Does your Finance department add true value to business? Do you see Finance influence decision making in your organization? Is finance always invited to attend strategic business meetings? Does Finance in your organization perceive as true business partners by the other functions?
If the answer of any of the above questions is “NO”, it means there is transformation needed in the Finance function to be an effective business partnering function.
I would like to share with you the transformation journey which I implemented, when I got the opportunity to lead the finance department in a global multinational FMCG company.
When I joined the company I found the Finance department providing accurate financial statements and on time, all controls were in place, all reconciliations were done properly, working capital was managed very well, and all management reports were submitted on time to the regional office, so the first impression was that everything is perfect.
However, when I spoke to business stakeholders, and I had to dig more and more into business, I realized the following ; Finance was not giving proper support to business, minimal finance involvement in decision making, FP&A was providing reports without insights just basic comments, weak relationship between finance and the other functions, finance had no seat in most of the strategic meetings, no single source of truth for decision making.
At that time, I decided to make a major transformation in the finance function from being a strong controlling function to being a strong finance business partner which should add true value to the business.
The 5-Steps Of The Transformation Journey:
1. Build strong relationships with the business partners and understand their needs.
I conducted 1 to 1 meetings with the key stakeholders (General Manager, Sales directors, key account managers, marketing, supply chain, and HR). I listened carefully to their expectations from Finance and what their needs are. I had to understand their goals, pains, business problems, challenges, etc. After deep discussions with them I started to think of quick wins to build credibility with them, and then I set short term and long-term goals on how to add true value to business and how to gain their trust.
2. Understand the business and the organization:
The second step was understanding the business and the organization, how the company makes money, the business model, the value chain, the company’s strategy, competitors, customers, suppliers, revenue drivers, cost drivers, pricing strategy, products, etc.
To reach the needed level of solid business acumen, I had with my team to do a lot of works; attending all possible business meetings regardless it was in the scope of finance or not, have conversations with all levels inside the organization (sales directors, managers, sales reps, product managers, supply chain, HR, etc.), conducting frequent field visits with the commercial team and understand their day to day challenges on the ground, meeting key external parties ; customers, distributors, wholesalers and retailers across all channels, taking notes of all of our observations during the field visit, and then discussing it with the commercial leaders to get their feedback.
The outcomes from the frequent field visits was outstanding . We got deep business understanding and we were able to understand clearly what was behind the numbers. It also helped in building strong business relationships with the commercial people.
3. Improve reporting & performance management tools.
The third step I had to implement was developing the proper reporting tools that really add value to business and meeting the commercial and business leaders’ expectations. It was powerful because we built it after deep business understanding.
So, we implemented new BI system to achieve the following objectives:
- Create an interactive smart solution to provide strong support to the commercial team and business decision makers to make quick, effective and fact-based decisions
- Give commercial teams more free time to focus on in-market activities
- Highlight critical opportunities /gaps in the market
- User-friendly and interactive tool that can be accessed at any point of time
- Help commercial team to prepare accurate forecast using monthly and annual trends
- Develop one accurate source of truth replacing all current reports
The Results were outstanding; the commercial team was impressed by the new smart tool, it replaced of all existed reports with one accurate source of information, it saved time to many functions; Sales, Marketing, Finance & Leadership Team,
Commercial team was able to focus on In-Market activities rather than time consuming in seeking and analyzing information, quick and accurate decisions were taken, full control on Key account business and top customers performance on daily/monthly basis, leadership meeting became more productive due to focusing on key business gaps using smart dashboard reports.
4. Provide insights and influence decision making.
The great combination of understanding the business, having the right decision support tools, and having a good relationship with other stakeholders helped us a lot in providing powerful insights to business by adding to our reports the proper business questions, the right business story and message, and the appropriate and realistic actionable insights and foresights.
At that time, Finance succeeded to influence stakeholders into the right direction
5. Gain the trust from business stakeholders
After implementing the above transformation steps, the finance function got a permanent seat in all business decision making meetings, finance became an essential part of the key operational and strategic meetings inside the organizations; S&OP meeting, sales and marketing meeting, annual key account contracts renewal meetings, and many other cross functional meetings.
Finance learnt to speak with business their language not the technical finance language, Finance team were involved in the day to day business activities, working very closely with business people, and overtime Finance succeeded to gain the trust from all stakeholders, and the organization realized the true value that the finance added.
At the end of the transformation journey, Finance was able to influence decision making and became a true business partner.
This article was first published on FP&A Trends: Click here
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