3 Essential Criteria for Getting Executive Approval on Finance Transformation Projects
The economic downturn brought on by COVID-19 has transformed the way CFOs and CIOs are prioritizing operational expenses. While a strong 2019 put multinational corporations in a position to invest in new finance transformation projects to accelerate growth, recent market and business performance have finance teams reevaluating their current and future investments. Board rooms buzzing about this momentary pause in spend and what investments to prioritize are calling on CFOs and heads of IT to forecast why their projects should or should not move forward. And, in the absence of criteria to support the business, many organizations are simply putting any new projects on hold. This zero-sum game leaves a lot on the table and gives prepared and savvy organizations a distinct advantage over those who are not able to act under such distress and uncertainty.
In a recent research report, “Evaluating Your Finance Transformation Project During a Pandemic (17 April 2020 by Nisha Bandhare)”, Gartner analyst Nisha Bandhare offers a guide for chief finance officers that is equally helpful to business leaders across the organization, especially CIOs and solution architects, to help determine what matters for business continuity under COVID-19 conditions.
While Bandhare in the report offers a wide range of criteria to examine, the following three are essential for obtaining CFO/CIO alignment and project approval:
- “Prioritize any transformation initiatives that enhance cash generation, reduce operating costs and improve remote working conditions”
- “Pause any transformation initiatives that require big change management efforts”
- “Carefully weigh any initiative that would result in large operational efficiency gains against the potential disruption of change it could cause”
The crisis has put finance teams in business continuity mode, and the pandemic has clearly demonstrated the benefit of having digital technology that automates work, reduces operating costs with intelligent workflows and supports remote work. In fact, many organizations had already begun planning for a large ERP-cloud transformation in order to gain key efficiencies in these areas. Per our understanding of the report, Bhandare’s guidance on these transformation projects, especially those that drive efficiencies in cash leveraging AI or machine learning to accelerate automation, is to proceed in certain areas. Programs that include predictive analytics that deliver better working capital and free cash flow should be prioritized, as well as solutions that offer real-time visibility into company cash flow.
Hope for the Short-term and Agile Solutions
The report suggests that projects should be reevaluated against the current market and remote work realities but does not suggest that business leaders should take a wait-and-see approach. Companies that had invested in remote work solutions, digital finance technology and business continuity planning prior to March 2020 are more prepared now to develop a plan for growth as the market stabilizes. While ERP projects may be on hold, the recommendation is to use the pause to reorganize teams and to evaluate process standardization. This last point is worth emphasis as exhaustive and extensive as a finance transformation project can be, the application of the plan may be preserved through other means that include cost savings, reduced operating costs and improved remote working conditions.
A few examples of case studies that meet the criteria of cost savings and supporting work from home, as well as showing a clear ROI to operational costs, include recent projects for cloud-based cash management and cash forecasting, FX risk management and hedge planning, payments solutions and accelerating supplier payments. Automated reporting and cash forecasting, for example, enabled one health care company to reduce the burden of support from IT, leverage advanced cash forecasting to extend the forecast from 30 to 90 days and automated report distribution improved communications among teams. Another company transformed exposure management gaps into real-time visibility, generating 97 percent real-time visibility of group FX exposure. In the last example, a company enabled buyers to pay suppliers in as few as 15 days, adding cash flow and working capital improvements to cover operational costs. These case studies showcase the value of cloud solutions that these organizations were able to also leverage during the pandemic with little to no impact on their business operations.
COVID-19 and the resulting global economic slowdown has put finance transformation projects on hold for companies of all sizes, but recent Gartner research has shown that this is not the only short-term course correction. Finance teams should reprioritize existing or new investments, according to a clear set of criteria. Adhering to these criteria can help put your organization in the best position for business continuity and plan for growth while others fall behind. As demonstrated by multiple case studies provided by Kyriba, companies that have invested in cloud-based solutions with machine learning capabilities, streamlined payments operations, real-time visibility into cash and risk, and that deliver improved working capital are in a strong position to grow during the current financial crisis and market volatility. For more criteria and guidance to consider from Gartner, download this report “Evaluating Your Finance Transformation Project During a Pandemic.”
For related reading from Kyriba for those CFOs and CIOs pursuing an ERP cloud transformation, download the eBook “Optimizing payments during an ERP cloud migration.”