Sustain the Change: Finance Transformation to Last

In our last post in this nine-part series, we looked at Deploy and Transform. We covered the final design steps and the different stages of deployment.

This post will focus on the last of the nine steps: Sustain the Change. We will now look at verifying the success of the change and ensuring it sustains.

The Story So Far

If you have been following the Loughridge Transformations method by now, you will have covered the following steps:

1. Strategy
2. Functional Fit
3. Baseline Assessment
4. Target Setting
5. Choosing Levers
6. Context
7. Preparing for Delivery
8. Deploy & Transform

At this last stage, we turn our attention to validating that the changes are successful and ensuring that the changes are sustainable for the future – sustaining the change.

Validating the Change

Sustain the Change: Monitoring Process Performance

When moving to Standalone Go-Live, you should consider process performance. Therefore, you will monitor whether the performance is acceptable for the initial period. However, as your standalone operations mature, performance should move from an adequate level and improve towards top-quartile or even world-class. Key Performance Indicators (KPIs) are a great way of monitoring performance in almost every organisation.

For instance, imagine you have improved the Period End closing process. Before the improvement, the team completed the close on WorkDay +10. The new closing target is WorkDay +7. Consequently, the KPI becomes which WorkDay the closing is complete. Nevertheless, you may find that, during the stabilisation phase, closing finishes on WorkDay +8 or even +9.

Sustain the Change: Reaching Target Performance

However, remember that it may take time to reach the target. Therefore, it is now the time to identify any remaining blockers in achieving the target KPI. For example, you might find out that by closing Accounts Payable on WorkDay -1 (rather than WorkDay +1), you gain a whole day in the closing process.

The insight gained through KPI monitoring will allow you to be proactive in making the necessary improvements. Moreover, when correctly set up, KPIs also enable you to measure the effectiveness of the improvement project. This approach ensures the long-term sustainability of your organisation’s operating model and will, in many cases, help increase value.

Ensuring Sustainability

To ensure sustainability, you must first consider how you will keep the design up-to-date. Secondly, think about how to maintain design compliance. Thirdly, decide how to deal with legal and fiscal requirements outside the design. Finally, you should classify any acceptable deviation from the original design as a “step-out” and fully document and seek approval from the appropriate governance body.

Sustain the Change: Process Governance

Rolling out or deploying global processes across several geographies and, at the same time, making sure they are kept evergreen can often be a challenge. Through Global Process Owners (GPOs), process governance is vital to mitigate the risk of unwanted divergence from the process, data, role or control design.

What should be the Global Process Owners’ role? 

GPOs act as the governance body for the design and have authority over design changes. The GPO is typically accountable for the following:

Process Visionary or Process Operator?

Should the GPO be responsible for today’s As-Is and tomorrow’s To-Be processes?

There is no simple answer. It rather depends on where in the transformation journey your organisation is. Ordinarily, the answer is “yes” – they are responsible for both. However, in a mature standard design environment, the accountability of the GPO will focus mainly on the operation, maintenance and improvement of the existing standards.

Practically speaking, using the Shared Service Centre example again, the answer would be “yes”. Here, the organisation is at the start of the transformation journey. As such, the GPO needs to articulate the business case for the change. They will work with decision-makers and have a role in cascading the message further in the organisation.

In addition to the technical competencies in the process, data, systems, organisation and controls, a GPO, especially in the early stages of finance transformation, should be heavily involved in change management.

A GPO will often be critical in telling the story of change, running agile programmes to implement improvements, and leading a growing team of process, data, systems and control experts. As a result, they will manage up, down and across – even convincing some stakeholders that end-to-end process management is essential. It is often a delicate balance between promoting innovation in one breath and trying to halt needless investment in shiny but ineffective technology. They will usually have to convince others that the intention is not to create a “process nirvana”. Furthermore, some may see them as an “overhead” and a challenge to other leaders’ authority.

GPO Activities 

Defining the scope of a GPO can be complicated. For example, in many organisations, an ERP or other technology implementation is the trigger for looking at processes. As a result, favouring a narrow technology view over an end-to-end process view can be a risk.

Take Order to Cash (OtC) as an example – if you do not take the time and effort to understand the process’s correct start and end points, you may miss elements. The OtC process spans many activities: sales, credit management, cash management, general ledger entries, reporting, and more. If a systems-only lens is applied, ensuring everything is appropriately considered when designing the standard process and all that goes with it can be challenging.

GPO Authority and Resources

Ultimately, the GPO needs authority over all standard design aspects: process, data, systems, organisation and controls. These elements are too interconnected not to sit under the same governance. Therefore, good governance is critical; else, excellent design work is at considerable risk.

The GPO will need to be active in the initial design and then the operation, maintenance and improvement of the standards. They ensure that the organisation replicates the enhancements globally and minimises “step-outs”. They will need the competencies, skills, authority and resources to deliver accordingly.

Two things influence the level of resourcing that a GPO will require. Firstly, the larger and more complex the overall organisation, the larger the team needed to handle design and operational issues. Secondly, GPO activities in the early phases of transformation are more resource-intensive – and require different skills. Therefore, a GPO needs a team with the appropriate number of resources and a diversity of skills.

Sustain the Change: Management of Change

In addition to operational enhancements, there are many legitimate reasons for design changes over time. New systems, increased automation and changes in the regulatory environment are just a few examples.

These global design changes must be released and rolled out properly, whichever agile or continuous improvement methods your organisation uses. A typical procedure could look as follows:

You will also need to ensure that the new change procedure is communicated to all relevant stakeholders and users. In the work instructions for each process, ensure that the roles participating in the end-to-end process have been identified. Therefore, this list of roles is an ideal starting point for change communication. However, keep in mind that there may well be other stakeholders to include in the communication.

Furthermore, it is critical to communicate all process updates to process operators. If the update or change involves a change in the design, you also need to consider potential training requirements. Depending on the size and nature of the change, it may constitute project scope in its own right and lead to a project with subsequent deployment.

Sustain the Change: Performance Management & Improvement

So far, we have talked mainly about reacting to changes needed post-deployment. However, to sustain change properly, we must also consider proactively identifying improvements to the process.

During process design, building in continuous improvement elements and ensuring global enhancements replication is essential. That could be in the process itself, but certainly in the skills and behaviours of the process teams.

Visual Management is an excellent way to encourage teams to identify and implement improvements from their day-to-day experience operating the process. These four components of visual management below support teams on a practical level:

Using a TIMWOOD(S) structure can also help teams approach improvement identification easily and practically.

Let’s look at how this can help a team. We will return, as an example, to the now familiar financial closing process. In this illustration, the newly designed closing process includes a process step to review the process each month after the close.

When the team perform this monthly review, they identify that the volume of Manual Journal Entries is increasing. It is not too surprising. Many organisations struggle with this, after all. Studies in some organisations have shown that up to 80% of the entries are not material for closing purposes.

Having identified the topic, the team then uses TIMWOOD(S) to help them dig deeper to find the causes. Here are some of the things they find:

Next, the team think about their Visual Management. Here are a few of the points they come up with:

Order	Are the work instructions clear enough?
Standards	Would screenshots in the work instructions help?
Metrics	Can the performance dashboard be updated to identify from which department the late journals originate?
Controls	Can we introduce a warning sign on the journal template to alert us if the value is below the materiality threshold?

At this point, the design change procedure we have detailed above will take effect. A team member would then contact the Process Management Team to evaluate the requested changes.

This example demonstrates the importance of sustainability in standard design. Without the possibility of evolving, the standards will become obsolete, and operational practice will deviate from the design. This design deviation, in turn, undermines the investment made and lowers the return. Many organisations face challenges in the sustainability of design standards. Loughridge Transformations can support you in implementing procedures and ways of working to ensure you can sustain the change and offer workshops and other services to deliver this.

And so the Cycle Begins…

With that, we have reached the end of the Loughridge Transformations method of Finance Transformation. Having identified a new batch of improvements for the next release, you can return to the first step to ensure your subsequent releases are as successful and sustainable as the first one and continue your journey to world-class performance!

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Interested in More Finance Transformation?

This post was the last of the nine posts in this series. Look out for the upcoming summary of the method, or take a look at some of the posts you may have missed:

• Finance Functional Fit: The Most Critical Scope Definition You Need11 May 2022
• Strategy: How to Supercharge Finance Transformation28 Apr 2022
• Reviewing the Nine Steps to Finance Transformation25 Feb 2020
• Sustain the Change: Finance Transformation to Last11 Feb 2020
• Deployment for Finance Transformation: Ensuring a Successful Go-Live14 Jan 2020
• Delivery – Design and Prepare for Robust Finance Transformation10 Oct 2019
• Finance Transformation: Understand The Context to Secure Excellence25 Sep 2019
• Choose The Lever for Successful Finance Transformation3 Sep 2019
• Define the Future – Target Setting & Benchmarking20 Aug 2019
• Baseline Definition – A Reliable Assessment Model for the Finance Function22 Jul 2019
• Nine Steps to Finance Transformation28 May 2019

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