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Learning to transform: key success factors

Author: ICAEW Insights

Published: 06 Sep 2021

Successful finance transformation projects follow a tried and tested route. ICAEW member Bilal Khalid talks us through the critical success factors based on his career in corporate finance.

With economies becoming more competitive and companies constantly seeking cost efficiencies, transformation has become a regular feature of the corporate landscape. Organisational transformation is a broad term that encompasses the process companies undergo to change their organisation setup in terms of employees or culture. Quite often It is a more palatable term for restructuring.

The last 10 years working in corporate finance have presented me with some first-hand opportunities to observe and drive transformation. They include setting up an onshore captive shared services centre for transactional accounting and a centre of excellence for entity controlling and statutory compliance in UAE, structuring onshore shared services centres and working with BPO organisations, and supporting the transfer of transactional roles to offshore shared services centres and third-party services provider in India and Poland and closer to home in Europe.

Although the scope of the many projects I’ve worked on throughout my career has varied dramatically, the key success factors are common and recurring themes summarised below. 

1) Choose the team carefully

The goal of any transformation should be to strengthen processes or tools to a level where human involvement can be efficiently controlled and monitored. Effective job capture is only possible when it is led by a strong team. And yet, outsourced third-party service providers typically target low-cost staff and poorly-qualified or inexperienced staff driven by the desire for cost control and favouring process over people. Consequently, employee turnover across outsourced shared service centres tends to be high.

Transformation is a sensitive process with workload and management implications. For that reason, every role that is surrendered needs to be handed over to experienced and suitably qualified staff within the receiving entity. An experienced team also helps to ensure that responsibility mapping is consistent and drives a push towards “fixing” irregular transactions. Experienced teams also drive stability and hedge against loss of knowledge from normal staff attrition. 

2) Other transitions should be avoided during the project

Having multiple transformation projects on the go at the same time risks putting unnecessary strain on the primary deliverable, whether that’s a system implementation or job/role switch within the company. Make sure that other streams do not conflict with the project, particularly if the involvement of the existing or new team is central to the other projects. This splits management as well as staff focus. 

3) Parts of the project should be completed on-site

Wherever possible and assuming a return to a post-pandemic normal, critical parts of the project should be completed on-site to allow a more dedicated and deeper understanding of deliverables. This also helps to forge a more robust working relationship with the (retained) local and remote teams. Both teams should travel to each other’s locations for parts of the project. For the local team, this can also help to secure “buy-in” and deeper engagement with the project.

4) Project management delegation

Another possible engagement strategy could be to appoint sub-project leads for individual streams within the local teams. This has the benefit of enriching their understanding of the project and giving the project stability. My advice would be, however, that they remain closely supervised to avoid any deviation in the overall project direction. There can be little deviation from the recommended approach or required deliverables once the project charter is finalised. 

5) The HR stream should kick in as early as possible 

Staff redundancies are a natural result of any transformation. But the project must mitigate the impact of demotivation among staff who are going and staying. Set aside dedicated deadlines within the project timeline to focus on the HR aspect. You can help to keep staff motivated throughout the project using things like handover bonuses, placement support or an attractive severance. In my experience, a more generous severance payout is appreciated more than a longer notice period. The level of reward also depends on the complexity of tasks being handed over and does not apply fully to natural redundancies. 

6) Retain process control with the transformation team 

All spillovers into the project from other functions should be avoided to guard against significant issues and potential delays with project deliverables. There is often a tendency to hand over respective aspects of a finance transformation to the HR, procurement and other relevant teams but all of these streams must be led by the finance management to ensure product stewardship and to make sure that tasks are seen to their desired completion. This may seem like a very centralised approach but delegation can only be effective once the structure is redesigned.

7) The evolution of the project charter

A project charter formally validates the direction of the project and lays out the project’s resources, dependencies and risks. This points to the basic architecture of any project and can be built on a certain standard to ensure clear direction for the project teams. This helps to support process harmonisation and reduces the effort required from the outgoing team during the stabilisation stage of the project.

8) Change the culture through communication

Culture change isn’t something you can outsource to the HR or communication teams. Finance leadership can help align the objectives of the transformation to the required culture by taking certain concrete steps such as sharing and agreeing service level agreements, announcing changes in the team and taking time to actively listen to feedback from cross-functional teams. Most importantly, the retained finance teams and cross-functional teams must be kept updated on all relevant aspects of the project.

9) The project should have a dedicated and committed IT/EPR system sponsor

A project sponsor is usually part of the steering committee or the governance team, which itself is usually comprised of the most senior management of the company. The IT counterpart in such a committee would be an equally senior or empowered colleague, who can ensure that any systems issues are quickly resolved. A transformation might require additional controls and system information that really affects the speed and quality of the project’s delivery.

ICAEW member Bilal Khalid is Finance Director of a global technology company headquartered in France

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