Why Finance Transformation Starts with Chart of Accounts

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Inside-out approach

A data-driven and contextualized approach to prevent business disruption

CFOs looking to redesign and create a flexible and singular CoA that drives financial transformation require an inside-out approach—one that is data-driven, contextualized, and aligns with the business strategy. The key considerations for this approach are:

1. Assess finance maturity

Evaluate the existing ERP systems along process, control, and technology parameters to unearth possible process and reporting bottlenecks that a new CoA design must address.

2. Propose a global CoA design

Conduct a series of cross-functional and collaborative workshops across finance functions to understand how different users leverage the CoA for their business needs. This should include areas such as budgeting, planning, consolidation, reporting, and performance tracking at both statutory and managerial level.

At this phase, a CoA structure that minimizes or eliminates the dependency on manual efforts to meet financial and management needs can be proposed.

3. Conduct value analysis

Outline the business benefits from the new segment structure, hierarchies, and rationalized segment values. The focus should be ensuring the new CoA segment design is mutually exclusive and completely exhaustive—from reporting to monitoring business performance.

Critical business objectives can be segregated to focus on key KPIs or metrics and the CoA’s visibility to them. This analysis also serves to pressure test the flexibility and scalability of the CoA structure for future readiness.

4. Develop an impact assessment

Execute a limited proof of concept of the new CoA across a single business unit to assess the amount of effort required to implement the new structure across the organization. Determine the number of ERPs, business intelligence tools, and other ancillary applications affected by the CoA change.

A review of the connections across these systems opens opportunities to retire eligible upstream and downstream systems, as well as rationalize reports. The impact assessment provides a detailed view into the implementation cost, effort, and cost saving potential for the new CoA by minimizing technology assumptions.

5. Create a roadmap for implementation

Develop an organization-specific roadmap to determine “how”, “where”, and “when” the CoA rollout should take place. Critical questions must be addressed to determine how the new CoA design will be rolled out and integrated with the existing landscape, without disrupting business operations.

Findings from the ERP maturity assessment should help evaluate where—or which system should first house the revamped CoA structure and how data should flow to and from it. The roadmap must also consider how the CoA implementation will fit in with the organization’s overall transformation journey.

A broader enterprise view is necessary to examine cross-program implications and its effects when the rollout takes place. Being sensitive to these considerations will ensure the cost saving potential and value realization is tightly aligned to the rollout strategy.

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