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Achieving Cost reduction and World Class operations in a Finance Department - is it a Paradox?

There is a need for the Finance Department to reach World Class standards and at the same time reduce costs. This calls for a transformation in the way in which Finance organization operates.

Finance Departments of most organizations are going through a significant pressure to reduce cost. In fact, they are almost one of the first casualties of cost reduction programs in large corporations. Business pressures are so high that there is an urgent requirement to reorganize funds from Indirect cost to more revenue generating functions. Unfortunately, for some reason cost of Finance department tends to be considered as overhead cost and not directly contributing to the revenue generation of the corporation. This causes huge pressure on the Chief Financial Officers (CFOs) of corporations to substantiate their contribution to the success of the organization. One of the biggest contributions of the Finance Department is in providing business value to the organization by providing financial insights. While Finance is an integral part of the running of business, there is a need to articulate the value the Finance Department is providing to the business to substantiate their existence.

Therefore there is a need for the Finance Department to reach World Class standards and at the same time reduce costs. This calls for a transformation in the way in which Finance organization operates. It demands a different operating model with a sharper business orientation. There are many organizations that have done a number of cost reduction programs by different methods of elimination of work, reorganizing their geographies and so on. However, many of them are yet to reach the desired business requirement of running World Class operations and providing the best-in-class support to the business. Some organizations are somewhere in the middle-path and a few are lost in the complete mishap of reorganizing themselves. There is a growing mistrust among internal stakeholders on the functioning of Finance Department which is leading to even more difficult situation.

Is it too much to expect a Finance Department to reduce cost at the same time run world class operations?

Will there be a transformation in the approach?

Is there a tip-off point?

Is Transformation in Finance Department a myth?

Are there enough proof points?

Is there a method to the madness?

These are a number of questions arising in the minds of CEOs, CFOs and internal stakeholders which needs to be addressed. Transformation' as a buzz word in Finance Department is stretching beyond the imagination and it is at times tending towards misleading. This is especially in the context of complex situations of having operations at businesses in-house, Shared Services Centre, outsourcing to a third party service provider and so on.

Not every method works for every organization. Method and approach varies based on the maturity of the organization. Therefore it is important to first define the current maturity of the Finance Department. Once the current state is defined and the end-state is articulated, the approach and roadmap to reach the end-state needs to be defined further. This calls for a structured and proven approach from a practitioner's perspective. There is a need to create a cross functional governance to arrive at a solution to reach the desire state of World Class operations and Cost Reduction in Finance Department. Transformation in Finance Department is not a short-term journey. It calls for a structured approach and well crafted execution plan with appropriate stakeholders' involvement.

Read this recently published Infosys thought leadership paper on how we can support CFOs in defining a transformation journey for the Finance Department.


Seriously this is a matter of fact Cost Reduction is the most challenging factor for financial department of any company. I agree with this post.

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