Current Location. Destination. That’s it. That is all you need to provide your favorite mapping app for it to create a route. No current location? You will not know where to begin or how long it will take to get there. No destination? You will drive aimlessly with no end in sight. Your finance transformation or business process improvement is no different. We all recognize the need to determine our future state. But you also need to spend time understanding your current state so you can create a road map detailing how you will achieve that future state. How will you attain your long-term vision if you don’t know where you are starting from?
Oftentimes, we simply jump directly to our desired or future state process discussions and then believe we can move straight into implementing those changes. Who cares about the current state, right? I often hear, “Brian, we don’t need to spend time on our current state process. We already know what it is.” Really? Are you sure? I had myself convinced of that same thing…right until I hit my first roadblock.
I was sure that I knew what each group did during the forecast process. After all, I created many of the schedules and reports that we used and personally trained the teams on every step. While discussing why it took so long to create one of those data input schedules, I uncovered that the functional group took the source data and “massaged” it a bit (deleted rows and columns, inserted and renamed items, etc) to put it in the format they were used to seeing. Then, they sent the file to someone on my team who simply undid much of the previous work and changed it back so it fit our process! We had no idea that the format we preferred was actually the initial extract of the source data. I happened to walk by someone’s desk at just the right time and saw something on their computer screen. After a few questions, we significantly reduced the time required to generate the same sheet.
Don’t underestimate the importance of spending adequate time mapping out and truly understanding your current state process. Don’t fool yourself into thinking that “the process” is being followed 100% of the time. Make sure to uncover those pesky little shortcuts that people take to circumvent the process. Uncover the waste in your current process and then create a future state that eliminates it. I can ensure you that time spent upfront can payback multi-fold during your transformation.
Of course, you could attempt to implement your desired future state without first understanding your starting point. If you do, call me after you are over budget and too dizzy to continue. I’ll be happy to help and I promise to do my best not to say, “I told you so.”
Read more blog posts in our FP&A Done Right series:
FP&A Done Right: The Importance of Naming Conventions – Names Really Can Hurt
FP&A Done Right: The Flexibility of Today’s FP&A Systems is Both a Blessing and a Curse
FP&A Done Right: Finance as the Conductor
FP&A Done Right: You Can’t “System” Your Way out of This
