As we boldly march into 2017, there are few things that are certain. And, one of these certainties is uncertainty. If there is one thing all the economists, pundits and industry commenters can agree on is that the future is coming faster than ever before.
The 2017 —and foreseeable future— business environment will be characterized by constant change, from fluctuating markets to political disruption to new technology. The C-suite is feeling the pressure from all sides, and large global corporate entities (with firmly established and entrenched procedures) are expected to be as nimble as a Silicon Valley startup.
In a recently published report, Future-proofing the CEO: Why Chief Executives need to adapt in an unpredictable world, 71% of those polled thought that technology and digital would be the biggest driver of change in their industry over the next 10 years, yet only 40% thought their businesses were currently well prepared for this change.
For companies looking to stay ahead of the competition, acquire or merge with another company, or create new business lines, this ability to keep pace with technology and digital change is a Number 1 priority.
The Process Principle
Yet, technology is not the sole factor in digital transformation, whether it’s the Finance department or any other area of business. Real transformation cannot happen without the underlying processes changing. Outcomes can be aligned with strategy, but unless there is a serious rethink about how things are done, technology will never reach its full potential.
Companies can put in new customer-facing technologies, like allowing clients to pay invoices online, but if the processes in the Accounts Receivable and Cash Application department still require manual PO matching, or other human intervention, the benefit goes unrealized.
Beyond technology, organizations need to evolve processes, and view them through a more holistic end-to-end lens. In short, transformation begins with process innovation.
The Nitty Gritty of Change
The journey starts with process mapping. Before any movement toward a future state can begin, organizations need to have a deep understanding of the “As Is” process. However, from our experience, most F&A departments have some documentation, but it may not always be current or complete.
This predicament can be seen as an analogy for the larger challenge of process transformation. F&A department resources are so caught up with the day-to-day act of “doing” that the very act of analyzing existing processes as a catalyst for process re-engineering seems overwhelming and near-impossible.
Even with decades of change management models and theory to draw from, the failure rate of change management initiatives is still pegged between 60-70%. A recent 2016 report by Proviti, a global consulting firm, and North Carolina State University’s Enterprise Risk Management (ERM) Initiative noted that just under half (49%) of CFOs stated that resistance to change was a significant risk to their organization.
To create best-in-class practices and processes that begin the path to F&A transformation, companies need to see where behaviors and patterns need to change to become standardized and optimized.
Your Next Step
In our experience, this usually takes a third-party, a provider who is highly skilled in process transformation, who understands the industry norms, and can eliminate inconsistencies, conduct a due diligence on the end-to-end processes and eliminate exceptions.
Sutherland can bring in bolt-on workflow tools, e-invoicing technology, cloud-based document and knowledge management systems and leading edge process automation tools. If you’re looking to rethink your legacy F&A processes and take advantage of technology to improve your outcomes, please schedule an appointment today for a free evaluation of your accounting processes.