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Why The Finance Dept Is Ripe For Disruption

Do you ever get the feeling that some thing's never change?

I had this realisation last week, although I feel it’s been bubbling away for a while now. I’m far more attuned to the ‘art of the possible’ now and how we can innovate, rather than accept the status quo. That doesn’t mean, however, that everything can be changed en masse.

As I come from a finance background, I’ve always focused on the information and finance elements of a business. That said, in more recent years, I’ve focused on data and improving business performance.

Initially, I believed these two elements were poles apart but I’ve reconsidered that view of late. And the reason?

Information makes the world go round.

Obviously, that is not technically true, but in my consulting practice, we focus on turning data into information and information into actionable insights.This challenged my original thought and provoked a further consideration... if I know that we can improve business performance through enhanced data and insights, why can’t this be applied to the finance department too?

Stereotypically, the finance department has been immune to innovation and evolution within a business. They have been the gate keepers of the business’ money and hold tight the purse strings.

I’m sure we have all felt the influence of the finance department; reduction in budgets during the year or rejecting spend applications as just 2 examples. But it very rarely seems they are held to the same stringent protocols as the rest of the business, and I think this is wrong.

The opposite should be true; the finance department should lead by example in delivering change and innovation.

Why? Because if they can do so, then there is no reason why the rest of the business can not.

So what can change?

Each month there is a huge pressure placed on the finance teams to produce periodic reporting for management review.

The teams are stressed, often working late, undertaking manually intensive processes, just to get the reports completed for that week/month/quarter. But why is it so?

Surely in the modern age, there must be a better way?

I am not trying to belittle the importance of this reporting, quite the opposite.

The fact that the finance department are practicing ‘evidence-based decision making’ is music to my ears. The part I take umbrage with, is the fact that a lot of finance leaders are not keen to innovate and evolve.

Having spoken with a significant number of finance individuals over the years, they are happy to ‘talk a good game’ but very rarely follow it up with action. The problem appears to be, ‘as long as it doesn’t affect my little kingdom, I’m happy to support it’.

But how can you expect to move the business towards something new and exciting without taking on some risk?

Simple answer is you can’t.

Finance is all about risk mitigation: removing errors, understanding variances, reducing costs, for example. But very rarely do they take part in ‘change’.

If a business wants to remain a market leader, or become a leading player, a progressive and growth mindset is needed. Just ask anyone who’s had to deal with digital disruption in their industry (think taxis, food delivery etc).

What worked 5-10 years ago, isn't necessarily the best way now.

You may think I'm being unfair here, but take a moment to consider how much has changed in the finance dept over the same period?

What can you think of?

Introduction of cloud computing, increased computing power and swifter calculations have all helped but there are still HUGE numbers of manually intensive processes involved.

  • Copy and paste the figures for monthly reporting?Check.
  • Repeat the same manually intensive processes each month because you don't have time or he inclination to correct it?Check.
  • Moan about how stressful it is and then do nothing about it until next month?Check.

I do not believe this is an acceptable way to go.

I've spoken previously about the Blockbuster vs Netflix question and the finance dept is facing a similar conundrum. If you don’t believe me, just ask any bank who thought they were immune until startups such as Revolut and Monzo destroyed that thought!

So it feels like there are 2 options:

  • Continue doing what is happening at the moment, ignore technology and future work practices and hope they won’t apply to the finance department, or
  • Or embrace, try change and move the businesses forwards

I fully appreciate it is not as clear cut as this, in reality, but it could be. Mindset change is the real blocker to innovation and change.

But I do have a question to ask... “Why does it take weeks to create a monthly reporting pack?”

It's not exactly a surprise as It happens each month!

But it appears that no lessons are learned, as the same approach is employed time and time again.

So what's the alternative?

How about reviewing the complete portfolio of financial responsibilities?

Evolution of efficient business practices, now shows that becoming output focused rather than people focused, makes a big difference. An output based approach means certain elements of the task can be attributed to multiple individuals, thus sharing the responsibilities. Add to this, the ability to re-define process to remove bottlenecks, add automation and challenge existing approaches and you will generate real efficiency.

My aspiration is to refine the processes so they are much more manageable and efficient.

With the introduction of technology and digital disruption, there should no longer be a need for "an army of FP&A" people. This is merely a misunderstanding of the problem statement and drivers of the situation.

Through technology, automation and redefining processes, it is possible to radically shrink over inflated finance departments too. Just imagine if your team's could focus on what’s REALLY important and not the mundane manual monthly processes.

This would free up time, and potentially reduce costs and make the organisation more agile.

It is important to make a distinction here; this is predominantly focused on the BAU elements within finance. Specialist areas such as treasury, structuring, corporate finance etc will need special attention.

That said, they are not exempt from understanding the current landscape to see what can be improved.

Yes, some finance individuals are more of a blocker than a facilitator. But by removing their little kingdom and focusing on a benefit for the whole business, the air of invincibility will be removed.

And this can only be a good thing!

So is it possible to radically change the finance workforce?

How about the introduction of a remote workforce that operate on an output premise, scaling up and down as required? Why do people need to be sat in the office?

What would the finance team do if half their time was taken away due to the removal of manual processes?

Just think of all the ‘value-add’ activities that could be addressed!

These are all questions which can be overcome, but will take commitment and drive from the top. I firmly believe that all companies should look to evolve and improve what they currently do. The decision to ‘do nothing’ is not acceptable to me.

Rather, understand what others are doing and see if it can be applied to your business. This can be application from different industries, as finance in media is fundamentally the same as finance in legal industry.

Change is difficult, but it does bring about efficiencies.

I want you to take a look around, and in relation to the finance department, ask yourself which type of person your leaders are:

  • “Yes, and...?”
  • “No, but...”

The distinction is that ‘no, but’ people slow thinking, create tension and blocked creative ideas. Whereas a ‘yes, and’ person will build faster decision, more creativity and build rather than destroy.

It might seem trivial, but it can have wide ranging effects. Sadly, I fear, finance will fall squarely into the 2nd bucket, as most shy away from innovation and change.

If you are prepared to try something new, see if it works and then decide if it’s worth continuing means evolution can occur. Evolution in the future of work, means remote workers, new working practices and adoption of technology wherever possible.

The benefits are considerable: enhanced communication, improved wellbeing, and increased productivity are all possible through agility and innovation.

Wouldn't finance like to save money and improve efficiency by leading from the front?!

Ultimately, what I have talked about here might not be possible but my response would be the same to you, as it is to any IT or finance department, “don’t tell me what we can’t do, tell me what we can...”

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