While most corporate finance organisations say they are highly committed to moving to global standards, more than half are failing to see success in this area, research from The Hackett Group suggests.
The business advisory group finds that over the past two years, minimal improvements have occurred at typical companies, and most dramatically underestimate the commitment required to execute on this key finance strategy and achieve true transformation.
The findings are drawn from the group’s 2013 ‘
Global Finance Organization Model Study’
, while its research recommends that in order to effect change companies more effectively prioritise transformation projects, create teams dedicated to change, and focus on developing the skills required to support a globalised operating model.
“There’s no question that finance has many important projects to undertake in order to provide higher value to the business,” said The Hackett Group finance executive advisory programme global practice leader, Tom Willman. “But their attention is getting divided, and the hoped-for gains in areas such as implementing global standards still haven’t materialized to any significant degree.
“Today, most companies are once again targeting comprehensive transformation in this area over the next few years. But it’s tough to imagine they’ll succeed unless they can change the way they prioritise and resource their transformation efforts.”
“Companies have told us that they hope to more than double their adoption of global standards for key performance indicators [KPIs] and reporting, technology platforms, master data and process design/build,” said senior research director Lynne Schneider.
“The re-emergence of internal finance transformation groups shows that finance executives are making a commitment to transform. Nearly all of the companies that participated in our study have secured finance transformation/business improvement capabilities within the company.”
However, the research shows that most companies have failed to meet transformation goals in this area. For example, at the end of 2011, 42% of finance functions said they planned to have predominantly global standards for master data over the next two to three years, but more than half said they did not actually achieve that goal by 2013. Companies are hoping to double their use of global standards for master data over the next two to three years, moving from 19% today to a target of 38%.
Over the next two to three years, the most frequently cited areas for transformation in the study are: planning and performance management and business analysis; and process improvement and function management. Within planning and performance management and business analysis companies are largely focused on three areas: driving improvements in the timeliness of the planning and forecasting; accuracy and responsiveness of planning, budgeting and forecasting processes; and the provision of timely, highly relevant management information and analysis to drive better business decisions.
Within process improvement and function management, companies are focused on the transition to a customer-focused finance organisation that delivers a comprehensive and consistent service portfolio while implementing the capabilities and resources required to drive transformation and continuous improvement of those services.
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