Lean Finance and Accounting Operations Implementation for Financial Services

Case Studies Finance Operations
A Top 5 Global Retail Investment Management Firm Finance Group

Case Study: Lean Finance and Accounting Operations Implementation for Financial Services

United States

Month End Close Process Improvement by Standardizing Knowledge Work Operations

The merger was completed a year earlier. Month end closing, however, still took almost 60 days. There were now three sets of books to manage: one each for the two merged businesses, plus an over-arching set for the combined entity. A single new financial system was on the way, but it would be a year late. Wall Street analysts wanted a progress report on the cost cutting and operational efficiency gains promised for the business by the merger. But operational efficiency declines in the finance function made accurate reporting almost impossible. The CFO decided to launch a high-speed lean process improvement effort.

Project Sponsor:

Chief Financial Officer, Managing Director

Non-technology, self-funding operational improvement implementation:

– No new technology
– End-to-end finance function
– 6-month implementation

Client Description, Project Scope, Objectives

Management wanted to quickly build a “knowledge work factory” for financial operations. They turned to The Lab’s database of non-technology improvement templates. These templates transformed finance operations within 6 months. The finance department achieved a 20 percent cost reduction and recouped 25 percent of productive capacity. Reports were standardized and consolidated. No new technology was required.

This retail investment management firm employs nearly 15,000 advisors. The overall finance function includes shared services accounting teams. These work with decentralized teams dedicated to each business line.

Implementation began with an 8-week, Phase I analysis of the finance shared services model. This initial phase delivered a self-funding, guaranteed business case and work plan that launched a 6-month Phase II implementation.

Project Objectives:

– Month end close process improvement
– Cost cutting gains
– Lean finance and accounting principles

Project Scope:

– Standard reporting rationalization
– Reporting inventory & centralization
– Strategic analysis
– One-off requests
– Capacity management

Finance Department Transformation Examples

The Lab implemented over 200 non-technology finance department process improvements. Examples:

Reduced Month End Close Complexity; Increased Analysis — Multiple finance systems
meant that costly analysts were diverted to accounting reconciliation. Lean finance and accounting principles helped to simplify the chart of accounts and standardize reconciliation methods. Dedicated reconciliation teams specialized by account category. Analysts reduced their reconciliation duties from 70 percent to less than 15 percent of their day.

Fewer, Leaner Standardized Reports — The finance function created nearly 2,000
reports every month. These were designed by the business lines. Finance management provided no oversight. Many parts of these reports were inaccurate, irrelevant and redundant. These are common problems in the finance department. Within 6 weeks, The Lab standardized report design to provide valuable insight into operational performance. Over half of all management reports were eliminated.

Reduced One-Off, Urgent Requests— — Because standard reports lacked useful
information, business line managers frequently requested one-off, supplemental analysis. These uncontrolled, “drop-everything” requests consumed almost half of finance capacity. Process standardization for submitting and reviewing requests eliminated 75 percent of these one-off requests.

Implementation Results:

  • Operating Cost 20%
  • Annual savings $23.0M
  • Capacity improvement 25%
  • Productivity 18%
  • Break even point 4 mos.
  • ROI (12 month) 6X