Archives For Deborah Kops

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 

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Corporate Governance

By Deborah Kops, founder and managing principal of Sourcing Change

Not too long ago I sat through a panel comprised of very experienced shared services leaders. And it hit me like a ton of bricks; although each was accomplished in his or her own way, every panellist’s path to leadership was very different.

So I came up with a typology of career paths which represent the usual cast of leader characters…and what kind of change they are typically called on to make. Are you a lifer? A loyalist? A moonlighter? Or an expert?

Look around at the players in our shared services community, and you’ll see four distinct pathways to leadership. Each pathway corresponds to the level of maturity of the model, and at the same time is shaped by the business context in which the model operates. Which pathway characterises your career? What kind of a shared services leader are you?

Firemen, teachers, accountants, architects, astronauts, drummers, or even hedge fund managers…ask any child what he or she wants to be when he grows up, and I highly doubt you’ll hear “I want to be a shared services leader.” The majority of professionals taking up their first positions find that their careers take twists and turns, often placing them in roles that they never knew existed.

When it comes to shared services leadership, there are a number of career paths that lead individuals into the role. However, looking more closely, four main pathways become obvious, each of which reflects the context in which shared services is operating, and the degree of change that the leader is expected to drive. Whether you’ve come up the ranks as a lifer, moved from another role in the same company, often to fix or accelerate delivery growth as a loyalist; hold a “day job” such as controller but implement shared services at the same time (the ‘moonlighter’); or come in from another organisation under the mandate to implement, expand or accelerate shared services (the ‘expert’), you have the same aim: advance the value of business service delivery.

So to validate my assumptions about this cast of characters, and see what kind of havoc they wreak (in a positive sense!) on their organisations, I partnered with sharedserviceslink (http://www.sharedserviceslink.com) on an industry-first survey. Check out our results by reading our very-easy-on-the-eyes infographic at http://www.sourcingchange.com/what-kind-of-a-shared-services-leader-are-you/.

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By Deborah Kops, founder and managing principal of Sourcing Change

Over the past few weeks, it seems as if everyone in the accountancy world is talking about GBS, GBS, GBS. Shared services organisations encompassing one function in a few countries with a centre or two purport to be running global business services.

Companies with transactional accounting processes operating around the world declare that they are GBS leaders. Sourcing leaders managing an outsourcing deal or two are trying to link governance together under the guise of GBS. Procurement heads are dangling the notion of GBS in front of their bosses as a strategy to move up the proverbial value chain. Newcomers to shared services and outsourcing are even christening their first forays into consolidated business models as GBS. The chatter has become so pervasive, it’s starting to sound like cicadas mating in the summer.

If you take a cynical view of GBS, it’s almost as if changing the name of the processes and systems that serve the business, and putting as much of them as possible under one organisation will magically create new prestige and impact. With a new moniker, and more scope, will CXOs will suddenly be clamouring for GBS leaders—whose calling card is adept cost containment, reasonable customer service, some level of stakeholder management, and a track record of process excellence to join them, putting their two cents into every strategic decision.

But does organising under the banner GBS elevate the importance of business operations execution, making it more strategic? Will knitting services together really earn a seat at the corporate high table? Or is the value that business services ultimately delivers to the enterprise remain reliable, out of sight/out of mind operations? And, by the way, that’s no mean feat. As process operations become more sophisticated and industrialised, it not only increases cost-effectiveness, but boosts agility.

Any good corporate leader or manager aspires to create value for his or her organisation. There’s no doubt that the roles we variously group within shared services, sourcing or outsourcing leadership have as their mission to deliver consistent and predictable business processes that underpin operations to a range of corporate stakeholders by manipulating the levers consolidation, standardisation, process improvement, sourcing and technology enablement. But isn’t creating a reliable operating platform that delivers the ultimate means to an end – providing better service to the organisation so that they can get on with the business of being strategic good enough? What’s unimportant about taking over the management of the tasks critical to corporate operations to the next level, increasing efficiency and effectiveness, by performing them on a silent running basis?
There’s a difference between execution value and strategic value. I suspect that corporate leadership will look to GBS in any of its iterations as operations, not strategic direction; in fact, troll the internet for mention of GBS and the entries supports that observation: “GBS optimises the mix of resources, process acumen, and technology to deliver… services on an enterprise-wide basis to support business strategy” according to HfS Research. That’s still pretty important stuff.

It comes down to one word: service. The root of both service and servant is the same. Servants don’t dine with their families, and I’d posit that those who provide service don’t have a seat at the top table.

tall building, modern CFO

By Deborah Kops, founder and managing principal of Sourcing Change

If you think about our efforts to transform business functions through shared services and outsourcing, are we just trying to make them more efficient and cost-effective? Are we really tackling enough change to make them more relevant to today’s business needs? In effect, aren’t business functions as we know them obsolete, and changing them in-situ is just fodder for conference agendas, full employment for consultants, and topics for bloggers (such as yours truly)?

If you think about it, nothing much has changed in horizontal functions such as finance, IT, HR, marketing and legal for years. Sure, we tweak reporting lines – corporate versus business lines versus geographies; implement technologies to standardise; invest in “transformation” to gain incremental improvement; and change the delivery model through outsourcing and shared services, near-shoring and offshoring. But when it comes down to it, we haven’t really changed the relationship of these functions to the business. We merely focus on cost and efficiency of the same old delivery.

Contrast the dynamism of the so-called ‘front of the house’. Business lines constantly merge, spin off, or break apart in response to the market. Companies merge or divest in order to become more competitive. Yet we hold on religiously to the concept of standardising and consolidating business support platforms, thinking by managing cost we’ll add a lot of value to the business. By setting up shared services and outsourcing, aren’t we just moving the deck chairs to one side of the ship?

That’s not to say that cost-effectiveness and harmonisation are not corporate virtues, and do not create value. But when we focus on building generic platforms, maybe we’re missing a bigger bet. Perhaps it’s time to look at what component of business support functions should be close to or actually within the business. Perhaps, in the thirst for business model innovation, it’s time to admit that it’s conceivable that one size does not fit all. Mono-functional teams may not be our best bet.

If you are an avid follower of the daily HBR blog, you may have read Paul Leinwand and Cesare Mainardi’s 8 February post, Rethinking the Function of Business Functions. In it, the authors submit that “Wal-Mart doesn’t succeed just because of a strong operations group. It has built impressive capabilities that include logistics, inventory processes, buying standards, real estate practices and labour models — most of which it created for itself.” And the post goes on to cite Amazon’s ability to mix it up in new and different ways. In effect, the authors believe that we consider these companies great in part because they incorporated business functions into the business cross-functionally to create value.

The blog goes on to say that mono-functional teams are only oriented to the short-term, conflicting needs of all of their constituents. And, by implication, the value they create sinks to the lowest common denominator. There’s almost no ability to break out, or combine business support functions with the business in new and different ways.

Isn’t this true of shared services and outsourcing? The success of these models is predicated on consistency in structure, performance, service levels, and, most importantly, a customer relationship as opposed to a collaborative relationship. As a result, the perceived value is cost and predictability rather than problem solving and innovation.

Perhaps, after we go through a shared services and outsourcing phase which results in eliminating excess, it will make sense to tear it apart, moving processes closer to the business to create value. One day, sourcing just could be obsolete.