Focus on quality
Avoid the trap of focusing on cost over quality. Seventy-three percent of surveyed leaders said their primary goal of finance transformation was to cut costs. “When ‘cheap’ begins to be synonymous with ‘good.’ the finance budget suffers,” says Bant.
When spread too thin, the function gets mixed reviews for overall effectiveness
Finance transformation initiatives provide leaders a chance to redesign the finance function so their teams can dedicate more time to quality, high-value activities and being better business partners.
Pay attention to corporate strategy and finances role
Don’t fall into the trap of downplaying business complexity when setting cost targets. Finance tends to base its cost targets on a narrow set of inputs like revenue size and industry peer groups. But Gartner research finds that complexity — in terms of legal entity structure, geographic locations and core finance technology operating systems — is twice as important as revenue size in explaining total finance department costs.
Instead, align finance strategy to the drivers of business growth. Finance executives driving the most successful transformations pay less attention to how the total costs of finance stack up against companies of the same size and industry, and more attention to their corporate strategy and the right level of finance resources to help the business succeed.
Learn more:Finance transformation
Prioritize resources on high-value activities
Don’t spread resources too thin. Finance teams fight two competing pressures: Reducing cost while improving customer experience. Frequently this leads to an approach to cut costs across the board rather than in targeted areas that create less value for the business, and results in mixed reviews for overall effectiveness.
Finance transformation projects should shape customer expectations and force effective evaluation of wants vs. needs
By focusing on business value, finance leaders can allocate resources to the services, markets and products that will have the biggest impact. At the same time, they can scale back support for or eliminate low-value activities.
Understand that satisfaction does not equal efficiency
Recognize that business partner satisfaction is an insufficient measure of finance’s value. Eighty percent of finance teams use feedback from the business as the sole measure of the function’s effectiveness, and 90% strive for universal internal customer satisfaction. Despite best intentions, focusing on satisfaction often leads to neglect of strategies that actually would do more to improve performance.
Instead, finance transformation projects should shape customer expectations and force effective evaluation of wants vs. needs. Finance departments that shape expectations and force business trade-offs deliver better decision support and are more effective at helping the company achieve strategic objectives.