Purpose-led governance – elevate your game

84% of digital transformation projects don’t reach their stated goals.¹ It’s a jaw-dropping statistic that can make your heart sink, especially if you are about to embark or are already in your transformation journey. There is a myriad of causes that hold programs back from achieving their objectives. We will explore how purpose-led governance in digital transformation can elevate your game and keep you “locked-in” on your north star.

According to the Project Management Institute, “governance is the framework, functions and processes that guide activities in project, program and portfolio management.”² At Deloitte, we also believe that the main objective of governance is to produce sustainable value. Its mission is to deliver meaningful outcomes for Finance, IT, and their business partners. Putting in a new finance platform can be expensive, complicated, and have far reaching impacts to stakeholders companywide.

Purpose-driven governance can help accelerate our clients’ finance modernization journeys. “Accelerates” as in helping clients transform better, faster, stronger—while preserving committed benefits. It’s the fuel that will likely boost and sustain a successful finance modernization program. This year, we surveyed³ Deloitte leaders who helped clients successfully transform the Finance function using new finance systems and improved processes. Per survey responses, when it pertained to overseeing a finance technology enabled transformation, there were key areas for improvement. We will focus on three—accountability with decision making, administrative workflows, and the plan for managing change.

What are organizations struggling with the most

Purpose-led governance

Leaders should focus on developing a purpose-led governance framework that clearly defines the desired outcomes and the journey to get there. We want to spotlight several high-performing behaviors in program governance that make finance transformation successful.

Build the right team to manage change

As Phil Jackson said, “The strength of the team is each individual member. The strength of each member is the team.” The success of your governance team is a function of the extent to which it manages risk, challenges status quo, and embraces transformation.

The Steering Committee should promote thinking beyond existing frameworks and encourage out-of-the-box ideas. It should encourage constructive dialogue with businesses, challenge non-configurable software customizations, and deviate from the standardized solution only if proven necessary. Thus, the Committee should include the CFO, CIO, and their delegates with high visibility and expertise in technology and finance modernization programs. According to the survey, nearly 67% of the programs were actively championed by the CFO. And close to 40% were co-championed by both CFO and CIO—a statistic we would prefer being higher.³

Similarly, the Design Authority Committees should include a diverse set of individuals who can enable your organization’s ability to drive sustained change. Diverse representation from impacted businesses, different product lines, corporate departments (e.g., HR, Audit, Legal, Risk), super user groups, software vendors, and system implementors is key. Multi-functional and inter-departmental perspectives are typically backed by rich on-the-ground experience and thus, can build a strong case for challenging the status quo. It is imperative that these committees embody professionals who can envision and re-imagine new ways of working, adopting greater standardization than customization. This is relevant for cloud finance technologies, which require a paradigm shift to “Why can’t the out-of-the-box capabilities meet your needs?” and often needs hard decisions by business users.

At Deloitte, we believe a periodic evaluation of committee members and their role as advisers is crucial to enabling a fit-for-purpose governance model.

Your gauge: Drive accountability via key performance indicators

As transformation programs are usually complex with involvement from diverse teams, lines of accountability may often be obscured. In addition to the traditional RACI construct (identifying who is responsible, accountable, contributing, or informed), we believe that delegating ownership of outcome-oriented KPIs to project sponsors and workstream leads can provide clarity of expectations, decision-making authority, and set accountability. Organizations often establish KPIs which are inclined towards addressing qualitative questions which may leave room for ambiguity. Hence, it is critical that the program vision is broken down into qualitative and more importantly, quantifiable measures. For example, if a prototype is required by the end of the month, project leads can measure and monitor progress based on the number of rulesets that must be configured. KPIs should be grouped and have a single owner (a “one-hand-to-shake”) per set. It’s best to avoid naming multiple owners.

Outcome-oriented KPIs can serve as a single source of truth in monitoring progress towards milestones and provide early signals for impending risks. Outcome-oriented KPIs represent, for example, a measure of what and when key decisions, working software, and outputs are needed. Instead of relying solely on the intel provided by project leads, governance members are equipped to draw their own observations, risks, and questions based on richer data. To illustrate this matter, please see exhibit 2.

Early identification of risks can provide a longer runway to proactively engage and respond instead of waiting until the eleventh hour. Governance committees can mitigate risk, for example, by committing subject matter experts or reprioritizing enterprisewide efforts that conflict with a particular program.

In closing…

There is a constellation of factors that can make finance technology transformations a resounding success or a failure. We believe a purpose-led governance framework is paramount to achieving sustainable, meaningful value. This can be achieved by setting up your gauge (via KPIs) to detect early signs of risks, recruiting the right governance members, and adapting your model to the situation-at-hand (recover vs. thrive). For those already far along on their journey, this often requires deep reflection and introspection to assess what needs to change. For those that are just beginning, what we have covered are the parts of the transformation engine that will accelerate and amplify value. At Deloitte, we’re ready to help you reach your destination no matter where you are in your journey.

Endnotes

¹ Phil Lewis, “Where Businesses Go Wrong With Digital Transformation”, Forbes, July 31, 2019
² Project Management Institute, Governance
³ Deloitte’s internal finance transformation survey, 2022; Deloitte analysis

Get in touch

		Raj Chabra Managing director Deloitte Consulting LLP rchhabra@deloitte.com			Fahad Salah-Ud-Din Principal Deloitte Consulting LLP fsalahuddin@deloitte.com
		Brian Moon Senior manager Deloitte Consulting LLP bmoon@deloitte.com			Smriti Sachdeva Manager Deloitte Consulting LLP smsachdeva@deloitte.com