What are the internal challenges which act as a clear and compelling set of Accounting and Finance Transformation Drivers? Here is a long list of such internal accounting and finance transformation drivers. Of course, not all the things are applicable to every company that is in the throes of turmoil in the accounting and finance function, but if more of them apply to your situation, the graver the need for a transformation of your accounting and finance department. To learn more about the why, what, how, when, who et al of finance transformation, please consider CIOPages.com Finance Transformation Resources.
Accounting and Finance Transformation Drivers:
Internal Factors necessitating a major rethinking and reimagination.
Accounting and Finance Transaction Processing:
- Business processes are disjointed and disparate
- Monthly close is a nightmare
- Consolidated reporting takes an army of consultants
- The chart of accounts is a mess
- Inconsistent and inaccurate data strewn across multiple systems
- Planning and budget cycles take forever
- Insights and reports for decision making are not timely
- Finance IT systems are inflexible and cannot accommodate business shifts and changes
- Business makes decisions based on stale guestimates, rather than reliable and real-time dashboards
- Stakeholders – management, employees, investors, analysts – are all frustrated at lack of visibility, transparency, and delays
Legal, Risk, and Compliance:
Of course, not all the things are applicable to every company that is in the throes of turmoil in the accounting and finance function, but if more of them apply to your situation, the graver the need for a transformation of your accounting and finance department.
- Regulatory violations and compliance non-conformance are issues
- There is no way to model enterprise-wide or ecosystem-wide risks
- Compliance is mostly a manual process with replication and repetition galore
- Risk to enterprise reputation due to fines, as well as perceptions
- High cost and complexity of internal audit processes
- The industry is moving fast and competitors are agile, but your enterprise is not even close
- Impossible to model, forecast, and react to rising costs – raw material, energy, shipping, warehousing, labor et al.
- Each merger, acquisition, spin off, divestiture is reinventing the wheel each time
- Inability to manage lifecycle of cash – the vital bloodstream of any business
- Impossible to move on a dime to accommodate business model changes
Human Capital Issues:
- Roles, responsibilities and skills are not match properly
- Instead of working on their respective roles, most finance and accounting employee fight fires
- Ability to attract top talent is difficult given the operational and IT challenges
- Need to hire an army of contractors and consultants to fulfill many of the commodity pieces of work
- More employees supporting basic transactions, and service recovery due to errors, than working on strategic context and business decision support.
How did you rate yourself on these factors? If 20 or more of these factors are a fact of life in your finance and accounting organization, your hair is on fire. You needed an accounting and finance transformation yesterday! If 15-20 of these finance and accounting transformation drivers are applicable to you, it is evident you are a serious candidate for transformation. If 5-15 of the transformation drivers are applicable to your firm, then probably you can get away with general improvements and selective surgery, not a wholesale finance and accounting transformation. If only less than 8 of these drivers are applicable, perhaps you’ve already successfully completed your transformation, and all that is needed is small fixes here and there.
If you are looking for external drivers necessitating transformation, please check out our top ten list of external drivers for accounting and finance transformation.