Ian Winham, chief financial and chief information officer of £78-billion imaging and electronics company Ricoh, talks to Edwin Smith about problems encountered in finance transformation projects – and how to overcome them
Q: Do you have experience of finance transformation projects that haven’t gone to plan and, if so, why did they go wrong?
A: It would be almost impossible for someone in my position to have gone through a career without seeing a project that’s gone wrong, either through peers in the industry or being involved in one personally. The challenges that crop up most often are a lack of strategic purpose, underestimating the scale and complexity of the activity, and not having the leadership to drive through what is an incredibly complicated task.
Q: How has your approach been influenced by what you’ve seen during your career?
A: Before we went on our journey at Ricoh, we spoke to peers and specialists, such as Oracle, and I did my own research to understand what other people had done, and how they made mistakes. That doesn’t mean you won’t make the same mistakes, but you can mitigate the risk of pitfalls.
One example is our deployment in Italy. From a simple legislative perspective, Italy has VAT processes, VAT registers and daybooks that just don’t exist in the UK. So you have to balance harmonising processes with meeting the requirements of complex local legislation. But you still want the same business processes for your customer and your internal stakeholders. There’s a real complexity in getting that right and you have to understand that up front. You really don’t want a late surprise because you’ve missed a local requirement that fundamentally forces you to redesign your process. The pain of trying to fix it afterwards is absolutely huge.
Once you’ve deployed, you’ve got to keep getting it right and revisiting those processes to make sure you keep getting value from the investment
Q: What’s the single most important thing to get right?
A: The biggest mistake is failing to understand why you’re doing the project. I think a lot of people start finance transformation or business transformation without properly grasping what their end-game is. From a Ricoh perspective, throughout the project we’ve thought about what our customer requirements are going to be, so when we come to the end of it, we’ll be in a position where our customers and internal stakeholders are going to be able to do business.
Q: You mentioned that leadership was an important part of a finance transformation project. Can you explain that?
A: From the inception of the project, I was volunteered by Ricoh’s chief executive [David Mills], so I’ve always had the mandate to drive the change agenda into our business. We’ve had two of the company’s business leaders in Europe [Mills and Winham himself], saying that this is critical to our success, how our customers interact with us and how we’re going to remain relevant. It really drives the message into the organisation that this is something our employees need to participate in. Change management needs to work on every layer, but having that support and leadership at the top is paramount.
Q: In your view, is it better to have a major one-off overhaul or carry out transformation projects gradually, by continually making small adjustments?
A: I don’t think there’s a black-and-white answer. At Ricoh we’re changing back-office service organisation, sales organisation and business intelligence processes all at the same time, so on one level we’re doing everything at once. But it’s still a journey. When you make fundamental changes on that scale, the process of re-engineering is difficult. Now we have to refine those processes, so it’s a continuous improvement exercise.
In my view, anyone who goes through a project like this and says “we’ve deployed, it’s finished”, is almost definitely wrong. Once you’ve deployed, you’ve got to keep getting it right and revisiting those processes to make sure you keep getting value from the investment. Otherwise, why bother?
Q: Some statistics suggest that 70 per cent of all finance transformation projects fail. Can you see that percentage coming down; are companies improving the way they approach these tasks?
A: I think it depends on how you measure success. Looking at our process journey, has it been as smooth as I would have liked always? No. Has it been easy? No. But has it delivered the business benefits that we wanted to deliver to our customers and our employees? The answer to that would be yes, because we’re now in a position where we can automate and standardise data collection. In the past, there was no consistency of data, definitions or processes.
But however good you are, there are always things to learn from what other people have done and the challenges they face, because the scale of these projects is often too large to get absolutely right first time.