Finance transformation – a term that’s been circulating for decades – has been heralded as the key to bringing the Office of Finance into the digital age. But after years of trial and error, it’s clear that traditional approaches to finance transformation are fundamentally broken.
By Paul Tassinari, Chief Client Experience Officer, Aptitude Software
Introduction
Today, too many finance modernization initiatives result in failure, leaving organizations grappling with the same inefficiencies they set out to fix.
In this article, I’ll explore why the old way of transforming finance doesn’t work and how a new approach – one that is rapid, incremental and agile – can drive the results companies desperately need.
The problem with the traditional finance transformation approach
To understand the challenges in transforming finance, it’s important to recognize the complexity of the function itself. The Office of Finance spans a vast array of functions, from transactional back-office processes and compliance reporting to financial planning and strategic support for the business. Large organizations add layers of complexity, including multiple regions, entities, product lines, and the baggage and technical debt of past mergers and acquisitions. Adding to these layers of complexity is the tendency for organizations to approach a finance transformation as an exercise in attempting to plan for a vision five to ten years into the future. This approach requires heavy upfront planning and consultancy fees before you even get to the actual technology selection, implementation and deployment of the transformation itself. Today, the rapid pace of technological change, driven by innovations like AI, means that companies can’t afford to wait years for transformation programs to yield value.
Why finance transformations fail
According to research from Gartner, while 85% of finance teams are in the midst of a finance transformation initiative, a staggering 70% of these projects fail to meet expectations. The origins of these failures are threefold: pace of implementation, resistance to change, and misaligned outcomes.
Pace of implementation
Finance transformations take years due to their scale, data complexityand the level of collaboration required across the organization. In fact, recent findings from our Global Autonomous Finance Benchmark survey of over 1,600 Finance and IT professionals found that for 60% of respondents, it took three or more years to experience value from their transformation efforts. 23% reported achieving results in 1-2 years while only 17% saw benefits in less than a year. It’s not uncommon for companies to spend years preparing data and going through multiple rounds of testing and iteration before any value is realized. By the time a project is completed, technology may have already moved on, rendering the transformation outdated before it’s even fully implemented. The challenges of the classic “Big Bang” approach to any type of transformation are well documented and we shouldn’t expect anything different with finance transformation in particular.
Resistance to change
Gartner research has shown that one of the primary obstacles to technology adoption in Finance – specifically around AI – is rigid mindsets on the part of finance professionals. A significant reason for this is that the sheer number of change events finance teams need to accommodate has dramatically increased, up 5x from 2014 to 2023. Additionally, large organizations often have competing priorities that lead to siloed solutions, making collaboration and change adoption difficult while the fear of high costs creates an environment where stakeholders are hesitant to embrace new technologies. Finally, as outlined by Sara Sheehan, Founder and Executive Consultant at Sara Sheehan Consulting, changing a behavior that has a well-developed habit supporting it can be extremely challenging. “It’s hard for the brain to break a habit once that neural connection has been made. That’s why organizations need to fully understand what behaviors need to change at the task level regarding what employees or business users will do differently in the future and what new behaviors will support a healthy organizational culture. This will require a planned approach throughout 30, 60, and 90 days to embed new behaviors. Without a planned approach, the behaviors will not stick.”
Misaligned outcomes
Finance transformations are expected to automate manual tasks, provide better access to data and free up resources for more valuecreating work. However, when these objectives aren’t met—whether due to insufficient technology or poor adoption—companies find themselves needing to restart their transformation with a different technology vendor or implementation partner, which is demoralizing for all involved. We’ve seen high-profile examples of this at HP, MillerCoors and Revlon all of whom announced nine-figure losses only to begin anew.
The need for a new approach
It’s clear that the traditional model of finance transformation – characterized by years of planning, complex implementations and massive upfront investments – doesn’t work. What companies need instead is a more agile approach that focuses on rapid, incremental and ongoing transformation. They need transformation that delivers a shorter time to value, a lower cost of delivery and a solution that not only meets their needs now but also grows with them. So how do organizations shift to a more agile approach to finance change? In part, through a focus on automating data activities, faster solution configuration and incremental change.
Automating data activities
Many projects are immediately stalled because they can’t get their data preparation and requirements ready. This often ignored area, which can make up about 80% of a finance transformation effort, includes data requirements gathering, preparation, testing and iteration. Solutions that shift the data transformation process from Extract, Transform, Load (ETL) to an Extract, Load, Transform (ELT) model allow organizations to land raw data into the system and enrich it there, dramatically reducing time to value. Additionally, using tools like automated regression testing and AI-driven configuration can also help companies reduce time spent on these cumbersome tasks.
Configure faster
The ability to configure a finance solution quickly offers immense value by accelerating time-tomarket, enhancing operational agility and reducing implementation costs. Faster, even automated, configuration also allows businesses to respond promptly to market changes, regulatory requirements, or growth opportunities without long delays. It also empowers finance teams to optimize workflows and access critical insights sooner, driving better decision-making and efficiency. However, many of the large ERP systems lack much finance IP, meaning they must be fully configured by IT which slows down the process. When finance teams can reduce the number of configurations required and the time it takes to configure – not only for initial set-up but also over the course of maintaining and adjusting the solution – they can reduce implementation time, increase agility and lower the demands on finance resources. It also means finance can actually own and configure the solution on their own, giving them the control they need to direct the business.
Iterative change
The market is lacking a viable alternative to large ERP systems. Organizations need composable, modular solutions that support small, iterative projects and allow finance teams to quickly show success and win buy-in. Solutions that support quick changes and the ability to see results in real time are faster and less risky and can win over leadership teams that were previously intimidated by large scale change. In fact, when smaller use cases are delivered more quickly, adoption tends to increase, and excitement around the new system is sustained.
A new era of finance transformation
In a world where technology is evolving faster than ever, finance transformation can no longer be a multi-year process. It’s time for organizations to embrace a new way of thinking—one that values agility, automation, and, most importantly, speed to value. At Aptitude, we’re excited about the potential of our finance data management platform, Fynapse, to disrupt the traditional finance transformation model – ensuring finance teams see value in weeks or months, not years. Learn how Fynapse can unlock the power of the finance function.
