How to Truly Lead Finance Transformation [so it's more than just another slogan]

Enterprises across the world are struggling with the question of how to update the Finance function to extract the maximum quality, cost, and leverage needed to propel themselves forward. This applies to old-style brick and mortar companies as to newly emerging digital enterprises like Uber and Airbnb, whereby the latter have a distinct advantage in being able to start from a blank page. For most traditional companies, Finance transformation is crucial to adapt and prepare for a new, digital age of commerce.

SSON's Barbara Hodge spoke with a tried and tested SSO leader recently to get some insight. Hertz’s former Shared Services Centre Director and Global Procure-to-Pay owner, Keith McEvoy, has been responsible for the design and delivery of a new style AP and Procurement process, spearheaded a P2P Finance Lighthouse globalisation project that cut costs by almost $10 million in 2 years, executed more than 1000 improvement projects, designed and implemented six ERP modules, and consolidated 34 legacy systems. On top of that he has successfully rolled out streamlined AP and Purchasing processes to more than 10,000 users across 4,500 locations, and exceeded the 10% annual productivity improvement target for each of the last eight years.

Given this track record, Keith’s leadership skills are indisputable. He shares his top 10 tips to leading Finance transformation with us.

1. Recognise the Opportunity A Crisis Offers

Most Finance transformations are driven by a crisis of some sort. And while this naturally creates a highly stressful environment, it pinpoints some real opportunities. Identifying and then executing on these opportunities requires strong leadership. And while this is more challenging in an insecure business environment, this is where a strong leader interprets the opportunities for the team – and then leads it. Albert Einstein’s words have particular significance for Finance leaders: "A crisis is the best blessing that can happen … because the crisis brings progress. Creativity is born from the distress. It is in crisis that invention, discovery and large strategies are born. The real crisis [would be] the crisis of incompetence."

2. Be Visionary

Transforming traditional Finance from a transactions-service into a modern-day business enabler means experimenting and challenging the norms. That, in turn, requires looking beyond your walls and silos, and considering processes end-to-end. Just focusing on "Finance" won’t effect change, at least not in a transformative sense. Being visionary means assuming that cost and efficiency savings are a given, and targeting a new definition of ‘service’. In other words, instead of focusing on first-time-through invoice processing, considering the real problems – for example, that purchasing is manually implemented and not integrated with electronic invoice processing.

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Leadership is important because you need to reach out to key people and get them to share your vision: For P2P transformation, you will need to get your operations and purchasing peers to commit; in order-to-cash you need the sales team on board; and for record-to-report you need more connections to the senior management team.

3. Know How to Take Your People With You

You can’t introduce transformative change by "telling" or announcing an initiative. You’ll need more than that to get your people on board, so that they embrace and live the change. Make them part of the design process. They know the work better than most, after all they live it every day, and they’ll be the first to spot obstacles and opportunities.

When Hertz’s Accounts Payable was planning the go-live for North America with a new ERP system, the entire North American AP team was involved in designing the new process. As a result, when AP went live and problems inevitably emerged, everyone saw it as their responsibility to get right, and fix the problems.

4. Worry Less About "Finding Talent" than What You’re Doing With the Talent You Have – and Recognise the Learning Opportunity

The lack of "talent" is a favourite refrain for leaders. The truth is, though, that most hire from the same general population pool and inhouse talent is a fairly accurate reflection of what's available out there.

What can be more easily influenced is the extent to which you are fully utilizing the talent you have. So the question of ‘what are you doing with what you've got?’ is more important than ‘who are you recruiting?’

Most employees are terrifically underutilised. They’re either doing non-value adding activities, stuck in traditional processes, or simply not recognised for their potential. Think of all the amazing things your staff do outside work: running charities, organizing events, putting on concerts… the underutilisation of existing talent is one of the great tragedies of today's enterprise.

In addition, much of the resistance encountered in change initiatives relates to people not wanting to do things differently, or not seeing the value of what you are trying to do (see point 2, above). So emphasise that learning is part of the change. Communicate the message that change presents an opportunity, not just a means of getting by. This also takes the negative emotion associated with change, and fear, out of the equation.

Many new solutions offer tremendous opportunities for staff to improve their performance. Hertz today is actively tracking and quantifying these kinds of learnings, and factoring them into the value delivered through transformed processes.

5. Be Visible

When you put your name on a change initiative, everyone is watching you. They notice everything you do, and everything you don’t. You have to commit to Finance transformation 100% and take the punches as well as the accolades. As the Leader, you are the embodiment of the change and its promise. Use every opportunity to leverage this brand but guard it well. Once you are seen shirking or pulling away, support will evaporate.

6. Find Inspiration Everywhere

There is, of course, a limit as to what can be transformed; after all, there are only so many ways to pay a bill – right? But you can get new ideas from all kinds of places. Look outside your function and consider how things are done in marketing or sales. Or perhaps you’ll hear about new-age digital firms like Uber using a completely different approach, and glean some ideas there. Take a look at how you transact your personal business online, how you shop, what your experience is. And look at what your kids or grandkids are doing: how they compare notes or communicate with friends. There are ideas for the taking everywhere, and they will break the mould, but also encounter resistance. Be prepared.

Also remember that while it’s easy to copy what others have done, beware of passing the blame when things don’t turn out as planned. You will need to own your initiative completely. Figure it out for yourself and then follow through.

7. Learn from Suppliers and Vendors

Solution vendors are a great resource for new ideas, particularly as they are constantly re-evaluating their tools in the face of customers’ (like you) changing demands. So invite a few in, and get them to pitch their value to you. Listen to their suggestions. Compare different products.

You can also learn from your vendors. For example, when Hertz implemented electronic invoicing it wasn't until suppliers were included in the discussions that the process started to work properly. A lot of valuable information came out of those discussions that would have saved time and money in the earlier implementations. Suppliers highlighted what worked and what didn’t. As a result, the final implementation was far more effective and, guided as it was by implementing from the supplier's point of view. Hertz has had a much better end result and service experience since then.

8. Challenge the Complexity of the Status Quo

All businesses have a lot of complexity that builds up over time. Within Finance, something that needs to be considered is whether, just because something was done a certain way 15 years ago, it’s still the right way to do it. Push for simplification, even elimination if possible, by highlighting the costs associated with complexity [see sidebar]. Be brave and stand up against complexity. Do there have to be three ways of doing something? Consider that each "choice" translates into multiple variations for a given process, with costs escalating accordingly. Try to visually demonstrate (there are lots of new tools that do this) the cost of complexity to challenge others’ preconception.

Finance could take a brave new lead in re-evaluating controls

Here’s an example of leveraging learnings and advances from other industries: Instead of focusing on accruals reporting, which requires tedious validation, Finance could take a tip from manufacturing. Twenty years ago, inspectors stood at the end of factory lines monitoring quality output for a given product. Today, that process is recognised as out-dated and expensive. Instead, manufacturing has focused on improving the manufacturing process itself, thereby guaranteeing a better quality output. Sample quality audits now replace end of the line checks, with statistics confirming the likelihood of no defects. This language of engineering and manufacturing presents an opportunity – one that has yet to be adopted by financial services. If Finance were to apply process improvements across its entire ‘service process’, a high quality output would be all but guaranteed.

These lessons are entirely transferable but are not yet being implemented. It will require a brave practitioner to lead the way.

9. Leverage "Digital" in New Ways

While the digital world is rapidly entering our personal lives and transactions, businesses themselves are not moving as fast as they could to embrace opportunities because of perceived risks or lack of controls. Anyone will tell you from personal experience how easy and convenient it is to pay via an Amazon account, or PayPal. In our personal lives we are used to handing over information and enacting digital business 24/7. So what is stopping us from doing the same in enterprise?

Most finance leaders are holding back because they are still applying out-dated ideas, while in truth there have been so many changes to the digital framework that some of these ideas need overhauling, lest you fall into the trap of over-controlling something that no longer needs to be controlled [see sidebar below].

Relinquishing Control

Consider how business engages with vendors. Validating individual suppliers, and them validating you as a counterpart, is enormously time-consuming and costly. In addition, each customer may have a different preferred invoice and means of controls – some preferring a two-way match to a three-way match, for example. The challenge is to digitise companies’ dealings with each other – more specifically, with their customers and suppliers. While no one's going to be willing to give up complete control over validation, there may be an opportunity to build a unique interface that embeds some of this validation for you.

Consider individual credit cards: card issuers have accepted both the individual and the merchant as a known risk to enable business transactions. And merchants accept credit card payments as pre-validated credit worthiness. If you could extrapolate this idea and project it onto accounts payable processes, while taking whatever steps are necessary to safeguard your payment flows, you would be neatly eliminating as opposed to improving a significant roadblock to efficiency. Consider Uber’s use of credit cards as the single means of payment and validation. Now do you get it?

Without paper, many other problems disappear: human error, fraud, mis-filing, etc. There are already some innovative solutions in the market: for example, credit card companies already offer individual card numbers which can be used to authorise and track transactions, similar to a purchase order, for example.

While Finance is traditionally obsessed with controls it's worth questioning whether we are over-controlling some aspects of our process. In this day and age, are all existing controls truly necessary? Or could we allow some form of third party validation replace our traditional checks?

10. Keep an Eye on the Future

While we started with "recognising a crisis" it’s useful to end with "keep an eye on the horizon for the next crisis (or opportunity)". Technology, how we use it, the marketplace, the definition of service… everything is changing constantly. To be really successful you'll have to pre-empt what's coming at you in future. Keep your eye on thought leaders, read Wired, join webinars on interesting topics, find out how new digital companies operate (and whether this works). Above all: Stay informed. Networking with other Finance leaders and your suppliers (see point 7., above) is invaluable. Be at the forefront of change rather than tagging it, even if this means taking on some risk (you can always choose to pilot a new approach in a smaller area to test it out).