Financial Services

Components of a Financial Transformation Program

The previous blog post in this series about transforming financial processes discussed the adjunct applications and their role in control and efficiency. This week, we take a detail look into the components of a successful transformation.

Once the impediments to a firm’s financial process are understood, a targeted remediation effort can be constructed. Depending on the specific issues found, the time and cost of the corrective actions can range from minor (e.g., automating mechanical manual entries) to moderate (e.g., revamping reporting structures/hierarchies) to major (e.g., overhauling the chart-of-accounts or accounting key). The one-time cost of the program must be weighed against the labor and time savings reaped during each monthly accounting cycle.

Partner with a trusted finance transformation advisor like Perficient to help avoid missteps, save time and money, and ensure the success of the program. Understanding the end-to-end financial process, how it impacts an organization, and how to go about implementing and managing a response program will be critical for key stakeholders. The interconnected pieces of a large financial institution will need to be navigated and the history and lifecycle of its data and processes understood to ensure a successful outcome.

Let’s take a closer look at six components of a financial transformation program:

  • Current-state evaluation
  • Implementation roadmap
  • Data stewardship
  • Program management
  • Requirements gathering
  • Testing support

Component of a Financial Transformation Program #1

Current-State Evaluation

The first step in a finance transformation program is to evaluate the current-state financial process and assess end-to-end processes inclusive of technology, data, manual touchpoints, and staff:

  • Chart-of-accounts
  • Coding block (accounting key)
    • Thick vs. thin ledger
  • System architecture
    • System interfaces
    • Sub-ledgers
  • Source systems
    • Timing
    • Data quality
  • Planning/budgeting/reforecasting
  • Overhead/expense allocations
  • Consolidations
    • Eliminations
    • Equity pick-up
    • Minority interest
  • Regulatory reporting
  • Management reporting
  • Closing cycle
    • Timing
    • Resources

Component of a Financial Transformation Program #2

Implementation Roadmap

Evaluating where the company stands today and where it needs to be in relation to finance transformation is of paramount importance in the early phase of the transformation program. Create a coherent roadmap that lays out concrete projects to be undertaken. This will allow the company to mount a coordinated response across multiple functions.

This roadmap should include:

  • Technology strategy
  • Financial process mapping and restructuring
  • High-level data analysis

Component of a Financial Transformation Program #3

Data Stewardship

The basis for any finance transformation program will be a thorough analysis of reference and transaction-level data.

This includes:

  • SYSTEM IDENTIFICATION – Look across the organization’s various functions, product areas, and business units to identify all sources of relevant data.
  • DATA ANALYSIS – Catalog the various places that relevant data exists and determining the quality of existing data and gaps with respect to finance transformation requirements.
  • DATA REMEDIATION – Create a plan for addressing data gaps and quality issues, as well as defining survivorship rules in cases of multiple sources for similar data.

With an understanding of the data in place and a plan for addressing any shortcomings, the company will have a solid foundation for complying with its finance transformation objectives.

Component of a Financial Transformation Program #4

Program Management

Depending on a company’s size, product mix, and complexity, the finance transformation may require a multi-year, multi-functional program that could encompass dozens of projects. Given the scope and scale of affected institutions, most will already have several layers of project management responsible for different areas of the business.

A strong finance transformation program will require the integration of different PMO groups, but also have a separate and distinct focus on the new regulation. An attempt to decentralize the management of this program and focus on individual functions will invite a disorganized response, and will likely lead to missed deadlines and incomplete requirements.

We have many years of experience managing large financial services programs by leveraging both Waterfall and Agile methodologies.

Some of the essential program management activities include:

  • Creating or adapting a program charter to guide transformation activities
  • Creating or collecting individual project plans and generate an integrated program plan
  • Coordinating existing PMO groups affected by the transformation
  • Managing program communications down to project teams and up to senior management, as appropriate
  • Managing deliverables associated with individual projects and the integrated program
  • Managing cross-functional “war rooms”

Existing PMO groups will have an important role to play in organizing individual projects or group contributions to projects, but a standalone program management office reporting directly to senior management will be required to oversee a truly effective finance transformation program.

Component of a Financial Transformation Program #5

Requirements Gathering

For each of the technical work streams involved in a finance transformation, requirements will need to be defined and vetted with key stakeholders across the organization.

Some ways of gathering requirements for finance transformation include:

  • Validating existing finance transformation requirements and objectives
  • Working with stakeholders across business, technology, and operations to create business requirements documents and drive signoff
  • Translating business requirements into both functional and technical requirements to enable a seamless transition to development activities
  • Creating traceability matrices between various phases of requirements definition
  • Managing versioning and storage to avoid a disorganized document lifecycle

Organizations will likely have in-house resources tasked with creating some or all of these requirements in a normal project. However, having dedicated resources who can write and manage requirements for an entire program will help ensure continuity between different functions and phases. As requirements grow and change, trying to address them with possibly dozens of different business analysts across groups could bring a program to a standstill. A company will benefit greatly from having individuals who are tasked with writing requirements at a program level.

Component of a Financial Transformation Program #6

Testing Support

Each phase of a company’s finance transformation will have to undergo rigorous testing to ensure that all the objectives are met without disruption to business as usual.

These activities include:

  • Test planning and execution
  • Defect tracking and reporting
  • Requirements traceability
  • Continuous integration

As with requirements definition, having testing support resources that are dedicated entirely to the finance transformation effort will ensure consistency of methods, documentation, and reporting across all of the affected silos. Integrating existing testing teams into an overall test support structure will allow the company to leverage its skills with proprietary databases and software, while simultaneously enforcing a unified approach to testing all aspects of the finance transformation.

To learn more about the “hows” and “whys” of initiating a finance transformation program, download our insightful guide. You can fill out the form below, or you can find the guide here.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Eugene Sefanov

Sr. Marketing Manager, Industries, Perficient

More from this Author

Subscribe to the Weekly Blog Digest:

Sign Up
Follow Us