In Part 2 of this series, we described why you need a culture of analytics and what the end state should look like. Finance must move from explaining what happened, where it happened, and why it happened to what might happen and how to make it happen. However, many people can describe the end goal of something without necessarily paving the road ahead to get there. That’s especially true when we talk about building a new culture. What are the elements of a culture, and how can your organization work differently in the future?
Mindset, people, process, and systems
In broad terms, the culture of an organization is anchored in the following four elements.
These elements in combination are what makes an organization work in an unconsciously competent way. Study each of the parts, and you’ll figure out what it’s like to work in the company. For example, the mindset might be entrepreneurial, the people impatient go-doers, processes nonexistent, and systems constantly evolving as the company grows – the likely culture of a startup. What does the culture look like in most finance organizations in 2018?
- Mindset: Controlling company operations as the commentator of what, where, and why things happen.
- People: Highly analytical and data-driven people who struggle to communicate well and build relationships.
- Processes: Heavy and cumbersome processes to fit compliance with rules and regulations; lengthy budgeting processes to satisfy the controlling mindset.
- Systems: Typically limited to Excel coupled with other likely outdated and scattered tools, as various applications have been built on top of an ERP system that was implemented before 2010.
To build an analytics culture, you need to work with all parts of the culture to make a sustainable change. Here’s how.
- Mindset: To change the mindset of your team, you need to create a joint vision for the future. They need to understand why it’s important to move on from a controlling mindset and what positive outcomes will result. You’ll likely need to make this visible in a framework demonstrating concretely what each person must do differently every day. That will help drive behavioral change, which, with reinforcement over time, will create a new mindset in your finance function. You’ll also need to allocate time in people’s day for change. Asking for change while requiring delivery of all current tasks makes it impossible for them to pivot toward sustainable change.
- People: You need to develop your people. If you want them to do something different, they need to learn new skills or improve their existing skills. Help them understand that systems will do a lot more of the analytical processing in the future; hence, rather than doing the analysis, they will be interpreting the analysis and creating insights. Also, you need to match skills. A person wedded to spreadsheets will often not adopt a new analytical tool.
- Processes: Your processes need a complete overhaul to become much more agile. You need to embrace failing fast to succeed sooner. Spending five months on completing your budget or 10 working days on your monthly reporting simply doesn’t cut it anymore. You should probably design new processes from scratch to deliver insights much faster. Ideally, you need to make real-time month-end processes a non-issue. In addition, let the system create your forecast to drastically cut time on budgeting and make room for the important discussions about business strategy and making choices. In the brave new world of analytical decision-making, data and decision-governance processes will become a small part of everyone’s job every day.
- Systems: You likely cannot make a real change without getting new analytical systems. Spreadsheets will not suffice for making sophisticated analytics with large, multidimensional data sets. However, it’s important to understand that these new cloud-based analytical tools are not the monstrous ERP projects you know. Today, ERP systems come with a light core, which essentially works as a database that you build applications on top of. That gives you a lot more flexibility and will enable you to go digital at a low cost. This way, you can try out many different applications to learn what works best.
Changing a culture takes time, but it need not be expensive nor difficult. Take a step-wise, incremental approach. Starting small and building credibility and capability can be done in a few months. Each quarter, make more changes and, over a two- or three-year journey, a culture of data-driven decisions with analytics will cover all areas of the company. You’ll face many obstacles on the way, but nothing that hasn’t been faced or routinely resolved before.
It’s time to get started now
Since this will be a long journey, you’d better get started now. First, map out your current state along the lines of mindset, people, process, and systems. Then create a gap analysis to the desired future state. Finally, create a plan for how to close the gap. This is standard change management, so don’t get overwhelmed by the work ahead of you.
What do you find to be most difficult about changing the culture of your finance function? Would it be helpful to have a clear framework for how to make the change? Learn how SAP can help you transform financial management and culture to become a best-run business.