Case Studies

Investment Management: CFO Process Maps Financial Close, AP, Treasury & Fixed Assets to Enable Automation

Fortune 500 Investment Firm
United States

Project Background

This global financial-services firm was still adjusting to the operational impact from several mergers when a new CFO was recruited from within and charged with consolidating and streamlining her new finance organizations. She was also determined to upgrade their effectiveness—everything from general-ledger operations and AP through hedging against turnover. The previous mergers had swollen the ranks of many finance departments. However, the past, pre-merger decade had also seen a relentless growth in finance department headcount to accommodate unchecked demands from the business units: more reports and more analysis. The finance-group culture required responses to all requests. And the more they delivered, the more the requests grew.  

The CFO had spent half of her career at the firm and was familiar with what she and others in senior management perceived as a problem of unbridled growth in finance-group operations and related technology investment. And there was nothing to show in the way of return on this ever-increasing spending: there were too many reports, yet too few insights. The company’s margins, earnings, and risk exposure remained unchanged from historic industry-average performance.  

Prior efforts to mandate less work—such as limits on management reports, or internal chargebacks to the business—failed quickly and created tension. The CFO was looking for a more clever and productive way to remove the root causes of this explosion in management reporting and analysis. She was familiar with The Lab’s patented standardization approach and felt that it held potential for reducing the demands from the business as well as simplifying and automating financial reporting and compliance.  

Project Overview

Project Sponsor: CFO, Managing Director

Client: Global Investment Bank

Implementation Results
  • Operating cost: Down 12%

  • Break-even point: 9 mos.

  • ROI (12 month): 4x

  • Rework activities: Down 18%

  • Number of reports: Down 40%

  • Ad hoc report requests: Down 60%

  • Standard reports inventoried: 100% 

Client Description, Project Scope, Objectives

This publicly-held, diversified financial-services provider ranks in the top ten globally for its peer group. The finance groups in the project scope included roughly 3,500 employees, mostly concentrated in a half dozen locations across North America, Europe, and Asia. These organizations supported business units that served commercial and institutional clients with financial products and services. The finance groups serving retail and consumer businesses were excluded from this initiative.  

The CFO listed several objectives. First, she wanted thorough, “inarguable” documentation of end-to-end (E2E) business processes to understand where redundancies existed, and near-term consolidation opportunities could be immediately pursued. Next, she wanted The Lab to validate the existence of additional automation opportunities. The finance group’s robotics process automation (RPA) initiative recently stalled in its discovery efforts, with only six bots operational. Finally, she wanted to investigate how standardization might begin to reduce the demand for analysis from the businesses. Based on her prior, unsuccessful experience, she was convinced that simplification must occur at the level of key performance indicators (KPIs) and the related data sources.  

Initiative Objectives:
  • Decrease reporting volume/work effort

  • Automate report data preparation

  • Reduce ad hoc report inquiries

  • Upgrade report content, insights

  • Automate administrative work (AP/AR, Recons, etc.) 

Overview: Phase I, Analysis and Discovery

The Finance Operations Standardization (FOS) Initiative began with an eight-week Phase I analysis covering several key, end-to-end business processes, including: 

  • Monthly close and reporting  
    • Management operating results (budget/actual) 
    • Financial results (external) 
  • Financial Planning and Analysis (FP&A) 
  • General Ledger (G/L) operations 
  • Accounts Payable 
  • Treasury (corporate) 
  • Internal audit 
    • Others 
    • Fixed assets 
    • Cost accounting 
    • AR/collections 

The Lab’s database of finance function standardization templates—including industry-standard KPIs, related data taxonomies, process maps, benchmarks, best practices, automation “use cases,” and more—enabled rapid, remote documentation and analysis of more than 85 percent of employee work activities (approximately two minutes each), while only requiring one hour per week of any subject matter expert’s (SME’s) time. The analysis was conducted across all global locations. 

During the Phase I analytical effort, The Lab identified over 150 activity-level improvements. Just over 50 percent of these represented non-technology standardization improvements that eliminated redundant reports, preempted ad hoc analysis requests and/or reduced avoidable errors. While the remaining improvements were technology-dependent, no new systems were required. Roughly half could be automated using the existing technology on hand once the work was standardized. The remainder were automated using robotic process automation (RPA), and small, low-code applications (e.g., automated forms, APIs, etc.). Many automations could be further augmented with artificial intelligence (AI) for simple decision-making and proactive, real-time notifications. 

Better yet, all improvements could be implemented in eight months or less, with benefits from non-technology standardization “quick wins” beginning to accrue within six weeks of the start of implementation.  

Assets and Deliverables: Analysis and Discovery, Phase I
  • 8+ major end-to-end business processes documented at nano-scale detail
  • 70+ process-standardization opportunities identified
  • 30+ automation candidates identified
  • 50+ advanced analytics and KPI use-cases identified
    • Upgraded dashboards and reports (financial, operational)
    • AI/ML driven alerts and recommendations
    • Improved insights: Operational, strategic 

Phase I: Findings, Insights  

The activity-level detail provided by The Lab’s templates and validated by the finance organization presented stunning but inarguable insights. The organization was surprised at the summary of resource allocation—where the daily efforts of finance employees were concentrated: 

Accounting operations. Over half of all work effort (55 percent) was devoted to financial close, reconciliations, general-ledger entries, accounts payable, internal audit, and more. This high proportion may be partially explained by the complexity—false precision—of the G/L: 

  • Of 38,500 G/L line items, 75 percent of total expense was concentrated in just 500 line items (one percent). 
  • Of 500 Business Unit cost departments, just ten (two percent) contained 75 percent of total BU expense. 

Management reporting and analysis. Roughly one third of finance employees’ efforts were dedicated to routinely producing management reports and responding to requests for one-off/ad hoc analysis for a total of 16,400 reports per year. With no standardization of content, report names, or file locations, duplicative reports proliferated. For example, 67 percent of all reports addressed revenue, expense, and assets. Roughly ten percent documented service levels. And less than one percent actually monitored productivity, quality, and operating capacity: the truly empowering analyses that the CFO sought to provide. 

Roughly 30 percent of the finance organization employees’ time was devoted to avoidable corrections, reconciliations, and research for the existing scope of work activity. It did not include opportunities to eliminate redundancies from the recent mergers or for simplifying the existing complex and duplicative work activity.  

Phase II: Standardization Implementation

The eight-month, self-funding Phase II implementation effort within the finance department increased productivity, compressed cycle times, improved internal customer service, and delivered cost reduction by eliminating duplicative operations. The upgrades and simplification of operational management reporting quickly launched an upward trend in business performance by revealing and reducing the major sources of margin leakage: primarily unprofitable products and revenue producers.  

Automation was employed to shore up basic support areas, such as AP, AR, and reconciliations. The bulk of the engagement focused on upgrading management reports/insights, which centered around a select few “Super KPIs” to help management proactively predict trends, preempt issues, and prescribe fixes which would impact not only finance, but the rest of the organization which the finance function served.  

Improvement goals were established by area and/or by E2E business process, and the organizations involved were free to perform the work with any mix of resources they chose: internal resources, The Lab’s resources, or others.

Improvement Examples: Finance Operations Transformation

The Lab identified more than 150 opportunities across the eight major process areas reviewed. Examples: 

Management report rationalization. Together with senior executives from both finance and the business units, The Lab helped design a “frugal footprint” of “Super KPIs” for selected critical operating points in major, end-to-end business processes throughout the enterprise. Data sources for external benchmarks were included. Standardizing these data definitions, KPIs, and reporting formats eliminated the “spaghetti mess” of manual, one-off, “spreadsheet factories” across the enterprise—without the long lead-time deployment of costly, new data warehouse technologies.  

General ledger simplification. The Lab helped the CFO launch a G/L simplification team to reduce the “long tail” of over 15,000 infrequently-used line items. Data analysis provided background for interviews with the organizational areas that “owned” these line items. Most interviewees were unable to explain the necessity of this detail; nor had they felt empowered to question its purpose. Consequently, the simplification team made rapid progress on eliminating this false precision and the related tedious reconciliation efforts.  

Automation use-cases. Using the frugal footprint of “Super KPIs” and management reports, The Lab identified 220 automation use-cases for robotics process automation (RPA), application programming interfaces (APIs), workflow automation, and easy-to-deploy, specialty applications (low-code/no-code). Whenever practical, artificial intelligence (AI) was used to help push reports to users and send notifications to employees and managers to help preempt errors, delays, and under-attainment of performance targets. Beyond the hourly savings attained via automation of required-yet-mundane AR, AP, and G/L work, the automation:  

  • Preempted errors that showed up downstream when it came time to close the books. 
  • Freed up valuable staff for other more value-add work.  
  • Reduced risk of employee turnover—a big factor when they’re saddled with repetitive chores that they hate performing.  

The Lab Makes it Easy

Organization-friendly engagement design

At The Lab, we’ve spent three decades refining every aspect of our transformation engagement model. We’ve made it easy for clients—from the C-Suite to the front line—to understand and manage the initiative:

  • Minimal use of client time: One to two hours each week, maximum.
  • Measurable benefits: Typical 12-month ROI is 3x to 5x.
  • Pre-built templates and tools: Process maps, data models, bots, and more.
  • U.S.-based, remote delivery: Nothing is ever outsourced or offshored.

Designed to reduce risk, increase success

Since 1993, The Lab has led the industry in eliminating risk for our clients. Whether your engagement involves a handful of bots or wall-to-wall transformation, we make it easy to do business with us:

  • Fixed pricing and clearly defined scope
  • Early-out checkpoints and options
  • Money-back guarantees

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