How to Rethink Your Finance Operating Model for Operational Excellence

In a recent global webinar presented with BlackLine, we explored the macroeconomic trends that are driving the need to optimize your finance operating model and the strategies you can adopt to create competitive advantage and drive operational excellence.

Trend 1: Evolving business strategies

Driving productivity and cost reduction are table stakes for F&A leadership. Corporate leadership now expects CFOs to provide business insights on an almost real-time basis to ensure optimal use of capital and resources. Process optimization and automation are the keys to delivering. And this requires a digital strategy, enabled by data from both inside and outside the enterprise. Increasingly, CFOs are responsible for driving digital transformation for both internal and external stakeholders.

Trend 2: Post-pandemic workforce strategies

Changing behaviors within the workforce, combined with economic and geopolitical instability, are making it more challenging — and costly — to access and retain the highly skilled talent that is required to successfully execute these mission-critical initiatives. Millennial and Gen Z workers seek technology-enabled positions with forward-looking firms where they can make a difference. In today’s market, it’s a real challenge to access and retain talent with the needed skills for a future-ready finance operating model, making talent acquisition a high priority for strategic workforce planning.

Trend 3: Complexity of executing strategic, global initiatives

Most organizations still struggle with the successful execution of large-scale initiatives. Global initiatives, such as a cloud ERP implementation or end-to-end process optimization, require local implementation. This adds complexity as you must account for varying market and legal/compliance requirements as well as cultures, skills and time zones.

Project success hinges upon the ability to manage interconnected workstreams and blended and hybrid project teams. Highly skilled program and change management is essential to maintain leadership support while attaining project objectives. A 2023 RGP survey of 1,005 senior executives at large global companies revealed growing demand for outside consultants to not only fill a critical gap in skills but also to inject new ideas and insights.

Optimizing Your Finance Operating Model: Core Components That Drive Performance

RGP’s Finance Operating Model framework addresses all of these critical business imperatives, with a holistic approach for assessing, defining and executing changes within the operating model across six core components:

• Governance and organization design
• End-to-end process efficiency and effectiveness
• Data and data governance
• Controls integration
• Digital and automation enablement
• Organizational readiness

At the center of these core components are two emerging factors that are integral to digital transformation and critical for building a future-ready finance organization: customer and workplace behaviors and experience.

It’s by focusing on all these components together that leading organizations are able to optimize their finance operating models for operational excellence.

Governance and Organization Design

From an organizational perspective, there are many operating models that exist within finance, from decentralized to centralized structures and varying degrees in between. There are benefits and challenges associated with each approach:

• A decentralized model offers autonomy and provides more agility to align the business unit requirements to the customer’s requirements. But it can also present challenges such as a lack of process consistency, which impacts efficiency.
• A centralized model focuses on driving efficiencies and implementing standardized, end-to-end global processes. But there’s less connectivity to the business and less agility for the F&A function to respond to those requirements in the business.
• Shared services — or global business services (GBS) — is a proven model that not only reduces costs through labor arbitrage but also supports end-to-end process standardization, tailored to meet local requirements.

While some industries have moved away from using labor arbitrage simply to support basic services for the lowest cost, digital transformation and changing workplace behaviors have prompted more employers to create intellectual arbitrage by embedding highly skilled independent talent into their global workforce.

By creating global virtual teams, GBS organizations can access the right talent at the right cost without investing in physical centers.

Standardizing and Automating End-to-End Processes

Top-performing finance executives are driving their organizations to evolve and advance up the maturity curve, not only deploying technology platforms but also process design to meet the expectations of customers in the workplace. This means moving away from manual processes and adopting fully optimized end-to-end automated processes to drive process optimization and efficiency — and reallocate that time to deliver more data-driven insights and value to the business.

Less time on transactions, more time on insight

The Business Case for Transforming the Finance Operating Model

There are clear benefits for optimizing finance and accounting processes and implementing enabling technologies such as cloud ERP systems and financial close automation software. Independent benchmarks (from The Hackett Group and APQC) show top performers achieve significantly greater cost reductions across all processes — including procure to pay, order to cash, and record to report.

For example, moving from median to top performer for optimization of the record to report (R2R) process dramatically reduced costs, improved process efficiency, and shortened cycle times:

• 58% reduction in R2R cost
• 233% greater percentage of automated account reconciliations
• 40% fewer days to complete the financial close
• 33% fewer days to complete consolidated financial statements

Investing in Cloud-based Technology to Enable Process Improvement

In addition to a strong focus on process and workflow changes, there’s an appetite for greater agility from a finance and accounting perspective. This is one of the key drivers for investment in cloud-based solutions for ERP, close optimization and analytics automation — all with an emphasis on data and getting a single “source of the truth” for valuable business insights.

By investing in predictive analytics and digital automation, organizations can build a future-ready finance function that’s faster, leaner and more scalable, making it possible to deliver more value with fewer resources.

These investments in process improvement and technology also help to attract and retain top talent, including younger finance and accounting professionals who want to contribute to business value in a meaningful way — rather than spending 80% of their time working in spreadsheets and completing other tedious, mundane tasks.

Automating and Optimizing the Financial Close with BlackLine

For example, BlackLine software makes it possible to drastically expedite the close process and increase accuracy by automating paper-based, error-prone, repetitive tasks, while lowering audit fees and providing real-time visibility.
Implementing BlackLine delivered monumental impact for our global pharmaceuticals client. By optimizing close processes through standardization and automation, they were able to dramatically increase efficiency and improve controls:

• Automated 60 monthly GL reconciliations instead of processing all 350 of them manually.
• Moved low-risk and low-activity reconciliations — about 15% of the total — from monthly to quarterly, freeing up additional time for the team.
• Achieved a 20% reduction in close labor and 60% auto-certification in the first month.
• Enabled 100% visibility and oversight of SOX controls and controls testing.

Change management was a critical success factor throughout the multi-phase implementation, as strong communication and training helped ensure adoption and benefits realization.

Synchronizing Operating Models, Processes and Enabling Technologies to Create a Competitive Advantage

When assessing, analyzing, designing and executing target operating model initiatives globally, it’s critical to do so across all the components — from governance and organization design to data and technology. They are all interdependent. One thing we’ve seen in the market, for example, is that deploying automation without first standardizing processes is very costly to implement and rarely sustainable.

Investing in the technology is important, but if you don’t also invest in process improvement and in people with the skills and capabilities to optimize it, then you won’t see a return on investment.

How RGP Can Help

As a BlackLine Alliance Silver-tier and certified implementation partner for more than 15 years, our Finance Transformation team has co-delivered more than 500 BlackLine projects for over 200 clients. Our BlackLine-certified consultants not only have years of experience with the platform but are experienced practitioners in the record-to-report process. As such they provide invaluable insights to optimize the use of the platform and achieve our clients’ organizational goals.

We also provide deep expertise and capacity across enabling functions, including program and project management, change management, technology implementations and process optimization, and risk and compliance.

Reach out to see how we can help you streamline, automate or eliminate activities, standardize processes, and adopt or enhance business systems.