Finding Value in Finance Function Change and Transformation

Businesses exist to provide a product or service to their market. To continue to prosper in the long term, businesses must grow and make a profit. The environment businesses operate in is often dynamic with internal and external impacts requiring change to business policy, process and procedure. An extreme example is the business disruption brought about during the Covid-19 crisis.

External change can be driven by law, regulation or tax changes, for example the UK deciding to leave the EU, and changes to accounting standards or taxation schemes like VAT in the construction sector moving toward reverse charge accounting for suppliers.

The greatest external change is often felt from technology advances, disruption and competitor activity as they advance their business. As a result, your product or service may no longer be attractive.

Internal change is often brought about when the size of the business changes (such as through M&A), the business focus changes or initiatives are undertaken to improve the profitability of the business. Existing systems, processes and procedures may not be fit-for-purpose, at end of life or there is a better way of delivering the same outcome in a cheaper, more effective and efficient manner that brings improved profits to the business.

By understanding your requirement, you can plan the best course of action. There is the big bang vs incremental change debate, with the best solution being the solution that is often the least disruptive to implement to the wider business and often the best value for money.

Finding the best value for money is often a trade off between cost (money, time, effort and resource) and the benefits (quicker, cheaper, better quality and more efficient). There is a buzz in the ether around Artificial Intelligence, Machine Learning and Robotics in business as the next big thing. While these technologies do provide some solutions, there are also some cheaper practical ways of generating a return from business change and transformation.

This paper will look at a range of options to deliver value to an organisation and particularly the Finance function during change and transformation.

 Practical ways to generate value

Adding value can be viewed several ways:

  • Reducing waste, errors and freeing up resources
  • Stop doing something that no longer adds value
  • Improving efficiency and speed of processes – do it faster
  • Improving effectiveness in improving business performance – do it better
  • Blue Sky Thinking, i.e. a completely new way of running your business (be it production methodology, resource allocation, standardisation, outsourcing, marketing & selling platform etc)

Lean Process Mapping

A simple lean process mapping exercise can yield interesting insights into how a business’s processes have evolved and become bloated over time. For example, when purchasing services from a supplier, it is not unusual to see multiple authorisations and manual purchase order processes still in use.  In one large SME we have experienced over 30 process steps with 8 authorisations from raising the purchase order to completing the payment to the supplier, with regular delays as the process was paper based.

With an investment in time and resources, taking a step back to review the process end to end can yield insights and results, often without the need for new IT systems investment and implementation.  The quick payback in the SME case above was to ensure receipt of early payment discounts of 2.5% for paying a key supplier within 14 days, through a streamlined process.  For a business with payments to a supplier of £100,000 per month, the savings represent a cheaper way of doing business with an additional £30,000 cashflow per year to use to invest in the business, in marketing or on employee benefits.

Using technology to add value and transform

Process mapping can generate relatively quick results. It usually results in an existing process being streamlined or accelerated.  But what if that process could be radically changed or even scrapped? For example, automatically approve all invoices and expense claims under say £100 and only sample approve some for payment periodically.  This approach becomes more sensible especially if an invoice costs £50 to manually record, process for approval, and then pay. By simply reducing the complexity invoices are paid quicker and line management time is released back to value-add activities.

To deliver greater savings in the longer term, investments in technology should be considered. Before embarking on wholesale changes, it is worth reviewing the existing software solutions to understand if they are optimised and fully utilised.

An existing Enterprise Resource Planning (ERP) tool may have been partially implemented due to budget or time constraints.  Or, the ERP vendor may have released new functionality that enables the off-system work-arounds, otherwise known as spreadsheet creep, to be brought back into the key system of record. Unused functionality may include automatic Bank and Balance Sheet reconciliation functionality, Chart of Account extensions to aid reporting and analysis or Travel and Expense integration.  The investment to activate the functionality may be an Operational rather than Capital expenditure as it may be possible to undertake the upgrade without significant effort of downtime of systems across the business.  Even better the improvements are now enhancements and configuration rather than a full system upgrade.

Using an external consultancy, like Ownet, who are aware of the wider market and available solutions is a useful way of delivering an accelerated short project to assess the existing applications, identify the options of what is possible, and the gap to deliver value and a positive outcome to the business. The assessment review and report can be delivered in a couple of weeks with new functionality cutting process waste and improving efficiency in short order, freeing up knowledge workers to focus on adding better value to the business.

Upgrading existing software

There are times when the existing finance system requires change / modernisation. It may be that the software is at the end of life and is no longer supported, or the hardware is obsolete, or reporting requirements and user expectations are such that the current system is no longer viable.  When the time comes the apparent choice is usually between “lift and shift” or re-architect / re-implement.

Lifting and shifting the whole way of working to a newer platform may appear to offer value with a relatively low investment cost, in that the existing operating policies, processes and procedures are copied over from the old software to the new and little work done in the way of updating ways of working. Lift and shift is often considered in a major version upgrade or moving from software hosted on-premise to a cloud based or Software-as-a-Service (SaaS) solution. The theory being that the existing policies, processes and procedures can be maintained, with little distraction from business as usual activity. While the new software version may offer new functionality and features, many of the wider process inefficiencies still exist requiring work-arounds and spreadsheets to resolve. Overall, the value originally envisioned may not materialise, with the only result being a new graphic user interface and screen layout for users. 

Taking the view to reimplement/re-architect may appear to be more expensive in the short term. Longer term taking a step back to review requirements, functionality and researching the possibilities may generate longer term use and sustainable value. Opportunities to cut wasteful manual processes, utilise robotics functionality and leverage mobile technology to capture information once and at source all contribute to delivering value as part of an upgrade of finance and related operating systems. This will improve transactional process times, and free up finance team resources to focus on supporting further performance improvement across the business.

ERP automation tools

With processes streamlined and core finance operating software optimised, the next opportunity is to invest in process specific automation tools across high volume low value transaction types.  Examples of areas to target for automation include expenses, accounts payable and period end close.

For example, most Finance system vendors offer travel and expense (T&E) systems to replace the manual paper or spreadsheet based double capture systems used in many companies. In the first stage the expense originator captures their expenses on the spreadsheet then, after approval, the second stage is a finance person transferring the data into the ERP for payment.  Moving from a manual to a digital system (for example HMRC’s Making Tax Digital) enables the business to cut the second stage as the originating user captures their expenses directly into the expenses tool usually on their mobile phone, for authorisation and payment.

Automation tools will help free finance team members from repetitive and often boring data capture and processing work to enable them to fulfil a knowledge worker role that enables them to add value to the business and improve business performance. The tools will deliver the same outcomes in a quicker and cheaper way of working.

With best fit automation tools installed, the company can assess and further deploy robotics and machine learning applications to release more knowledge worker time away from low value work to further refine and optimise processes. The next stage may be to review planning, reporting and analytics to add value in the change and transformation process.

Robotic process automation tools have advance significantly over the past few years. These now come in the form of unattended (working in the background waiting for an event like an invoice to be received be email) to attended robots driven by the user to action a repetitive process like a balance sheet reconciliation.

The next iteration of the RPA is RPD – robotic process discovery – where a robot watches all the actions taken on a group of user’s computers and then works to identify the process. Much as was explained in the Lean Process Mapping section earlier.  In addition to identifying the process, often overlooked steps and actions are surfaced to the business that can be reviewed to be transformed and offer further value to the business.


External events outside the Finance function may result in a forced change being made across process, procedure or systems. There are opportunities to use the change to transform the way the Finance function supports the business. Lean process mapping, upgrading software and using automation tools are ways a business can deliver value during a change. This can make the Finance function more efficient by cutting waste, improving process or delivering quicker outcomes. Along the way staff are freed to deliver more of the interesting value add activities to support and improve business performance.  The finance function can find value in transformation and own their legacy.

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