Finance improvement programs are not meeting expectations. Recent studies have yielded staggering statistics on improvement programs. Unfortunately, 7 out of 10 large scale programs fail and less than 20% of digital efforts deliver satisfactory results.
“Transformation programs are complex initiatives that can touch every aspect of an organization’s Operating Model. These initiatives must be governed with appropriate care to yield benefits sought to be achieved from the outset of the program.”
– Greg Derderian, Managing Partner AEGIS Advisory Partners, LLC.
Digital Transformation Program
Digital Transformation Performance
1) According to Forrester, in 2018, leaders set their sights on large-scale initiatives such as digital transformation and customer experience. Unfortunately, many faced the harsh reality that these strategies are hard, costly, and challenge the way leaders run their businesses. Customer experience performance was flat and more than 50% of digital transformation efforts stalled. Leaders are now planning pragmatic, surgical efforts.
2) McKinsey research shows that 70% of complex, large-scale change programs don’t reach their stated goals. Common pitfalls include:
- lack of employee engagement
- inadequate management support
- poor or nonexistent cross-functional collaboration
- lack of accountability
3) Gartner noted that 75% of ERP implementations fail. They found that failed implementations can be avoided by adopting a phased approach for deployment and avoiding these common errors:
- inadequate planning
- massive customization
- lack of change management
- unrealistic expectations (cost & time)
- improper adequate staff training
4) Finally, a recent McKinsey study found that only 16% of employees said their company’s digital transformation improved performance and are sustainable. These successful programs indicate characteristics that fall into 5 categories:
- capability building
- empowering workers
- upgrading tools
These categories suggest where and how companies can improve their chances of making digital changes to their business successful.
The bottom line: a Target Operating Model foundation must be established for today and tomorrow
The trends reshaping the Finance function have many CFOs rethinking their core operating models. The rethink is long overdue, given the significant constraints of legacy operating models relative to operational agility, cost management and maturing data and technology capabilities. Defining the outcomes and benefits expected and the constituent experience desired are essential aspects of the Target Operating Model foundation.
The redefinition of the Finance operating model leveraging the Target Operating Model foundational framework will address these factors. In addition, this can provide a rallying point for linking the many significant and separate change initiatives already underway in many organizations.
At AEGIS, our services center on the Target Operating Model framework as an improvement program guide. We help organizations meet the business demand for improved performance. We focus on success factors, identify obstacles, and propose practical solutions. As we help our clients resolve these program impediments, we leverage a straightforward, implementable strategy that makes sense for your unique organization.
Companies need direct access to the senior partners and industry leaders who have assisted similar organizations through these complicated programs. They require advisors with deep expertise and cultural sensitivity to identify and resolve key program risk factors. That is fundamental to how AEGIS approaches each initiative.
During turbulent times, organizations require stable, dependable leadership that have led major global transformations successfully. Knowing the pitfalls that endanger these initiatives and having the deep know-how to mitigate these risks are essential to realize sustained impact and program success.