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

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 three major objectives:

1. 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.

2. Next, she wanted The Lab to validate the existence of additional automation opportunities.

The finance group’s robotic process automation (RPA) initiative recently stalled in its discovery efforts, with only six bots operational.

3. 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.

Overview: Phase I, Analysis and Discovery

The Finance Operations Standardization (FOS) Initiative began with an eight-week Phase I analysis across all global locations, covering major, end-to-end business processes, including:

The Lab deployed our proprietary finance function standardization templates, including

• Industry standard KPIs

• Related data taxonomies

• Business process maps

• Operations benchmarks

• Best practices

• Automation “use cases”

• And more

These 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

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.

All of these improvements, moreover, could be implemented in eight months or less.

Better yet, benefits from non-technology standardization “quick wins” began to accrue within six weeks of the start of implementation. These quick wins built momentum and helped to fund further improvements throughout the finance organization.

Findings: Phase I, Analysis and Discovery

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 the most routine work, e.g.,

• 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:

Two thirds 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 finance employees’ time was devoted to avoidable corrections, reconciliations, and research just to complete daily work activities. Finance teams had no time left to eliminate redundancies from the recent mergers or simplify their existing complex and duplicative tasks.

Overview: Phase II, 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. The Lab maintains a three-tiered service-offering structure (plus ongoing post-implementation support) to make this approach as flexible and sustainable as possible for clients:

Finance Improvement Examples: Phase II, Implementation

The Lab identified more than 150 opportunities across the eight major process areas reviewed. Related improvements were organized into major implementation work streams, including the three examples below.

Post-Implementation Support, Sustainability, and Automation

The Lab provided hassle-free, post-implementation hourly sustainability support for this client to maintain automations, process standardization, and operational data analytics models implemented during the Phase II engagement.

If the client’s team was not up-skilled enough to perform any needed automation updates, they leaned on The Lab for Tier 3-level support. If analytics dashboards required additional views or data connected, The Lab’s team was a simple phone call away.

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

• Pre-project feasibility/value assessments at nominal cost

• Early-out checkpoints and options

• Money-back guarantees

Book Your Demo

The best way to learn about The Lab’s patented Knowledge Work Standardization® approach is to book your free, no-obligation 30-minute screen-sharing demo. And you’ll get all your questions answered by our friendly experts. Simply call (201) 526-1200 or email info@thelabconsulting.com to book your demo today!

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