By Nilly Essaides
We talk about the need to transform finance’s service delivery model, in the face of changing enterprise needs and the pervasiveness of digital technology. In The Hackett Group’s 2017 Key Issues Survey, there was almost universal agreement that digital transformation will have a dramatic impact on finance’s performance and how it services its internal customers.
Enterprise demands on finance are also changing:

Finance needs to provide management with the insight to make faster, better business decisions. Its role is no longer to look at what happened, but look forward and enable management and business leaders to predict what’s going to happen and what actions they can take to affect those outcomes and improve enterprise performance.

But changing how finance does things and what services it delivers to its internal customers is one thing. Figuring out whether it’s doing a better job at it is quite another. Measuring the relative improvement in the service quality is really the only way to know whether its things are getting better. But it’s easier said than done.
How to measure Improvement
Some measures can be easily applied. For example, if managers can show that shifting X percent of finance activities to the GBS reduced overall finance headcount by 30% that’s clearly an improvement. Another potential measure is cycle time. If a new FP&A end-to-end planning solution shortened the amount of time professionals spend on creating the forecast from three weeks to three days, that’s an obvious win. Or if the forecast accuracy has gone up because of changes in the data-collection process that’s clearly a plus.
But other process and technology changes are less measurable yet more impactful.

  • By changing the finance operating model and embedding finance staff into the business units, finance is creating strong partnership with the operations; it’s building its business acumen so it can bring insight and analytics directly to business leaders. The result is better advice about issues that can range from investments or cost cutting to new business opportunities. But those outcomes cannot be credited to FP&A analysis only. So how is that value measured?
  • By switching to agile planning and rolling forecasting from a static budget approach, finance is able to give management a heads up on what coming down the road so it can better prepare, course correct and be ready to take advantage of new business opportunities. The benefits of such actions are measured in greater enterprise value, higher revenue and risks avoided. But again, they are the culmination of multiple factors. It’s nearly impossible to trace them back to the agility of the planning process.
  •  By hiring and training talent to be more analytical, intellectually curious and possess improved communication skills, finance is increasing its ability to ask the right “why” questions and put numbers in business context so it can influence business decisions and drive action. But how to measure the difference between actions taken, and not taken? Or how to assess the quality of a conversation with a business leader based on a more profound insight derived from better analysis?

Three possible ways
Here are three possible approaches to assessing improvement in service to internal customers:

  1. Capture success stories. One way finance can qualitatively capture these improvements is to document them by writing up success stories and sharing them with management and business leaders. Not only does this create a tangible record of improvement but also spreads the word of the additional value brought on by the new way of doing things. As the library of stories grows, statistics can be extracted. It may take a while, but it can become possible to compare the success of projects in which finance was involved compared to one it was not.
  2.  Survey end users. Another way to assess the success of the delivery model is to ask the internal finance services’ consumers for their opinion: Those would be business stakeholders at the BU level and functional level who are the receivers of analysis, reports and finance advice, as well as senior management. Some of the questions may include: Is finance providing faster insight? Is it helping resolve real business problems? Is it providing insight into the future? Does its input affect decisions about investments and business opportunities? Occasional surveys can help show progress by providing a benchmark.
  3.  Compare to peers. Of course one of the best way to check whether your processes and outcomes are moving closer to the top is to compare them world-class companies, and the process is not as arduous as it once was due to advancement in technology. (Disclosure: That’s The Hackett Group’s main expertise). However, while external benchmarks are a very valuable tool, they don’t capture the function’s specific progress. They can’t help finance measure how it’s doing today vs. how it did a year ago under the old model.

The pressure on finance to overhaul the way its delivers services to its internal customers won’t let up. New technologies will turn old processes on their head. Access to big data and predictive analytics will up the stakes on expectations for data-driven insight to help make smarter business decisions. The cloud is ushering in a more collaborative way of doing things. Finance is going to change, but change is not always for the better. It’s imperative that CFOs and their teams come up with value and efficiency measures to assess their progress toward a more effective service delivery model.
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Source: Generation CFO LI Group