The 4 Signs of Successful Finance Transformation: Advice from PwC

This article contains key takeaways from our webinar ‘People, Process & Technology: Building the Future of Global Financial Reporting’ and an interview conducted with Tony Price, Partner at PwC UK during Amplify EMEA 2022.

“Demands are coming in from all directions, and CFOs are worried.”

According to Tony Price, Partner at PwC UK, finance departments of major organisations are facing a perfect storm, as market volatility and staff shortages combine with an increase in governance and reporting requirements.

To arm themselves, organisations are embracing change. According to Tony, “most large, complex companies are either about to undergo, currently undergoing, or have recently completed, a major finance transformation.”

But for any company, solving complex issues is about more than just restructuring departments or adopting a new tool. The benefits of technology need to be paired with a close understanding of its people and processes to be effective. 

To understand how this should be done, we spoke to two finance transformation leaders at PwC:  Andy Williams, Tax Technology Alliances & Platforms and Jonathan Lloyd, Director of Compliance Services and Accounting Services. According to the experts, what are the signs of a successful major finance transformation? 

1. It helps establish a shared reporting language 

Tony Price’s firm belief is that “the cloud changes everything; it has to be cloud first”. 

For global organisations, using the right tools to bring team members closer together, facilitate communication and improve collaboration is essential. Between the IFRS (International Financial Reporting Standards), ESEF requirements and the mounting pressures of ESG reporting, standardisation is becoming increasingly imposed across the board. 

According to Jonathan Lloyd, companies should also be looking at language and messaging. “Consistency around messaging is becoming more important. Employees need to think about how to use standardised language in their reports around the globe,” he says. 

Using the same language across teams and delivering analysis through a shared lens can bring competitive advantage by showcasing solid strategy, values and governance to investors. The expectation to have an overarching narrative across all financial and ESG reports that remains consistent throughout departments, countries and entities should remain firmly front of mind when implementing new systems and processes.  

2. It values local expertise

For Jonathan, a common frustration finance professionals face when adopting new technology and RPA (robotic process automation) initiatives is contending with the belief that all statutory reports should now be done at the ‘push of a button’. 

“There are ways to automate much of the process, but it’s also a very complex job which requires knowledge, experience and judgement, as well as a lot of human interaction and collaboration. It also requires a significant amount of unstructured data, which can’t be processed by computers,” he explains. 

The complexity and nuance of financial reporting should not be underestimated. In an ever-changing regulatory landscape, having individuals who can pair technical expertise—such as an understanding of local accounting standards and IFRS—with data analytics skills and big-picture understanding is crucial. Big changes like restructuring workflow or automating tasks can be revolutionary, but only if they are designed to strengthen, not replace, the role of employee expertise. 

3. It was designed with modern audit requirements in mind

As Jonathan points out, the relationship between reporting teams and external auditors has seen a significant change in recent years: “Five or ten years ago, a lot of companies were relying on auditors to review, repair or even prepare their accounts. Auditor independence rules have now started to prevent that, so companies are having to look at different ways to supplement their knowledge and meet requirements.”

The process of preparing for external audits is also becoming more burdensome:

“Auditors are requiring more information, which means it’s taking more time and effort to prepare for the audit. When making changes to their process, companies need to think about how they support the provision of data to their auditors and how they help them review the financial statements.” 

These changes should be kept firmly in mind when transforming finance departments. Having access in real time to key individuals who can provide knowledge and guidance, and adopting tools that prioritise traceability throughout the report building process, can help meet increased audit requirements. 

4. It transforms the way knowledge and skills are sourced

In the past, companies had two options: do a task in-house, or outsource it. Traditionally, finance departments looking to outsource parts of their report building would have little say in how that work was done: “It was a case of tossing your data over a wall, and they’d throw back your statutory accounts,” remembers Tony. 

More recently, pressures including the pandemic, inflation rates and staffing issues have led companies to accelerate their digitalisation and cost optimisation initiatives. A popular solution for finance and accounting functions has been to leverage Shared Service Centres or “Centres of Excellence”: hubs of experts whose job is to provide relevant technical knowledge and strategic guidance throughout the reporting process, while ensuring standardisation across the organisation. 

The experts at PwC encourage organisations to consider implementing a hybrid model for sourcing specialist skills—an approach also known as ‘co-sourcing’. Andy Williams explains: 

“There are some tasks you will always do in-house and others you will always outsource. But for those tasks in the middle, it’s about being able to turn that dial up or down as necessary. Technology can provide that flexibility. So if a company has a resource or skill set one year but not the next, they can use their strengths when they’re available and outsource the work when they’re not.” 

As Jonathan points out, this opens up the option to source skills both internally and externally, even when working on the same project. “The ability to do some of the work in-house alongside some outsourcing, all while keeping everything standardised, is a significant change. It’s moving the dial forward in a way we haven’t seen in ten or fifteen years.” 

Financial transformation is an ongoing process

Ultimately, as digitalisation continues to gain pace, companies must consider their people, their processes and their technology not as three separate pillars, but as part of a single, agile entity. 

As Andy concludes, these changes have to be made in a way that continually takes all three of these elements into consideration, all while acknowledging and addressing the key concerns of team members. 

“When it comes to adopting technology, the train has left the station and is gathering pace, but it’s important to acknowledge that not everyone is comfortable with that. Solutions are sometimes imposed upon teams, who are then obliged to make them work. It needs to be more than just switching on and hoping for the best. A change management process needs to be undertaken.”