The challenge of upgrading finance systems - Direct Line, Skanska UK and Investec share insights

Profile picture for user Madeline Bennett By Madeline Bennett February 24, 2020
Summary:
The firms share their lessons learned from upgrading their Oracle financial systems - with change management being key.

Image of a laptop covered in finance post it notes

Overhauling the finance system at any organization is never going to be a quick and easy process. At Oracle OpenWorld in London this month, companies from the financial services and construction sectors shared their experiences of upgrading their finance systems and tips for getting it right the first time round, after learning the hard way.

While the three businesses - Direct Line Group, Skanska UK and Investec Asset Management – have all been updating their core ERP and financial applications – the catalyst for doing so differed.

For Direct Line Group, there was a need to replace its on-premise, end-of-life Oracle E-Business Suite with a cloud-based, modern system. The Oracle project was part of a business case for a total finance transformation, including technology and processes, as well as complying with new regulations.

The intention was to become more nimble and cost-efficient, and gain a technical edge. Michael Wing, Finance Transformation Director at Direct Line Group (DLG), explained:

Why financial transformation was so important, we have a lot of end of life tech in finance which is expensive, and definitely isn’t giving us the technical edge. We’re an expensive function as we have a lot of manual processes, and also in the finance function we find it difficult to support the change agenda within the company.

For Skansa UK, the move was down to issues affecting the entire construction industry. As the construction sector operates on very low margins, transformation into a modern, digital business is key to survival, according to Oliver Shore, ERP Programme Director at Skanska UK.

Skanska was looking for a technology update that would allow the firm to focus on strategic rather than transactional data, and as the company runs a vast number of projects at any one time, managing those in a cost-effective way was also vital. Shore added:

We were looking for our digital future within construction. Construction is a digital laggard at the moment. We’re trying to push on with a digital strategy and the ERP financial transformation is the backbone for that ambitious drive into the digital future.

Investec Asset Management had a much more immediate reason for changing its finance systems. While the company had been considering moving to cloud technology, that in itself wasn’t enough to prompt a major financial tech project – but a planned demerger between the asset management and banking sides of the business had that effect. To keep the demerger on track, Investec Asset Management had to develop its own standalone finance system, with an initial timeframe of just six months – which eventually extended to 10 months.

Building the business case for these projects wasn’t the easiest task, as DLG’s Wing noted:

The business case was a really tricky thing for us because these things cost a lot of money. It’s not very popular to spend money on back-office systems so we really had to leverage the value of how it supported DLG as a whole.

Despite the need to show value to the whole business, DLG did not put in any specific metrics to measure the progress or impact of the new systems. Instead, the team focused on desired business outcomes: simplicity, speed, and reducing manual processes and replacing them with technology.

DLG is currently halfway through the project, and is now starting to introduce a balanced scorecard approach – though Wing acknowledges it is probably a bit late in the process to get the full benefits.

A lesson learned is we’ve been a bit over delivery focused and probably missed out on doing some of the process work, some of the people metric, the softer side as well.

Skanska also took a more outcomes-based approach rather than putting in drivers for any specific percentage increases. The financial transformation project targeted key areas like payment performance and supply chain, which are critical in UK construction. Shore explained the need to pay its supply chain quickly and efficiently, and stick to agreed payment terms. Skanska was also keen to get access to strategic data on month-end closing, rather than transactional, so it wasn’t missing out on being able to make key management decisions.

Change management is key

For both Investec and Skanska, the change management aspect of the project posed problems due to user attachment to the familiar, old ways.

Angela Ferguson, Business Manager at Investec Asset Management, said the firm tried to make it as easy as possible for users to use the new system. It created a tool that kept the format the same for things like journal entry and invoices, so the process stayed the same, and offered a staggered way to get used to the new approach to make it more familiar for them.

People hold onto what they know. Everyone wants the same as what they had before but just in a new system, and it looks different and feels different and it is different. So we tried to understand what their requirements were to make it as similar as possible, which is maybe a rod for our own backs.

If there had been more time to carry out the implementation, Investec would have done things differently by changing its existing processes to fit the system, rather than trying to adapt the new application to fit in with old ways of working. Ferguson explained that - wrongly in hindsight - the firm decided to keep the processes as they were; rather than changing how the finance team worked, it tried to mirror what was on the old systems. On the ERP side, this proved difficult to get right.

Skanska UK is only in the early stages of its transformation, but is already working with stakeholder groups to support use of the new technologies. Shore noted:

UK construction is slow to change. We’re a big behemoth of a company stuck in its ways using old technology, a heavily customised tool; the finance platform has been in the business for at least 15 years. People have adopted that way of working and now they need to move to a pure SaaS environment. That transition is actually quite large.

We’re trying to almost drip feed them from the old world into the new world. It’s answering the ‘what’s in it for me?’ question for the individual.

Direct Line Group took three steps to cover the change management side of the project: it used PWC as a systems integrator; it actively recruited change experts, who helped put in place the discipline around change management; and as it was in the fortunate position of having a finance team that was generally keen for the changes to happen, it moved some onto the program immediately, which helped start to embed a lot of the new processes. Wing added:

You’re always going to get a community in finance who are a bit more hesitant about system changes so get yourself a really good business lead and product owner, and get them in there really early.

Don’t compromise on driving it through. We have had to make difficult calls and almost force decisions on them. Because when you do get it in and start using it, that’s really when people start to get more comfortable with it.