Archives For Finance Transformation

Jamie Lyon NEW PHOTO

By Jamie Lyon, head of corporate sector, ACCA

Collaboration, collaboration, collaboration should be the new mantra for corporate evangelists. Speaking at our Asia CFO summit last week, I had the temerity to suggest that finance had to up its game in working cross-functionally, and that future business growth was dependant on greater collaboration between the CFO function and the rest of the executive team. In a customer focused and digital knowledge economy, collaboration is king to evolving the business model, realigning operational processes and mining (in particular) the enterprises’ intellectual capital to create value. Consider one of today’s most prized enterprise assets – data. Today, there are countless examples of savvy enterprises who continue to invest in breakthrough technologies to leverage the power of the data at their disposal. Yet we also know that many enterprises still aspire to a single source of data truth. Functional responsibilities continue to blur in the great data debate, and the unspoken question at the C Suite table remains this: who takes ownership or leads the enterprise wide agenda in this critical asset class?

I am duty bound to say the CFO function has an outstanding case to take the leadership role here. The CFO is the steward of corporate value, the keeper of the purse strings, and it is they who must primarily drive required enterprise ROI. But in today’s connected environment, understanding and leveraging the value of enterprise IP is critically dependant on reaching out and building alliances with the CMO, the CIO, the CHRO and other new emerging C suite roles; the assets and processes that create corporate wealth today typically have little respect for functional boundaries. The data example provides an outstanding opportunity for CFOs to move the dial on peer collaboration. Collaboration of this kind will bring much greater clarity and agreement across the executive table on the processes that will create value in the future, it will mean a much more effective capital allocation strategy for the business, and it should help the CFO lead a clearer line of sight tracking, measuring and reporting on the enterprise activities that matter most.

Collaboration, collaboration, collaboration. A new year’s resolution for every CFO.

Jamie Lyon

By Jamie Lyon, head of corporate sector, ACCA

We’ve been talking about finance transformation for some time. The early 1990s witnessed the first moves towards business shared service operations, and yet our programme of work suggests many finance departments are still in the early years of adoption; remarkably some haven’t even started yet.

You could be forgiven for thinking finance transformation should be an art that has been mastered by now. It hasn’t, because enterprise change is difficult and amongst many other things, it’s about people change. All the experience and all the evidence continues to point to massive change challenges in changing the finance enterprise to drive down cost (and yes, its still a cost play, contrary to what some may say), and improve efficiency and value. ACCA is currently leading a global programme of research on how finance functions can become more effective. Its smart finance function campaign seeks to understand what practices the CFO organisation is adopting to drive more value for the organisation. Finance transformation has been, and continues to be, one of the ways in which the value equation can be addressed. But truth be told, many enterprises and CFOs continue to struggle to deliver all the benefits once promised. So what goes wrong? Perhaps my colleague Deborah Kops of Sourcing Change hits the nail on the head: ‘One of the biggest challenges for finance leaders is acknowledging that there’s no set of regulations for change. Mastering what is often considered ‘soft stuff’ is key to transformation success. It’s generally not comfortable for a profession that lives by rules.’

ACCA’s think-tank on business and finance transformation, which includes senior executives from some of the world’s leading enterprises that has decades of change experience such as Deloitte, Shell, Accenture, Unisys, Pearson, and GSK, has just released its latest report on finance change, and identifies 10 key requirements needed for effective finance function change to take place.

They are:

  1. Establishing the vision – the criticality of spending time conveying the transformation vision and goal.
  2. Buy in – The importance of CEO and senior management support and sponsorship of the programme.
  3. Communication – The need for constant communication on what is changing and the rationale for change.
  4. Preparation – Ensuring finance teams are bought in and committed to the change, and having an effective plan to manage the change process.
  5. Resources – Access to adequate programme resources at each critical stage of the transformation process, from developing strategy to achieving ‘business as usual’ acceptance.
  6. Patience – Accepting that large finance transformation initiatives can be revolutionary and evolutionary with most change processes taking longer than expected.
  7. Organisation redesign – Remembering that redesign and use of finance shared services or outsourcing necessitates change in the retained finance function too – the imperative of changing the finance enterprise in its entirety.
  8. Maintaining middle management – Successful change management is key to retaining the middle layer of finance management that is critical to core processes. Yet all too often, middle managers’ numbers are aggressively reduced to justify a business case for shared services and outsourcing, or they are lost in the shuffle.
  9. Alignment between capability and ambition – Often finance leaders overstretch themselves to realise a vision that is way beyond their, or their enterprises’, ability to achieve. Being realistic about the organisation’s change potential is essential.
  10. Working within the culture – Those who implement complex, multi-scope, multi-geography finance transformation programmes, particularly in business-line-led organisations, will experience the greatest change challenges. Gauging the type of change the culture will allow is an imperative.

Find out more about our Smart Finance Function campaign at www.accaglobal.com/smart.

This blogpost was first featured in CFO World in July 2014 

Jamie Lyon

By Jamie Lyon, head of corporate sector, ACCA

How will the finance function fare in the face of significant disruptive future changes in our business and personal lives? Broad social changes, the unstoppable rise of digital, the new “technological” industrial revolution, a much more mobile connected and powerful consumer generation, transitioning business models, a much more challenging competitive landscape, the proliferation of risk, and so on. All of these, and other changes, present new challenges, as well as new opportunities, to businesses. By inference, they have significant implications for the future finance organisation too.

At ACCA, we believe the future for the finance organisation is bright, and the changing business landscape presents new opportunities for finance leaders. It is fair to say the historic reputation of the finance department has been biased towards stewardship, the control centre of the enterprise. But in an increasingly complex, volatile environment, whilst control and risk management responsibilities remain essential, too often the nomenclature of “back office” has been used to describe finance activities. This belies the increasingly critical role finance will have to play in leading the enterprise in its growth strategies, and providing the important financial insight it needs to drive value. Smart finance functions will ensure they strike the right balance.

Over the next 18 months ACCA will lead a global campaign to understand the leading practices finance functions are adopting in their goal to becoming smarter. How are best-in-class delivering the insights that make a real difference to corporate performance, whilst continuing to drive effective stewardship and control of the enterprise. The campaign has already identified a number of critical areas in which progressive finance functions must look to excel. Over the next 18 months, it will seek to understand and showcase the good practices, challenges, issues and opportunities corporate finance functions face in working smarter in four key areas: the quality of its leadership, the extent to which it effectively uses technology, its human capital practices, and its ongoing ambitions to transform the function. Visit accaglobal.com/smart for further information and to access our ongoing thinking in this area.

Jamie Lyon

By Jamie Lyon, head of corporate sector, ACCA

To my eternal dismay I don’t really get much time on the iPad these days. I don’t have to look far, however to find where it is – invariably it’s in the clutches of either my seven year old daughter (worrying), or my three year old boy (worrying, but for different reasons). Their relationship with this sort of technology however seems very intuitive, dare I say almost hardwired. Technology will be even more coded into their future daily existence, probably beyond the realms we can imagine right now. It’s fascinating to watch, and it’s an extraordinary time to be alive.

Today’s rate of advancement in technology is exponential but I can’t help but think the technology we are becoming accustomed to in our private lives isn’t quite reflected in our business lives. There is no greater example of this than what’s been happening (or not happening) in corporate finance organisations over the last decade or so. If the finance organisation is serious about driving value and supporting the business in its strategic imperatives, one of the things it has to get serious about is the technology it has at its disposal. I don’t, however, subscribe to the view that technology is the panacea to all of finance’s problems, the one-stop solution to deliver the sorts of financial and operational insights the business is crying out for… but it would be naïve to underplay its growing importance, particularly with the digitisation agenda.

So what’s stopping finance technology delivering on its promise? The obvious one is investment costs and multiple legacy ERP systems not being fit for purpose; too much manual workaround, too much time trying to get to the number rather than understanding and explaining to the business the implication of the number. Where we have seen investment in finance technology, typically the investment is focused on streamlining and driving down cost, rather than investing in the sorts of capabilities that are predictive and insightful. But there are arguably other issues too. Has finance shown the necessary finance leadership in the technology agenda? Does it truly understand and can it explain the business case for finance technology investment? Does a typical finance function “culture” present challenges to really embrace the opportunities that technology provides? Is it because finance is too risk averse? Why isn’t it adopting the cloud much? Is the payback on technology that creates insight rather than headcount reduction just too hard to quantify? Is it a capability issue with finance playing “catch up” on the skills it needs to make technology truly deliver?

Lots of questions, not many answers. We explore all of these issues and more in ACCA’s latest CFO report Is finance function technology delivering on its promise? 

I’ll leave with you a final thought – I think the corporate insight agenda offers CFOs and the finance organisation a great opportunity for internal influence and moving the dial on the corporate reputation of the finance department. I also think embracing and making the case for technology and tools is essential to achieving this. My observation is this: if finance doesn’t take this opportunity to lead the insight agenda, perhaps someone else will…

This blogpost first featured in CFO World, February 2014

Accountancy is looking different

accapr —  6 February 2014 — 1 Comment

Sue Almond-1528

By Sue Almond, technical director, ACCA

I recently chaired a technical conference in Tirana in Albania. Other than the location, there’s nothing particularly new about chairing a conference. That is until one of my fellow panellists commented on the composition of the audience.

I used my privileged position as chair to do a quick scan and headcount – a typical 80/20 gender split in a room of around 100 accountants.

But wait – the 80 looked like me! Well, not exactly, most were much younger. I couldn’t resist pointing out to my (male) panellist that he might now appreciate how I have felt for most of my professional career. Accountancy is clearly an attractive career choice for young women in Albania.

I started to reflect on some of the other things I had noticed on this short visit and realised that this was a very different profession to what we typically see. Things are changing.

The previous day, I had been speaking at a conference organised by the Federation of Mediterranean Accountants. This had attracted an audience of over 220 – in a country with only 200 registered auditors. How often do we get this level of interest?

And the FCM conference attracted huge media interest, with Arnold Schilder of the International Auditing and Assurance Standards Board and Andre Kilesse of the Federation of European Accountants interviewed for primetime TV. It is highly unusual as an accountant to walk into a room with a whole bank of TV cameras, or to have the paparazzi buzzing around during a presentation on audit.

What probably made the greatest impression on me was the clear collaboration between the government and the accounting profession to build the economy for the benefit of all. Both the Albanian Minister of Finance and the Minister of the Economy addressed the conference. Their overriding message was that the accounting profession provides a bridge – that it can transform the past and make it into the future.

There was also a strong recognition at government level of the value that audit quality and oversight bring to the development of a strong and credible financial market. The emphasis is very much on reliable – trustworthy – financial statements, and the recognition that everyone has a part to play in generating confidence.

At home, back in the UK, I was listening to a news item on Radio 4 about the latest report from Cranfield School of Management, which reveals that women now make up 19 per cent of FTSE100 and 15 per cent of FTSE 250 board positions. The BBC reported that this is the highest participation rate since the university started keeping track in 1999.

This immediately reminded me of the conference in Albania, and that change for the accountancy profession is happening on a number of levels.

All this has made me realise that accountancy is looking different – a world where governments and the profession collaborate for the public good. Where accountancy is seen as critical to the future. Where accountancy is in the news for all the right reasons. Where women are the future of the profession. AND where the sun shines.

This blogpost first featured in The Accountant Online, November 2013