The Finance Enterprise Transformation Illustrated™
ByEric K. Gaba, CMA®
A Systems Approach to Refocusing the Finance Function
Automated, Best-In-Class, End-to-End, Integrated, Lean, Simple,
Standardized
The ROI Advisory for Specialized Technological AdvancementEnterprise Transformation Experts 2016 ©
The Finance Enterprise Transformation Illustrated™
Table of Contents
Executive Overview……………………………………………………………………………….....pg3
The Finance Enterprise Value Stream Architecture™……………………………….…pg4
Attributes of the Enterprise Transformation Architecture Models™…………..pg5
The Risk Tolerance and Value Creation Quadrant™…………………………………...pg6
The Architecture of the Enterprise Transformation Maturity Model™……..pg7
The Model → Risk → Duration → Outcome Matrix™…………………………….....pg8
The Building Blocks of Enablers and Inhibitors™………………………………………..pg9
The Resource Calibration Triangle™………………………………………………………….pg10
The Finance Enterprise Transformation Illustrated™
Executive Overview
The emergence of the Enterprise Transformation discipline has created an enormous amount ofopportunity for both organizations and practitioners to leverage intellectual capital, technical andfunctional tools amongst other resources in order to unleash the synergistic values which areinherently interconnected and interdependent within the cycle of business activities conducted bya going concern.
The concept of a going concern is well defined within the financial arena as an entity which is inbusiness with the expectation to remain as such, whereas the definition of an enterprise andexactly what constitutes transformation, remains an evolving field of management research thatcontinues to examine the complex array of business activities intertwined with a diverse networkof digitally transformative systems and applications which enable organizations to achieve theirvalue creation objectives.
Within the above context, the Finance Enterprise as a part of an organizational value stream ofactivities, is also emerging as a strategic business partner with the capability to transform its corefunctions into a predictor and enabler of value creation.
The transformation process of the finance enterprise also continues to be an evolving field ofmanagement research and this publication attempts to formulate the pillars and the frameworkwithin which the finance transformation initiatives can be meticulously crafted and successfullyunleashed to harness value creation throughout the enterprise.
In a visually summarized and condensed format, this publication intends to contextualize andstructure the finance transformation initiative by introducing the key concepts of:
The Finance Enterprise Value Stream Architecture™ Attributes of the Enterprise Transformation Architecture Models™ The Risk Tolerance and Value Creation Quadrant™ The Architecture of the Enterprise Transformation Maturity Model™ The Model → Risk → Duration → Outcome Matrix™ The Building Blocks of Enablers and Inhibitors™ The Resource Calibration Triangle™
The author suggests that by systemizing these elements within a structured framework, theenterprise transformation leadership team of any organization will be well positioned to unleashthe synergistic values embedded in their transformation goals which will ultimately and effectivelydrive business performance to exceedingly higher levels surpassing pre-established expectations.
To hit the ground running with these concepts, contact me at [email protected].
The Finance Enterprise Transformation Illustrated™
Enterprise/ Entity
Structure
Consolidation Levels
Sub-Consolidation
Levels
Investment Centres
Revenues/ Profit Centres
Support Centres
Working Capital
ManagementCapex Management
Supply Chain Management
Inventory Management
Human Capital Management
Treasury/Tax Management
Operations Management
Policies & Procedures
IFRS/GAAP/ CHART OF
ACCOUNTS
Regulatory Environment
Internal Control/SOX Environment
The Finance Enterprise Value Stream Architecture (A Condensed Overview of the Meta Data Structure)
Corporate Sustainability Reporting (CSR)
Enterprise Performance Management (EPM)
Enterprise Risk Management (ERM)
Business Process Management (BPM)
Corporate Performance Management (CPM)
Corporate Governance, Risk and Internal Controls (CGRIC)
Customer Relationship Management (CRM)
Business Process Reengineering (BPR)
Transformation Cylinder
Enterprise Dashboard
Business Intelligence (BI)
System ProcessesAutomated, Best-In-Class, End-to-End, Integrated, Lean, Simple, Standardized
The Finance Enterprise Transformation Illustrated
i. The Transformation model is formalized with a comprehensive blueprint outlining boththe current and future landscapes.
ii. There is documentary of evidence of formal acceptance by all key stakeholdersincluding the board of directors, where applicable.
iii. The Entity demonstrates a low risk tolerance for system implementation hurdles.iv. The Transformation life cycle exhibits a long term maturity model with a high value
creation emerging from an effective and efficient execution of established objectives.v. Execution is precise and seamless. The project team is less likely to spin their wheels
while attempting to resolve issues.
i. The Transformation model is formalized with a high level summary blueprint.ii. Stakeholder buy-in and acceptance is reasonably assured without any evidence of
formal acceptance.iii. The Entity demonstrates a moderate risk tolerance for system implementation hurdles.iv. The Transformation life cycle exhibits a medium term maturity model with moderate
value creation based on established objectives.v. Execution is moderately precise with a low occurrence of wheel spinning to resolve
issues.
i. The Transformation model is generally understood and well communicated amongstkey stakeholder groups via a formal action plan.
ii. Buy-in and acceptance is anecdotal with varying degrees of expected outcomes and alack of documentary evidence.
iii. The Entity demonstrates a moderate risk tolerance for system implementation hurdles.iv. The Transformation life cycle exhibits a medium term maturity model with moderate
value creation as defined by the established objectives.v. Execution is moderately precise with a low occurrence of wheel spinning to resolve
issues.
i. There is general acceptance for the need of a transformation initiative.ii. Key stakeholders are conceptually convinced without a formal action plan.iii. The Entity demonstrates a high risk tolerance for system implementation hurdles.iv. The Transformation life cycle exhibits a long term maturity model with low value
creation.v. Execution is less than precise and the implementation team is plagued with a massive
issues resolution log accompanied by excessive wheel spinning.
[D] A Definitive and Structured Transformation Model:
[W] A Well Defined and Formalized Transformation Model:
[L] A Loosely Defined and Informal Transformation Model:
[C] A Clearly Defined and Casual Transformation Model:
Attributes of the Enterprise Transformation Architecture Models
The Finance Enterprise Transformation Illustrated™
Definitive and Structured Model
Definitive and Structured Model
Well Defined and Formalized Model
Well Defined and Formalized Model
Clearly Defined and Casual Model
Clearly Defined and Casual Model
Loosely Defined and Informal
Model
Loosely Defined and Informal
Model
Definitive and Structured Model Well Defined and Formalized Model
Clearly Defined and Casual Model Loosely Defined and Informal Model
High
Low Low
High
The Risk Tolerance and Value Creation QuadrantThe Architecture of the Transformation Maturity Model
Risk Tolerance Value Creation
Risk Tolerance Value Creation
Mo
der
ate
Mo
der
ate
Convergence
The Finance Enterprise Transformation Illustrated™
Definitive and Structured
Well Defined and Formalized
Clearly Defined and Casual
Loosely Defined and
Informal
The Architecture of the Enterprise Transformation Maturity Model
Low
Medium to Low
Medium to High
High
Value Creation
High
Medium to High
Medium to Low
Low
Model →Risk →Outcome → Matrix
Model Type Risk Tolerance
[D] Definitive and Structured
[W] Well Defined and Formal
[L] Loosely Defined and Informal
[C] Clearly Defined and Casual
Low risk tolerance for implementation hurdles.
Potential Outcome
Medium to Low risk tolerance for implementation hurdles.
Immediate and Effective Transformation.
Medium to High risk tolerance for implementation hurdles.
High risk tolerance for implementation hurdles.
Moderate Transformation and Value Creation.
Slow Transformation and Value Creation.
Delayed Transformation and Value Creation.
Risk Tolerance
The Finance Enterprise Transformation Illustrated ™
Model → Risk → Duration → Outcome Matrix
.
Model Type
Business Processes/
Control Environment
Risk Tolerance for
Implementation Hurdles
Risk of Delayed
Transition from
Current to Future
State
Duration of Project/Time to Maturity
Expected Outcome during
and after Transition Phase
Likelihoodof
unleashing Value Added
Synergies
[D] Definitive and Structured
Fully Optimized Low risk tolerance for implementation hurdles
Low risk of delayed transition
Long Term Immediate and Effective Transformation and Value Creation
Highly Likely
[W] Well Definedand Formal
Repeatable and Intuitive
Medium to Low risk tolerance for implementation hurdles
Mediumrisk of delayed transition
Short to Medium Term
Moderate Transformation and Value Creation
MoreLikely
[C]Clearly Defined and Casual
Managed and Measurable
Medium to High risk tolerance for implementation hurdles
Mediumrisk of delayed transition
Short toMedium Term
Incremental Transformation and Value Creation.
Less Likely
[L]Loosely Defined and Informal
Initial/Ad Hoc High risk tolerance for implementation hurdles
High risk of delayed transition
Long Term Delayed Transformation and Value Creation
HighlyUnlikely
The Finance Enterprise Transformation Illustrated™
Funding – Estimating the level of the financial commitment. Time Horizon – Assessing the time to maturity of the transformation model.. Intellectual/Human Capital – Talent Management, Skills and Competencies. The Transition Curve – Migrating from the Current state to the Future state. Interruptions/Down-time – Estimating the impact on routine operations. Level of Automation – Selecting the ERP/The Optimal Level of Integration. Workflows – Capturing the sources and flow of data. Regulatory Requirements – Establishing the framework for compliance. Business Process Reengineering – Carving out the Future State. Entity Structure/Design – Reconfiguring the foundation of the enterprise. Policies and Procedures - Leveraging proper authorization and authority. Blue Printing – Documenting the “AS IS” and the roadmap for the “TO BE”.
The Building Blocks of Enablers and Inhibitors
The Finance Enterprise Transformation Illustrated™
Establish the Transformation Leadership Team , Communicating and Overcoming
Objections Document Policies and Procedures,, Implement Change
Management Procedures, Stakeholder Buy-In and Acceptance, Procure Resources
Assess Requirements, Consultation, Design, Configurations, Blueprinting , Prototyping, Testing, Troubleshooting, Support
Mechanisms
Transformation Deployment and Systems Implementation
Pyramid of Resource Calibration
Future State Objectives: Optimization Agility Adaptability Flexibility Scalability
System Processes Automated Best-In-Class End-to-End Integrated Lean Simple Standardized