Although not all financial transitions are equally complex, many businesses underestimate the burden and are astonished by how quickly underlying issues may derail even the best-laid plans. What appears to be a simple process becomes considerably more complicated, leaving teams disgruntled and unable to achieve expectations. All of this can be avoided if you appropriately prepare for the fundamental issues that financial revolutions will surely bring.
Defining finance transformation
Finance transformation is a term used to describe strategic initiatives aimed at realigning the finance function with the broader strategy of a company. Finance transformation includes restructuring and executing the finance operating model, accounting and finance organizations, accounting and finance procedures. It also includes financial capabilities, and replatforming of finance and accounting systems. These modifications may appear to modify the way a company’s financial function is carried out, as well as the processes, internal controls, and financial reporting that go with it.
Why is the financial transformation needed?
Finance, like every other industry, is changing. Finance directors must discover methods to deliver more with less while maintaining stronger controls and keeping up with a changing and tumultuous environment as expectations for the function rise.
Moreover, the finance function must invest in finance transformation to do this.
The solution is a set of solutions that assists finance executives in analyzing their finance strategy and vision… and helps design and implement changes to their financial structure, process, and systems to improve the total value of finance.
Furthermore, to improve the effectiveness of the finance function, CFOs must adopt proactive measures. Unfortunately, many organizations still have inefficient, labor-intensive processes and a lack of synchronization as their underpinnings.
Why do financial transformations fail?
According to Gartner, 85% of finance teams are planning or executing some type of financial transformation programme, with 70% of them fail!
Finance is sometimes defined as a function that blends corporate pragmatism with analysis, as well as a low-risk appetite. In a company context where success is defined by the ability to cope with the rising pace of change and transformation is required not just to prosper. But also to survive, this aversion to risk can often lead to absolute avoidance, which can be counterproductive in the long run.
- If you don’t have a clear aim broken down into distinct objectives from the start, you’re setting yourself up for failure due to a lack of clarity.
- It all comes down to bad resource management, which results in execution failure.
- Real lasting change is nearly impossible without the right culture, mindset, and dedication from proper leadership.
So, what are the challenges of financial management?
Challenges, the digital transformation of financial services faced by firms.
Data management practices
Companies generally don’t look at external data like consumer insights because they’re still trying to solve internal accounting problems, according to a Deloitte analysis. They spend more time transferring data around via email, spreadsheets, and between different platforms than evaluating it because many of their processes are still manual. Companies should focus on the seven requirements of good data management, whether they’re mining churn analytics or combining financial statements.
- Extracted from a credible source
- Complete and comprehensive
- Accurate and free from error
- Consistent across all systems
- Standardized format
- Collected on time
- Current and relevant
Investors and stakeholders
Stakeholders and investors can be wary about taking risks, and the upfront fees can make securing their support difficult. Setting expectations, projecting ROI, and presenting an accurate image of the risk of being left behind will be necessary to persuade them of the benefits. Make a concerted effort to persuade all parties. After all, it’s a procedure that will alter the way your organization operates, allowing you to think and act rather than react in unpredictable times.
Compliance and regulations
Teams may be afraid that implementing digital transformation would drain resources away from meeting compliance requirements. This prioritizes short-term goals over long-term solutions once again. Without the use of appropriate tools, managing the complexity of compliance will become impossible over time. Regulators continue to update and adopt new accounting rules in order to govern the ever-changing economic environment. Proof of this phenomenon may be found in the widespread usage of recurring billing models and the implementation of ASC 606 to account for recurring and deferred revenues.
Evolution of the workforce
Uncertainty and change have the potential to drive outstanding talent away. That isn’t to say that leaders should be paralyzed by fear of losing their finest personnel; it does mean, however, that roadmaps must contain methods for attracting and retaining the right individuals to drive the necessary reforms.
Lack of agility and coordination
The heart of the financial transformation is an agile attitude. Teams will have to develop a degree of agility and coordination that may not come naturally to them. When legacy standards and practices are in place, introducing cooperation and agility between departments might require time and persuasion. Data centralization is beneficial, but it is only one piece of the equation. Because of the emotional impact of large-scale transformation, failure to effectively explain changes can be costly.
Risk-averse mindsets
Those who are engrossed in manual operations may find it difficult to envision their responsibilities if this burden is lifted. Automation is only frightening if individuals believe they will lose their jobs as a result of technological advancements. It’s critical to emphasize that humans will continue to be at the center of operations and modify ideas about how their jobs will change. Managing the confrontations necessitates a commitment to change management and communications. And also sensitivity and compassion for individuals undergoing change.
How will Dynamics 365 overcome your challenges?
From capital markets to insurance and banking, a DHRP Dynamics 365 solution enables organizations to collaborate throughout the enterprise to build stronger client relationships, optimize client value, and provide world-class customer support along with the complete resources management.
When it comes to achieving financial transformation, technology is rarely the biggest stumbling obstacle. That’s why, when we engage with your firm, we place our finest people at the center of your success plan. Everything from advanced subscription billing to financial consolidations is covered by our systems, and everything else is covered by our personnel. We can assist you if you want to work with a team that will be there for you every step of the way of your transformation project.
