs, CTOs, and business leaders in general, planning a move to digital finance transformation can be daunting—and it can raise some serious concerns. What if, for example, the transformation causes more problems than it solves in the intermediate term? What if it adds interim state technical complexities to an already challenging ecosystem further challenging the partnership between finance and IT?

Mike Polaha, BlackLine senior vice president finance solutions and technology, has seen these and other issues arise in his time working with global organizations. Digital transformation has been proven to deliver significant benefits, he notes, but the keys to success are in the preparation and being smart with the ways you organize and sequence the strategy and work plans.

4 Steps to Finance Transformation While Avoiding Common Pitfalls

Base Your Strategy on Diagnostics

Your strategy and corresponding business case should have a clear goal, and that goal should be informed by benchmarks of similar companies in the affected finance processes.

“You don’t want your strategy to be informed by hunches,” says Polaha. Instead, it’s good to use an outside consulting group—the Hackett Group, for example, or some other company with a benchmarking service—to see where you currently stand, then focus your strategy to gain the greatest competitive advantage at maximum efficiency.

Benchmarking can also be critical in selling the transformation to executive management.

“It can help you show executive leaders how, by making certain investments, you can not only improve your cost to serve, but likewise how the service can be differentiated in what it can now provide,” he says. “You’re more finitely tethering the functional investment to the overall business strategies.”

Adopt a Leading-Practice Orientation

Polaha notes, “every company is unique, of course, but all companies share certain fundamental characteristics. Once a company realizes this, it’s able to benefit by looking at, and emulating, industry leading practices.”

 Here is where a relationship with a top-end system integrator like Deloitte or EY can pay dividends.

“These companies have lots of experience with finance transformation,” he says. “They can show you a well-documented way of adopting best-practice processes for your specific areas of concentration.

“Also, BlackLine can help implement leading practice solutions based on our own experiences with customer installations and our regular participation in customer advisory boards. In essence, our application is crowdsourced by enabling best practice inherent in the composition of our solution design.”

Admit You’re Not a Software Company & Embrace the Cloud

According to Polaha, “too many companies think that they can develop their own applications. The problem is they first have to build the applications, and then they have to maintain and upgrade them. Then typically at some point they start to fall behind and can’t catch up.”

An example is one company that tried to upgrade their intercompany reconciliations by customizing their ERP software. “It then became very difficult, and costly, for them to implement vendor upgrades without the fear of breaking everything they’d developed.”

Using the cloud can help speed application deployments and allow companies to digitize rapidly at scale. The company also avails itself to a future proof architecture by allowing the SaaS provider to continually embed the latest evolutions in process and solution capability.

Polaha notes, “there are times when companies have too many applications with significant overlap. It’s better to partner with fewer vendors that can use the cloud to cover multiple applications.

“If you’re using one finance vendor for account reconciliations and another to do cash application for accounts receivable, it’s much more efficient to give those jobs to a single, cloud-based vendor to simplify the overall technological and contractual footprint.”

Harmonize Finance Data with the Enterprise

Here’s where finance can be an evangelist and a valuable partner to IT.

Data analytics are growing in popularity as a tool for business planning, but Polaha notes that analytics are only effective when they’re based on data that’s harmonized—unified—so that all data uses common, standardized naming and formatting conventions.

As an example, today’s finance groups are making increasing use of analytics-driven rolling forecasts that produce continuous predictions based on the previous time period’s data. Rolling forecasts can be very effective planning tools, says Polaha, but only if they are based on harmonized data.

“The problem is that without harmonized data, some people will be basing their planning instances on their unique views of the data. So, you end up with 50 instances of planning and forecasting software, and you can’t put Humpy Dumpty back together again.”

Once finance has harmonized its own data, it can then become an evangelist for data harmonization across the enterprise.

“Finance can then present a common view of finance data to IT,” says Polaha. “IT can use that for further harmonizing their own data and applications,” he says.

“That’s the ultimate prize for transformation, isn’t it? To get finance, IT, and the entire enterprise moving smoothly into a digital future.”