We live in a very dynamic world. The change is constant and I see many CFOs facing similar challenges: how to operate a finance function that is lean but agile enough to respond to opportunities despite short economic cycles. At the same time, they’re expected to provide accurate information in real time to support business decisions, drive efficiencies and ensure growth – all while complying with regulatory requirements.
In such a world the CFO needs to be a modern superhero!
For many CFOs, the “AS IS” landscape of their organizations is often far from ideal. Some of the enemies of the CFO superhero include:
- Manual processes that are time-intensive, costly and error-prone
- Unreliable data that affects the accuracy of forecasting and financial reporting
- Long turnaround times that hinder real-time responses to dynamically changing conditions
- Poor transparency and ineffective controls which result in lack of compliance, risk of fines, penalties, and even jail
- Backward-looking processes that focus on “recording” what has already happened rather than “enabling” agile agents to provide useful insights that support business decisions in a fast paced and ever-changing market environment.
The good news is that these villains can be vanquished. And one of the best weapons is an operating model that serves as an essential jetpack to provide the CFO superhero the extra powers needed to deal with such complexities – and do it at unmatched speed.
In my experience, the most successful and sustainable finance transformations apply an operating model that focuses on both the operational outcomes of cost efficiency, operational effectiveness and strong controls as well as business value whether it relates to the support of growth, improved profitability and working capital or reputation. Not only does the CFO need a best-practice target operating model to aspire to, but also a means of ensuring a rapid but secure transformation journey. The key is applying the right calibration to each of the following ‘levers’:
- Grade Mix – the optimum team structure to perform and oversee finance operations
- Location Mix – an integrated network of centers from where the functions will be performed
- Competency Model – the right mix of skills and capabilities to achieve world-class outcomes
- Global Process Model – best-in-class processes that enable effective transition and consistently drive high performance
- Technology – automates the optimized processes to drive greater efficiencies and better analytics
- Pricing – a model that drives behaviors to align performance with desired business outcomes
- Governance – supports collaboration to align strategy, reporting and operations for better performance and outcomes.
To get started, I find it’s best to perform a “Maturity Assessment” that maps the current ‘AS IS’ state relative to the ‘TO BE’ model – beware, this can be a shocking exercise but it is also very useful. From there a Target Operating Model is carefully configured using the 7 levers described above and taking into account organization culture, change readiness and the business context.
The transformation journey to the optimized Target Operating Model (the “TO BE” state) can be done as a ‘big bang’ approach or according to a phased plan – it depends on the requirements of the individual organization.
By focusing on efficiency, effectiveness, and control, the CFO superhero can achieve improvements in all operational outcomes in addition to realizing more business value with a scalable platform to support growth in emerging markets; better profitability and happier shareholders; improved working capital through analytics and a clean balance sheet; not to mention a strong reputation in the market through better governance, risk and compliance. Once again, the CFO superhero saves the day!
This approach is based on Capgemini’s proven Global Enterprise Model (GEM) which has helped numerous finance executives become superheroes in their organizations. Check out this recent whitepaper to learn more.