One of the new buzz phrases we keep hearing in business is ‘This company needs to perform a transformation’ or ‘you need to do a transformation’. This happens when an EMT / Board meet and agree they want to reduce costs in a department drastically (maybe to an industry benchmark) and reduce cost to 2% or Turnover or whatever.This cannot be achieved by natural wastage, trimming any fat or even with a few cuts into the muscle – it needs transformation.

So what really is transformation ? Is it just emperors new cloths for business process re-engineering … Yes they are similar, but they are different, BPR is a much more documented structured approach whereas Transformation is faster, more dynamic and by its nature less planned. It is designed to respond to a fast moving world where you can save money if you can move quickly before the competitive advantage is eroded, whether that is process, technology, tax or location.

Why do we need Transformations …. No different to BPR the world recognises that processes grow and evolve inefficiently and occasionally a reboot is required to reset what we actually need.

Lets use this example of evolution – Ostriches still have wings, but don’t fly. Transformation is about looking at your processes and fixing those evolutionary wrong turns or double backs and ensuring you are not still carrying the wings that you no longer need. In most of our processes we still have the metaphorical wings from years or evolution. We think they are still needed.

Lets look at a quick review of the last 150 years of finance processes. Historically accountants or bookkeepers were literate (when others weren’t) and most businesses used them as the company records keepers (for finance and for everything written). Either in ledgers or administration, most of the work that involved writing happened in finance like filling out Purchase orders or writing out invoices. This trend then continues through the (1880-1920) pre computerised age. From the 1920s finance expands in centralised teams of clerical staff, good with numbers – like a production lines. Therefore any task that is repetitive, clerical and numeric becomes a finance task or overseen by finance. Then we get computers – suddenly we copy all our manual records to computer records. In the rush to computerise in the 1970s and 1980s we literally set up systems that work the exactly the same as the manual ones. At the same time most computers are mainframes in one location so a centralised accounts departments make sense more than ever. Now post 2010 we live in a word with almost limitless computing power to conduct analysis, global connectivity to be on line everywhere and businesses software that empowers each user. (This is a very quick summary and I could go into a lot more detail – but I will save you)

However our processes have not caught up. We think of tasks as finance tasks because they always have been done in finance (in our memory’s). But the truth is finance is only what finance is today because of literacy and centralised mainframe computers and we have been trained to think that way. However none of which are a limitations today – we have the opportunity to take advantage of these and transform !

So the question still stands just as Ostriches still have wings, but don’t fly. Finance departments still match purchase orders, even through they don’t actually create them any more. I know, right now, you are disagreeing and justifying the status quo in your head …. I know because I was the same once.

s usual what I wanted to write morphs and it is too big to cover in just one session …. Therefore I will write another post on “How to cut off your wings without just getting rid of the feathers” or something similar next week!