The 5 stages of finance transformation

Prophix ImageProphix May 28, 2024, 8:30:00 AM

You can’t transform your finance processes overnight. But with a plan in place, for both technology and people, you can embark on a finance transformation journey that will take you and your team into the next generation of finance with unwavering confidence.

It starts with taking the first step. In this blog post, we’ll walk you through the 5 stages of finance transformation, the steps you can take to move you through the journey, and share real examples of how Prophix customers ASRC Industrial and USA Properties have implemented this journey to reach peak FP&A transformation in their organizations.

What is finance transformation?

According to IBM, finance transformation is “the combination of processes, systems, and organizational change across a business, which is implemented through new technologies, training, and analysis.”

Often, finance teams look to finance transformation initiatives to streamline, simplify, and optimize their work.

The 5 stages of finance transformation

Your transformation journey starts with understanding your financial maturity. Financial maturity measures the sophistication of your finance processes. You can measure your financial maturity by looking at your finance processes on a sliding scale and understanding where your current approach fits. To learn more about financial maturity and gauge your current state, take the Financial Performance Assessment.

Now, let's take a look at the journey to finance transformation. We’ll look at the 5 stages, what each means, and the steps you can take to ensure finance transformation becomes an integral part of your day-to-day operations.

Journey to transformation

Stage 1: Reactive

The reactive stage is full of manual tasks and processes. These key processes, from budgeting to planning to financial close are mostly done in spreadsheets. And due to the high volume of manual effort required, there is limited ability to re-forecast in a timely and accurate way.

How to move to the next stage, proactive:

  • Research and consider a financial performance platform vendor. For more information on how to research and choose a vendor, check out our Buyers Guide.
  • Select an internal champion who will lead the finance transformation effort.
  • Be aligned on the end goal before you begin your journey.

Stage 2: Proactive

The proactive stage might mean that you use software for some processes, like OpEx budgeting or FP&A, but it’s not fully integrated into your processes and planning. Finance teams in this phase have moved away from spreadsheets in some instances, but not all, so there is plenty of room for automation and streamlining. Additionally, finance software is primarily used in the finance department, and it is not integrated into business planning across the organization.

How to move to the next stage, innovative:

  • User adoption is key – work to get 100% participation in your transformation process.
  • Engage and empower users with resources, communities, and opportunities to engage with other finance teams who use a financial performance platform to power their processes.
  • Show and tell with tangible, transparent results so others across the organization and in leadership positions can see the positive impact the transformation is having.

Stage 3: Innovative

In this stage, teams often have automation integrated into their processes, whether it’s through workflows or the collection and consolidation of data. There is the opportunity to create iterative plans and forecasting and multi-scenario views due to the speed and accuracy that finance software provides.

How to move to the next stage, collaborative:

  • Hold a review and visioning session to see how you can leverage the software outside of the finance function and across the organization.
  • Integrate additional data sources (like sales or operational planning) to further build on your culture of data-driven decision making in a single version of the truth.
  • Inspire other teams or business units who rely heavily on manual processes to plan and review their performance.

Stage 4: Collaborative

Teams in the collaborative stage no longer view their finance software as solely a finance system. Finance is a trusted advisor to business units across the organization, and departmental and operational planning leverages the systems and processes within your finance technology.

How to reach the final stage, FP&A transformation:

  • Document your processes for your team and other teams to understand so that your processes and data integrations remain a secure investment and document your ROI.
  • Integrate your reporting with finance technology into your executive stakeholder review meetings with executive dashboards or board books that display the data and key results.
  • Forecast the future, plan components of your business that aren’t yet in place and take advantage of scenario modeling, so you’re never caught off guard by what the data is telling you.

Stage 5: FP&A transformation

You did it – you've reached FP&A transformation! The stage means you have fully integrated finance technology into your function and your organization as a mission critical tool for decision making.

How to continue fostering a culture of transformation:

  • Continue to move your business forward with a clear strategy that is linked to plans and actions.
  • Use data driven insights, provided by your finance technology, to inform your decision making.
  • Continue to articulate the ROI of your solutions and integrate that into your reporting cadence.

Now that we’ve gone through each step, let’s take a look at real examples of Prophix customers who have gone through the phases of finance transformation to become super users of Financial Planning & Analysis on Prophix One, a Financial Performance Platform.

How ASRC Industrial embarked on a journey to finance transformation

Headquartered in Tempe, AZ with operations in all 50 states, ASRC Industrial has 30 operating companies.

In 2020, ASRC was in a reactive state. They had 8 different ERP systems, 600+ spreadsheets, 17K+ GL accounts, and needed a reporting structure that was suitable for $1B in business. But they faced challenges with Excel-based reporting, data consolidation, and collaboration.

Knowing that there was a better way, in 2021 they implemented Prophix, moving them into a proactive state. Now, their finance team could create financial statements and WIP schedules for their business and consolidate their general ledger data and contracts into one central version of the truth.

Moving through the stages allowed ASRC Industrial to innovate with Prophix, exploring uses for job planning, personnel planning, and capex planning. But it doesn’t stop there! Prophix is built for collaboration, and ASRC saw that potential. By 2023, the finance team was expanding reporting capabilities, continuously driving end-user adoption, and had expanded their licenses to 50 users, including analysts, accountants, controllers, C-suite management, and operating managers, to encourage the culture of data-driven decision making. Impressive, right?

Now, in 2024 and beyond, ASRC Industrial continues to strive for FP&A transformation. This year, they will expand the use of Financial Planning & Analysis to additional departments outside finance to explore PM job forecasting, safety analytics, and HR reporting.

ASRC Journey to transformation with Prophix

How USA Properties reached FP&A transformation

USA Properties has been using Prophix since 2020, starting small and scaling to bring more departments together with continued success.

Before Prophix, USA Properties had an Excel-based finance department. For example, their development job budgets, for anywhere from 15-25 jobs, would require manual updating each month. This meant incorporating actuals from their ERP, updating formulas, and circulating to 12+ people for review. This would take an entire month and always teetered on the precipice of Excel corruption errors.

Knowing there was a better way, USA Properties ran an 8-week pilot on their development job budgets in Prophix. The pilot project involved:

  • Creating a template in Prophix Financial Planning & Analysis similar to their Excel template
  • Administering the template to the same user base at the same frequency as their manual processes
  • Removing Workbook administration for ease of use
  • Automating the data feed from their ERP instead of copy/paste from reports for greater speed and accuracy
  • Eliminating lengthy review cycles or gatekeeping files since everything was accessible in Prophix, not saved on individual desktops or drives

After a successful pilot project, USA Properties extended their initiative for more innovative solutions. They moved their property management operations monthly reforecast and their corporate annual budget into Prophix. Continuing to innovate, their pipeline, Smartsheet project schedules, and construction budgets were all moved into Prophix too. Additional process refinements and data integration automation, especially with HRMS, were included.

As USA Properties continues to grow and scale their FP&A transformation, they have a lot of user-inspired improvements. This includes pipeline improvements, 10-year corporate forecasting, and corporate reporting in Prophix. Momentum is what keeps their FP&A transformation growing.

How you can embark on your finance transformation journey with Prophix One, a Financial Performance Platform

Prophix One is designed to simplify and transform processes for the Office of the CFO. One experience, one portal, and one single version of the truth—all in one platform—means that your key processes and data is all in one place. You can start small, and the platform is designed to grow and scale with you as you move through your transformation journey.

Ready to see what you can do? Learn more about Prophix One, a Financial Performance Platform.

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Prophix

Ehrgeizige Finance-Teams setzen auf Prophix, um den Fortschritt voranzutreiben und ihre beste Arbeit zu leisten. Mit Prophix One, einer Financial Performance-Plattform, können Finance-Teams die Geschwindigkeit und Genauigkeit ihrer Entscheidungsfindung verbessern und sich somit zukunftssicher positionieren.

 Vereinfachen Sie Ihre Prozesse, Reduzierung Sie Unsicherheiten und nutzen Sie das volle Potential Ihrer Daten. Erstklassige Funktionen für Planung, Budgetierung, Forecasting, Reporting und Konsolidierung sowie automatisierte KI-Insights unterstützen Sie dabei. Prophix ist ein privates Unternehmen, das von Hg Capital, einem führenden Investor im Bereich Software und Services, unterstützt wird. Mehr als 3.000 aktive Kunden auf der ganzen Welt vertrauen auf Prophix, um ihren Unternehmenserfolg zu steigern.

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