Adam: Hello and welcome to PwC Canada's newest podcast, Finance in 15, a series that explores finance transformation and what it means for leaders in the finance function. My name is Adam Boutros and I'm your host.
Adam: Hello and welcome. Joining me today are PwC Partners, Marino Fremis and Kevin Ng. They're here to discuss the process pillar of finance transformation. Welcome, Marino and Kevin. Thanks for both being here today.
Marino: Thanks, Adam Good to see you.
Kevin: Thanks Adam I'm really happy to be here. Looking forward to this.
Adam: To start things off, how about a quick background on each of your roles and what you do when you're working with finance leaders?
Marino: Certainly Adam. It's Marino Fremis. I'm our GTA Finance Transformation Leader, and as you can imagine. I also support clients all across the province and nationally as needed. The Finance Transformation Practice is one of the driving forces behind the future of finance, helping our clients optimize their processes and upskill their people and structures. I personally have the pleasure to work with our finance leaders to fix problems both large and small, from very focused single process transformations to much more complex structural and technology changes that impact all of finance and the entire business. Basically, Adam, if you could ever attach the words exciting and innovative to finance, this is where you do it.
Adam: That's awesome. All right, Kevin.
Kevin: Thanks Adam. So Kevin Ng. I am the Canadian leader of our tax reporting and strategy practice, I sort of look at our practices as really three foundations or pillars to a client's tax operating model being tax process efficiency, global compliance and managed services. When we work with our finance leaders, we really take a top down, bottom up approach. What that really means is that from a top down perspective, we address our leaders' concerns with regard to the tax operating model. How does that work? Is it insourced, outsourced? From a bottom up perspective? What we're trying to do is identify processes, specific processes within the tax department and look for those processes that are really very highly manual or time consuming. And what we try to do is bring about change to those processes and introduce technology to make them more efficient where possible.
Adam: Excellent. OK, let's get a little deeper. So a lot of people focus on technology solutions like ERPs when they think about improving the finance function and finance transformation. But I would argue processes are just as important, maybe even more, when looking at the most successful finance transformations. Marino, can you expand on that? Maybe give some examples of the types of processes we're talking about?
Marino: The surface of Adam is very simple. Makes sense what you just said, right? The best way to get value out of technology investments like an ERP is really to use it as an opportunity, not just an opportunity sorry to create a more efficient and agile organization, which is table stakes in my opinion. Right. But also one is more service and business oriented. This means that you want to stay away from things like lifting and shifting the way you exist, that you're currently doing things onto that new system, which is more of an outside in approach right? And move to more of an inside out one that really takes a fresh look at the repetitive and manual processes that are holding you back. An important goal of finance transformation is to free up capacity for more strategic insights driven roles. So automation is one way to do this, and it's important to simplify the way you do things first, since automation can't fix bad processes. Right. Another way is to really understand what your processes and are and where they fit on your finance value stream. The path of transformation is going to be different depending on the process being transformed. Think payables versus budgeting. Now conceptually simple, but figuring out how the processes or better yet the services are going to fit together as a secret sauce when it comes to process transformation. Now, where we've been successful with our clients is when we've been able to work with them, define the transformation of their process and services at three distinct but connected ways: transactional processes such as payables, compliance or technical processes such as closing the books and insight processes such as forecasting. And when you do it this way, you tail the transformation to the service need based on the technology being used to deliver it, not the service itself or the technology itself.
Adam: Yeah, really like those concepts, Marino. It's it's all about the ordering and getting things right. We've seen so many projects where everybody just wants to jump in and get started. But if you're not really defining the processes that you want to tackle and looking at making them more efficient before getting into the automations, then you're probably not doing things the right way. So, Kevin, what's your take on this? Some processes that you see organizations targeting how they're doing it?
Kevin: So the interesting thing here is that our typical tax department really focuses on the deliverable, the end result, and not- a lot of our our clients don't necessarily even appreciate what their processes might be. So in line with our top down, bottom up approach, what we try to do is really go in and have a very, very wide ranging discussions with no real agenda. So through those collaborative discussions, what we end up doing is we identify areas such as data gathering, which has almost consistently shown that it's very mundane and it's very labor intensive. And then there's other areas where our clients have discovered that they don't necessarily have the data needed to provide for proper governance. And that's where we look at where technology might come into play.
Adam: So we've covered a couple of processes now. Marino, how about how can organizations figure out how and where to get started amongst all of this?
Marino: Yeah, that's an excellent question, Adam, because processes in and of themselves don't do work right. You need the the operating model, the organization to deliver it. And that's where we like to focus, and at least conceptually, at the beginning, each area of the finance function needs to take a close look at their operating model. But with that service delivery mindset right, we got to stop thinking about processes as a transaction, an event, but as more of a service being provided. So when you look at it that way, from that service delivery mindset, it becomes a question of like, you know, how is the rest of the organization seeing us? What services are we providing? What technologies are we using? How are the services being provided? How are these services being managed? You know, if you understand that, then you can flip it and develop a picture of what you want to be, almost a bit of a North star. If you if you want to put it that way, flip it into what services do we want to provide? What capabilities, skills and technologies do we need to do that? What should be self-service? What should come from a service provider? What do we want to make our high touch gold star service? This will help you figure out whether you have the right processes to deliver those services in place and the magnitude of change needed. That's very important to understand that change perspective, that change piece. Now, doing an activity analysis or some kind of activity analysis can give you a very strong idea of what staff are spending their time on and how processes are working, adding some value stream analysis sophistication on top of that will allow you to more quickly define a future service delivery model and transformation roadmap to execute that.
Adam: Yeah, lots of great, thoughtful questions that organizations really need to ask themselves as they as they get into the process. And I think, you know, we've heard it from you already. And we've touched on in a few of our other podcasts, the change management aspect of all of this. Getting buy in and broad input across the organization just cannot understand how important that is to the whole process. So let's bring it to life. Kevin, how about a real example of a project that you've worked on recently?
Kevin: I'd be happy to Adam. Within our asset management function, we actually went through a process analysis and a review of exactly how we do something, a particular deliverable that we present to our clients every year. And it's within the mutual fund industry. What we did there was that, as some of our audience may be aware, the mutual fund industry each and every year has to do a year in taxable income calculation. We knew that there was a massive ask of our of our human capital to stay primarily late at night, around Christmas time to get this stuff done so that it would be published in time. And so we knew that we had to do something different. How do we get the data? What format do we get the data from? How does it differ by client? How do we ingest that data into the PwC world? Standardize it, change it, push it through a calculator of sorts, an automated calculator of sorts, and then also create a new communication platform with our client. By going through that full process, we were actually able to identify certain parts of the process or steps within the process that were actually redundant. We didn't even realize this. Our staff were just doing it because that's how they were trained to do it. Rethinking that, processing, leveraging the technology that we have, which was really a Microsoft based tool, and then also looking at the technology that provided for easier communication with our clients. Instead of emailing back and forth, we actually created a communication platform. So all those things led to a much more efficient process. And I would say that and I'm proud to say that, you know, at one point in time, I think that we in the FS group had a had a poor reputation for staff to want to come into our group because they know they'd be working late around Christmas. That's not the case anymore. So that's something I'm really happy about.
Marino: I love the journey you went through. And what I want to point out, what's jumping into my head here Adam, is that what you're talking about is not an isolated event. There's a structure to these things, but it's that rethinking process, the evolution process. You know, there's a lot of similarities between successful projects, but there's much of the same. The method, the approach is the same. But the ability to think through and navigate.
Adam: I think a lot of times, too, when we're dealing with companies, we can get to the state of figuring out the processes, figuring out the technology. But then you actually have to go through the project. And Kevin, you've held some senior roles within organizations in your past before becoming a partner at PwC. Maybe you can share some examples, practical keys to success for senior leaders as they're thinking about embarking on their transformation journey.
Kevin: You know, I had mentioned earlier that tax departments generally focus on the end result, the deliverable, not necessarily the process, and having been in industry and having run a tax department, I can attest to that mindset. But I think that in today's world, you pick up any newspaper, you get on any media outlet, whatever it might be. There's a there's a great discussion about data and what data can actually do to help grow a business. We don't typically think of the tax department in that way. And there's a very simple reason for it, which is that we're so focused on getting the deliverable out the door. We don't take the time to rethink the process and think about how we might be able to redirect or redirect human resources to highest and best use, which would be obviously a much better result. I think that from my perspective, you know, tax departments have typically been thought of as back office. And the reason being is that we focus on getting a tax return out, getting a tax provision out. What I've realized, especially with having gone through our internal process of changing our asset and asset management process, I really, truly realized that data and how we can assess it from a tax perspective, whether it's identifying certain tax points of view or assessing certain types of risks that we don't otherwise typically think of? Using that data to to bring those to light is really important. But the only way that we're going to be able to do that is that we change our processes, eliminate redundancies and leverage technology to make the human resources available to do that type of work.
Adam: Throughout this podcast series, we've talked a lot about how the three Ps, people process and performance are interconnected. So, Marino, can you talk about how process connects to the impacts on people and performance?
Marino: So let's talk about performance. The moment we work to optimize those inside processes like reporting, forecasting, budgeting, we naturally start to discuss and influence not just the efficiency of the process, but the effectiveness of it. So really simple if while we're working to get faster reports, we can also work to get better ones. And that's how we impact that whole performance agenda. Think about do I need it? Do I need the data? How should we structure the data? How do we make that data more relevant and faster? On people, certainly transformations are executed by your people, not by spreadsheets. So when you change processes, you shouldn't just change the tool people use, which is unfortunately what sometimes happens. But you should also focus on what is the way that our people are working. When you do that, you'll find that there was a bunch of latent talent you probably were not using and also discover that there's a lot of potential talent that you aren't upskilling. We've seen this countless times, but only when you bring them into that process transformation conversation. Think about how it could change the way they work, not just what they do.
Adam: Yeah, what a great way to end things off talking about the organization wide impact that something like this can have and really just making your organization a better, more exciting place to work. So thanks, Marino. Thanks, Kevin. Some great insights that you shared today.
Marino: Thanks, Adam.
Kevin: Was a pleasure. Thank you.
Adam: I hope our discussion has given you some good ideas about how to approach process improvement in your finance function or your tax function. I know a lot of organizations are looking at technology solutions and upgrades right now. So it's a very important time to be thinking along these lines.
Adam: Visit our website at www.pwc.com/CA/FiannceIn15 to learn more about the opportunities ahead for finance leaders. That's www.pwc.com/CA/FinanceIn15. If you enjoyed today's episode, please let us know by leaving a review and reading us on Apple Podcasts. I'm Adam Boutros and this is the Finance in 15 podcast. This podcast has been produced by PricewaterhouseCoopers LLP and is for informational purposes only. Contents discussed are for general guidance on matters of interest and should not be taken as professional legal business or investment advice.
