Rapid financial transformation: is it right for your company? With the agendas of many CFOs turning from stewardship to strategy-setting, financial transformations are getting new attention. A consultant makes the case for considering a rapid transformation rather than an evolutionary one.

• Author: Rabinowitz, Jay
• Position: Strategy

As the era of corporate scandals and mistrust appears to be dissipating, many CFOs are making efforts to shift the role of their finance function from steward to strategist. This involves expanding beyond the traditional financial oversight and accountability activities to play a more active role in determining the company's direction and strategy.

As a result, many CFOs are looking at financial transformation as a means of helping reinvigorate the finance function, but finding that the traditional three- to five-year horizon is too lengthy to meet their goals. That need for speed is driving them to consider rapid financial transformation.

Many of today's finance projects are classified as transformational, but are actually evolutionary programs--programs of gradual change over time. Evolutionary programs generally comprise several operational or tactical projects, while transformational projects tend to differ significantly from traditional projects and are rarely used. Financial transformation is an enterprise-wide, strategic project that is led by the CFO and typically takes three to five years to complete.

A financial transformation has multiple objectives, a broad scope and, if effective, a substantial impact on the company. For example, a financial transformation may involve simultaneously shifting the finance operating model, establishing a shared-services center and replacing several technology systems affecting many, if not all, of the company's business units and financial processes.

A rapid financial transformation differs from a traditional transformation in one primary regard--it is finished in less than three years.

Why the Hurry?

The traditional financial transformation's customary three- to five-year time frame may be unacceptable for many reasons. We are seeing CFO tenure shrinking, so a rapid financial transformation can help a CFO to quickly reorganize the finance function and return to supporting revenue-generating activities.

CFOs may select a rapid transformation to ensure the transformation is completed and does not become evolutionary or forgotten. This is typically seen in instances where the company has a short attention span or has not been effective in executing lengthy projects.

Lastly, opportunities for transformational change often occur only when the company encounters some form of disruption requiring a quick response. During a change in executive leadership, merger or acquisition activity, regulatory change or industry instability, the CFO may only have limited period of time to restructure the finance function and return to normal business activities.

Anatomy of a Financial Transformation

Achieving a rapid financial transformation requires an understanding of the various components of a standard transformation. A standard financial transformation consists of a number of work streams or activities, outlined in Figure 1 on next page.

Visioning and Road Mapping. In the initial phase of the standard financial transformation, the CFO and finance leadership work to develop an understanding of the current role and capabilities of the finance function and establish a common...