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Why is it so hard?

  • In most large organizations, Finance processes are usually designed around systems. This would be true on account of its size (headcount), origin (organic and inorganic growth) and spread (across global footprint)
  • The General ledger has been heavily burdened in most organization over time – making it less “general” by adding elements of information to aid internal MI such as product, segment etc, making the ledger THICK. This continued progression consumes expensive resources (people, process, technology) and drives inefficiency into the GL close process
  • This is further exacerbated when systems would differ in its make (eg: diff types of GL), or model (diff versions of the same system) across 3 categories – Input systems, data aggregation systems and output/reporting systems
  • The most commonly tapped response to this start point has been to centralize bespoke processes under a single roof – to capitalize on cost arbitrage, as well as pave way to develop standard processes
  • Frequent changes, driven by external stakeholders (regulatory ask) and internal stakeholders (shape of organizational structure and underlying businesses and products) makes it hard to maintain a standard process, despite application of conventional methods such as LSS
    Over the last 5 years, there has been an explosion of technology solutions, carrying a great deal of optimism to solve for organizational efficiency through tech influence
  • Most of these tools have been developed, keeping in mind core operational activities (transactional and repetitive tasks) that differs from core Finance activities that are developed primarily through End User Computing.
  • Through test and learn methods, organizations have come to terms with the reality of what these platforms can/cannot do, the readiness of large organizational to absorb these tools, as well as the smartest way to remain invested in the journey, while tailoring down expectations from such investments.
  • The long term answer to the efficiency problem will be to house all financial and non-financial data points into a single platform or data lake to aid internal and external reporting. This will declutter the General ledger into a THIN ledger that would not be overburdened, paving way for a faster close. However, getting to that state is an iterative approach, that would either be site led or process led.
  • Consequently, mature organizations have developed a bridge strategy that aims to sharpen its own view on usage of technology to address specific components of work, while alongside, educating itself and driving culture change.
  • In a nutshell, banks are shopping to test and adopt a suite of complimentary tools to drive and deliver near term saves, alter hiring plans, and redefine critical learning to include a large section on technology, and its usage in finance. Capability of such platforms range from addressing data aggregation challenges, to enhancing MI insight.