64. The Research Behind Successful Transformation Projects

Introduction and Announcements 0:48 

Hello everybody and welcome to a special edition of CFO 4.0. This year we've been talking to lots of CFOs already and it's only the first few weeks of January about their plans for the next year. And one of the things that keeps coming up is getting started and planning out financial transformation projects. So, based on some feedback and some conversations I've had in the backgrounds, I've got some exciting news from you. So, firstly, this second episode of January 2022 is going to be a presentation that I did back last year, at the latter end of last year, about the common mistakes people make when entering and starting financial transformation projects. And it's actually based on research from some of the leading analysts about where projects go wrong. So, I thought we'd use this opportunity for those that are just starting to dip their toe into the financial transformation pool. You might find this very interesting. And I'd love your feedback. If you're listening to this and actually you find this content useful and or engaging please do let me know you can contact me on LinkedIn Hannah Munro just send me a message and say that was great we want more of that or actually any other topics you'd like us to cover we are going to be continuing to speak to CFOs that are doing the job and doing it well to talk about their journeys their financial transformation and we've got some great speakers lined up from thought leaders in the CFO world that are going to come on to the podcast as well to talk about where things are going and what's happening behind the scenes you may not have heard about. So, the other thing we are doing is we are launching the Financial Transformation Live Sessions. And the first one is coming out in the next week or so, which is it's all about getting rid of the spreadsheets in your finance processes. We talk about the different types of spreadsheets, how to figure out how big a problem you have, because very often it's one of those hidden issues that you don't even know you've got in the back end. And we talk about doing like Excel audits as well. So, if you're interested in getting involved or receiving a recording of that session. Please do reach out to me. You can also sign up on the website, www.itassolutions.co.uk. Click on the resources section, go to Financial Transformation Live, and you can sign up to receive the link to join the live session where you can ask questions and get engaged because I really want to use this year. So, my New Year's resolution for the podcast is to start to create a community, a community of people going through or thinking about transformation that are looking to change the way that finance works within their organization. So, I'd love for you to get involved. So, please do reach out. Please do sign up to Financial Transformation Live and we'll keep you informed and updated on those different sessions as we go through the year. So, without further ado, I'm now going to hand over to myself, technically, to take you through the presentation from Sage Transform. Take care, guys. Speak to you soon.  

Setting the Scene – Why Transformation Projects Matter 03:36 

Hello everybody and welcome to this presentation. Today we're going to talk about the research and science behind successful financial transformation projects. So, in the next 15 minutes, I am going to, well, hopefully I'm going to show you that you can be excited about your next financial transformation project rather than dreading it, that you will be in a position where you know exactly where the challenges are and how to avoid them and or mitigate any risks with your next financial transformation project. So, what's on the agenda? So, we're going to share some current statistics and the latest statistics around financial transformation. It's We're going to talk through some of the common causes of project failures and we're also then going to get right into what can you do as a leader of your next project to ensure that it's a success. Okay, you ready? Let's get started.  

Industry Stats and the Urgency for Change 05:46 

So, what is the current state of financial transformation? Okay, so, what is exciting is that 85% of finance teams have identified that there's a massive opportunity for transformation and they're actually planning it as we speak. 56% of companies are actually evaluating some really exciting technology around automation of accounting and finance. And 97% of CFOs are planning to accelerate their digital transformation technologies in 2021. So, it's a really exciting time at the moment for both consultants working in financial transformation, but also finance teams to create that real shift, a wave from the number cruncher and into that value-add business partner. As you can see, though, the scary thing is, is that only 30% of financial transformation projects are deemed a success. Okay. And so, what is it that we actually need to address? So, why do 70% of projects fail? So, the first thing we need to clarify is what does fail mean? So, fail means not achieving the original objectives for your financial transformation project. So, the first question I will ask you is how many of you have actually identified what those objectives are in a way that can be measured? So, there is some good news, though. And is that actually, surprise, it isn't the technology that is the big decision maker around how successful you are in terms of implementing financial transformation, which I think surprises a lot of Because so, much effort goes into requirements gathering, choosing the right software. And actually, it's a factor, of course. If you choose the wrong one, it's going to be detrimental. But actually, it's not the only thing you need to have in place. And if you think about the amount of effort that goes into requirements planning versus the amount of effort that goes into planning and the change management around your financial transformation project, there is just a pause and a think. isn't there? Okay. So, let's look at the most, the common reasons for failure.  

Common Causes of Failure 07:21 

Okay. So, the first is a lack of clarity or urgency around your project objective. So, that first question I asked you about, you know, how, what do we mean by failure? If you haven't been clear about actually what you're trying to achieve with the project, then you're, you're never going to know firstly, whether it's a failure or whether it's a success. Okay. And the second piece as well is around insurance urgency. So, if you think about the shift that we've seen over the last 18 months in terms of digitization, in terms of the transformation to flexible remote working, that shift urgency and, you know, the requirement that everyone was aware of actually drove a huge amount of transformation. The next piece is around the aiming for unachievable cost reduction goals. So, there is some, you know, some standard benchmarks in, you know, in and around different industries around the cost of finance versus the overall profitability and or turnover of the organization. And I think one of the pieces that people need to understand is that actually, if your business is particularly complex, then using those benchmarks and aiming for those benchmarks is not necessarily the right thing to do. The third thing is the ultimate search for perfection in reporting. So, the reality is that perfection is the enemy of time. And if one of your objectives as a business is to shift into that real-time visibility, that real-time insight across your organization, that quest for perfection and getting everything perfect the first time around is just going to lead you down a bit of a rabbit hole. So, it's one of the biggest reasons for failure is that people are trying to make everything perfect rather than it just be good enough. And I I'm a massive believer in an agile approach to financial transformation because I do believe that if you're searching for that extra two pence or two cents difference in a report versus actually getting that report out to the business instantly or within a few hours versus a few weeks, for me, that is a tangible impact and a tangible difference that's worth that sacrifice. The fourth one that we've got on the list is an over-reliance on Excel Consultants, which you may think strange because actually we are a consultancy, we help businesses transform. But one of the pieces that I'm very passionate about is actually helping, enabling finance teams to drive transformation themselves, both in terms of process and capabilities, reporting and technology. And actually, by an over-reliance on consultants during the process and not engaging your team, you basically miss a massive opportunity to ensure that the solutions put forward are fit for purpose and also building that capability within your team. Because this transformation process is going to become less of a project and more of a way of life. And that's how we should be thinking about financial transformation. It's an ongoing, never-ending quest to get ourselves away from that administration and to value add as a finance team. So, that's something to consider. Next one is not, and I think this is where our projects go wrong, is not adjusting your output expectations during finance. big parts of the project. So, for example, if you're expecting your team to, you know, you're already highly busy and, you know, potentially overworked team to achieve exactly the same as they did in a standard week plus or a standard month and plus get live with a new system, you know, you are setting them up for failure. So, and last but not least is the focus on doing everything at once, trying to do too much too fast. So, just think of it like going to the gym, right? You're not going to go and pick the heaviest weight in the room and start picking it up. No. Well, some people on this call might, but I certainly wouldn't. So, I'd pick the ones that I firstly, I knew I could pick up, that I could do so, easily. I'd get my muscles nice and warm and or build those muscles so, that when I come in next time, I can pick up those bigger weights. And the same principle applies here. Imagine going into a financial transformation with clarity over firstly what you're going to achieve yep, a realistic time frame imagine going through that project knowing that actually what you're doing is going to deliver, that your team are engaged, that they're motivated and they're excited about this project. And that is the ultimate goal. This is where we want to achieve because your team need to come on this journey with you. So, how do we set ourselves up for success? And how do we deliver on this financial transformation vision?  

Setting Up for Success 16:11 

So, firstly, clearly articulate your purpose. Now, anyone that's done any kind of change management will know, you know, cotters, all of those kind of theorems, you have to have clarity of vision. And I do believe it's the same for financial translation. Why are we doing this? What is driving this? How important is this to the business? How important is it to an individual in terms of their role as well? So, I do think you need, personally, I think you need to break that vision and that clarity and purpose into both an organisational view of your finance team and why you need to do this and why you need to deliver, but also making sure each member of your project and your transformation team is clear on that on an individual level. And they know what their impact is on this project, their purpose and their value to this as well. The next thing is, you know, we all know that financial transformation is challenging. Hopefully that's why you're listening to this presentation. The first phase is you recognize that there's a skill to financial transformation. And the biggest skill is understanding what is the problem that you are actually solving. Okay. So, making sure that you've actually understood what the challenge is you are addressing. Yep. And that that clarity of what is the problem that you are going to solve will then allow you to prioritize functionality, to be clear on what is the challenge you're addressing and not allow your team to get distracted with something that is less important. Because it is so, easy to get bogged down in the minutiae of process and technology and actually having a clarity of what is the problem we're trying to solve? What is it that we're trying to achieve? allow you then to make good decisions as you go throughout the process and make sure that you're clear on what you're delivering. Why are we actually making this transition in terms of what impact is this going to have on the business, right? So, making sure that whatever goals that you are setting, whatever objectives you are setting for this transformation project is more than just we are going to cut number of heads or FTEs. What is the added value that that finance team will be able to bring when those FTEs are available and able to shift into more strategic roles? And that is a hard conversation to have. And it really takes a leader with a vision, with passion, and an understanding of the strategic value of finance to articulate that. And that's what's come across in a lot of the research. So, Next up, plan your phases. Okay, so, Again, we talked about big bang approach and let's be honest, right? Big bang doesn't work, okay? People are motivated by success. So, by creating small wins, by creating small successes as you go through the project, by hitting milestones on time, you're creating environment in which your team are winning and that there's a momentum that's generated behind your financial transformation effort. Now, what that means though is you need to carefully understand basically carefully plan out your phases, make sure you've understood any dependencies yet. If something needs to be in a certain phase to allow the next phase to happen, you need to have understood that. And that's where your technical consultants can come in to give you advice. So, a clarity of phasing, you know exactly what you're going to deliver or need to deliver within certain timeframes. You now need to create space for your teams to actually deliver on that project. Now, creating space can be, the question you need to ask yourself is, what are you going to stop doing to allow you to focus on the implementation? Now, that could be that you bring in, you know, external resource to pick up the administration or the data entry side of somebody's role so, that they can focus on this project. Like I said earlier, please don't overly focus on external consultants you need your team to have the capacity to think through processes to go on this journey and to be available and able to make decisions around how the functionality is going to work and expecting them to do go on this journey and throughout this journey be working extra hours late nights weekends is just not um it's not practical because they will do it okay so, Building internal skills. So, there is no substitute for internal involvement in a project. And actually, you are 1.5 times more likely to achieve your objectives if you have your internal team heavily involved in your project. And transformation is a journey. I keep saying this, and I will keep saying this because it's really important, but it's a mindset change. It's not a fixed end date. We're not going to get six months down. I go, oh, we've achieved everything. It's going to be an ongoing process. So, by building these transformational skills, by building these processes, this agility into the way that your teamwork, this ability to pick up new technology, to implement changes to processes, to work in this agile and iterative way, will then allow your team to continue that ongoing. So, it's all about building those skills. And actually, if they are developing along with your software and your processes, that's a huge motivating factor. So, you not only have a more skilful team, but you also have a more engaged and impactful one as well. So, win-win. So, make sure you're building the skills internally. And I did talk about this earlier, but that strive for perfection. So, you need to basically decide what is good enough, how good is good enough, and make the correct trade-offs between data perfection or accuracy and the speed of decision support. And the last thing I think is really important with any, particularly when it comes to technology, is there is always... There is always a tendency, I find, to think about just replacing your existing processes. Yeah. And I think that's one of the biggest, personally, one of the biggest mistakes you can make with any implementation. And actually, you need to think of this as an opportunity to rethink your processes, rethink the way that your AR works, rethink the way that you work with your suppliers and create the new normal rather than trying to lift and shift what you've already got into, you know, an auto.  

Final Thoughts and Resources 25:04 

Okay. So, hopefully you found this interesting. Hopefully you learned something from either the common mistakes or some ways to address those mistakes. And if you did find it interesting and you'd like to find out more about ITAS and some of the work I do around financial transformation, then there's a couple of options for you. Jump onto our website. We have a huge amount of content. And if I sat here and told you about everything, then you would be there for days. But we have... are always bringing out new content and new trends. And we've even just launched a success guide for new CFOs on our website. So, please do jump on and have a look at that. We will be launching this month our Financial Transformation Live. And I would love for you to join us. There is a sign-up link on the website that you can find. And that is live FAQs around financial transformation and kind of getting into the nitty gritty of how that works. So, we're You guys can ask as many questions as you like. And we're basically going to go through this journey together. So, share best practice, share ideas as a community and bring financial transformation to life. So, again, thank you so, much for joining me. It's been an absolute pleasure. Would love to hear your thoughts and feedback on this. My contact details are there and available. So, my email, and of course, please do connect with me on LinkedIn. Send me a message. And I'd love to hear your tips and your ideas to success, what you've known has worked. Thank you again for joining me. Have a great day. Thanks, guys. Bye.