Finance Transformation · June 24, 2022

10 Principles That Will Make Your Finance Transformation Successful

What is Finance Transformation?

The term Finance Transformation is sometimes used for implementations of new ERP or other finance systems, or for introducing automation. A good Finance Transformation is so much more. It addresses all five areas of the target operating model: People, Process, Technology, Data, and Information.

To truly transform a Finance function into one that gets more efficient and effective each year, and which becomes a strategic leadership function for the enterprise, you need a transformation that does not begin or end with technology. Below are my 10 Principles of Finance Transformation.


Transformation means change. Massive change. The People part of the target operating model is critical because you cannot transform your Finance organization without changing its culture.

1. Invest in Staff

This principle is based on the premise that a finance organization’s capability is the sum of the capability of its people. Investing in the skill development and alignment of the staff pays off. Creating an environment where continuous growth and development of the individuals is embedded in the culture of the team really pays off.

2. Embrace Change Management

There is a whole discipline and industry around change management and its foolish to think you can manage the change of a transformation by just figuring it out as you go. Adopting best practices in this area, such as Prosci’s ADKAR model, can help you manage the change for everyone. Change management covers a spectrum that includes sharing a common vision for the future state, addressing “what’s in it for me” for each person, providing training and upskilling, and assessing org readiness for new technology.


Focusing on process improvement before technology changes is a critical success factor for Finance Transformation. Expecting your process to be defined by your new software is a common (and expensive) mistake.

3. Adopt Lean Finance

When it comes to process improvement, there is no need to reinvent the methodology. Lean principles, which began in the automotive manufacturing, have been adapted across all sorts of business lines and functions. I have successfully adapted the tools and principles to create Lean Finance organizations.

To build a strong foundation for your transformation, make Lean Finance principles a part of the culture and apply Lean tools and methods to improve your team’s processes.

4. Organize by Process Groups

The best organizational unit at which to focus improvement efforts is the process groups. These groups probably align pretty well with your organizational structure already. A process group is the team responsible for a group of related processes (e.g., Collections, Cash Applications, Accounts Payable, G/L Accounting, Cost Accounting, FP&A, Tax Reporting, etc.). The right grouping will vary slightly for each company. At this level, you can identify the objectives, improvement targets, and metrics for a team to work on as well as Process Group Owner to lead the team. One of the Lean Finance principles is Empowerment. Empowering these teams to make improvements in their own areas is the key.


Process Groups should use technology to enable improvements in efficiency and effectiveness. The role of new or improved technology will be clear after the People and Process work is well underway. Implementing new systems should not be the primary driver of your Finance Transformation. More importantly, do not charge the third parties you need to implement new systems with change management toward a new culture or the development of your people.

5. Optimal Use of Existing Technology

Many Finance organizations start their Finance Transformation believing that the key is implementing new technology. They almost always have best-in-class technology solutions in their organizations that they are not using well. These might include Excel, Blackline, Concur, Power BI, etc.

If you consider all the technology solutions currently deployed, do you think the software providers would say you were in the top quartile of all their customers in terms of: how well it has been implemented, how well staff has been trained, how much functionality is being utilized, how well benefits have been realized?

Addressing the root causes of these issues and improving the utility of existing technology should come first.

6. Effective Implementation of New Technology

If you don’t already have a competency in effectively implementing new technology, I suggest you develop it before starting on a multi-year, multi-million-dollar system implementation. You cannot outsource the responsibility for successful implementation to others. All the software providers and implementation consultants you are considering have both success and failures among their past projects.

It’s not the contract that protects you against failure. It’s a leader’s willingness to lead the whole team (internal and external) and establish trust and teamwork, to get into the details of the messy middle and be the glue that prevents critical items from slipping through the cracks. I call it active sponsorship and it is the opposite of being ready to distance yourself from a failure.


Finance Transformation must address the state of the critical data. This includes data quality, data structure, and data accessibility. I have yet to see an organization that does not complain about the quality of their data and yet they rarely seem to understand who is responsible for the problem or how to fix it. Upskilling the team should include improving their data literacy. Processes that create bad data can be improved with Lean Finance.

The usefulness of clean data is still dependent on its accessibility and structure. Finance executives need enough data competency to have a vision for how it should be structured, transformed, stored, secured, and made available.

7. Improve Data Structure

One major aim of a Finance Transformation should be to enhance the team’s ability to provide insightful analysis to the business. Good BI tools and dashboards can allow people throughout the organization to self-serve their inquires while enabling the FP&A team to explore trends and variances at a deeper level (getting beyond what and where and into why). However, none of that will be optimized without a well-structured financial data model comprised of dimension tables for key dimensions like Customer, Product, Segment, and Employee and fact tables with transactions that can be aggregated using the dimension tables. Somebody with a clear vision for how transaction data can turn into valuable information must architect the financial data model.

8. Data Stewardship

The concept of data stewardship is that data is a valuable asset that belongs to the enterprise. A data steward is the person responsible for a particular sub-group of data. Typically, they own a process that creates this data. A staff member is more likely to focus on maintaining data quality if they understand that one of their roles is to create and safeguard accurate data, that others in the organization depend on them to do this well, and that inaccurate data impairs the value of the whole database.


The Finance team starts having an impact on the organization’s success and driving strategic changes when data is used to provide meaning information and insights to the business. These are the principles that relate to the Finance Transformation objective of providing more insightful analysis.

9. Driver-Based Forecasts

I have come to believe that the single most important financial report for any enterprise is a good driver-based rolling forecast with a 5-year (or so) horizon. Accordingly, no Finance Transformation can achieve its full value without developing the people, processes, technology, and data that can enable one. A good driver-based forecast model (DBF model) changes the conversation executives have about results from a backward-looking variance-oriented discussion to one that is forward-looking and action-oriented. It provides clarity about what initiatives need to be undertaken to act on the drivers that will deliver desired results and can serve as the basis for the enterprise risk management (ERM) plan. I have discussed DBF models in an earlier post and I expect I’ll expand on them in later posts.

10. BI/Data Visualization

One area where the rest of the organization will really feel a positive impact from your Finance Transformation is from Business Intelligence (BI) dashboards that enable them to really explore good data sets. To do this, team members need to become skilled at building good dashboards that refresh with the latest data. Further, data needs to be transformed into effective datasets that are continuously updated. In my opinion, the best tool for the money is Microsoft’s Power BI, but I’ve used other excellent tools like Tableau, Domo and Qlik. You can teach yourself to use Power BI for free with excellent articles and YouTube videos like Guy in a Cube. Good dashboards enable comprehension of information and allow important connections and insights to be made.