Unlocking the Finance Maturity Model: From Reaction to Innovation

[00:00:15] Melissa Howatson Welcome to The CFO Show. I'm your host, Melissa Howatson, CFO of Vena. Joining me is Peter Emerling, Director in the Digital Transformation Practice at Citrin Cooperman. He has over 14 years’ experience supporting companies across a diverse range of industries and across various lifecycle stages. He is focused on creating value and driving innovation, efficiency, and scale via data analytics, technology, and industry insights. As a CFO, you constantly strive to run a high-functioning finance team. But how do we assess that? To keep improving, we first need to understand where we are in terms of finance maturity and then figure out what comes next. Today, we'll be diving into this very topic, including some actionable steps that we can take to move our team to the next level. Peter, thanks so much for joining me today.

[00:01:16] Peter Emerling Hi Melissa, thanks for having me. Super excited to be here.

[00:01:18] Melissa Howatson You have spent the last 14 years advising companies on finance, technology, operations. What was it that drew you into this space, and how have you seen finance transformation change over the years?

[00:01:33] Peter Emerling Yeah. You know, it's funny. I got into the space in the beginning of my career. I started out as a forensic accountant. And as a forensic accountant, I was building financial models for business income loss, property damage, and other insurance claims for large insurance providers. I really love building models. It was great. I enjoyed the work that I did. Ultimately, I transferred out to another firm and into a management consulting role where I kind of wore two hats. I wore a finance transformation hat, really helping organizations think through their finance function and how to drive improvement and evolution in that. But I also wore another hat where I focused on corporate performance management. So helping companies kind of drill into their FP&A function, thinking about their financial models and how they did their budgeting and forecasting processes. And so, through that, I've, you know, had the luxury of working with a lot of different companies, you know, all the way from small businesses, family-owned businesses, all the way up to billion-dollar plus publicly held organizations. I think, you know, for me, getting into finance transformation and why it was really interesting to me was seeing how people struggled with responding to information requests when I was a forensic accountant and not being able to provide the data that they needed to show the performance of their business and the impact of an event on their business. So, when I came over to the consulting side, it was really kind of thinking about, well, how can I help companies improve that process? How can I help them see their organization as for what it was, the performance of their organization and start planning into the future so that they could navigate the challenges that were coming down the path.

[00:03:00] Melissa Howatson It's interesting that was your observation when you were working on the forensic side and seeing your client struggling, because I think, you know, for us when we get into this profession, we want to be able to get the right answers. We also want to be able to add value to our companies and feel like we're part of it. And there's nothing more frustrating, I think, for a team than when they actually can't find the answers or it seems so it takes so long. And then people don't want to come to them to ask them for help because they're not really able to deliver. And so being able to lean into the transformation and evolving the business so that we really can be spending more time consulting the business, answering those questions, driving the insights and stuff. It makes it better for the company. It makes it more fun for us to be in this job as well. So it's interesting that you spotted that need from that side and then have built a career around helping companies to navigate how they can be higher functioning. Now, let's move into this finance maturity model. Can you tell us a little bit more what is it, and why do you think it's important?

[00:04:08] Peter Emerling The maturity model is a tool set for just gauging where we are as a finance organization, right? And so and where do we want to be, and helping you chart that course? I think the thing about finance maturity models is they've been around since the beginning of time. But you know, the thing is like the more things change, the more they stay the same, right? And I think some of the challenges that CFOs have experienced since the beginning of time are still here, right? What we just talked about, getting data out of the organization that properly reflects the performance of the business, being able to make decisions quickly and having the ability to make those decisions based on data, right? So some of those things have stayed the same, and those are challenges that we've had, like I said, from the beginning of time. But you know, it's an interesting world today, right? We are, you know, in a place where we've moved past that, you know, going from on-premise to cloud from a technology perspective. We've got, you know, AI knocking at our doorstep and people wanting to leverage it, right? So, you know, ultimately that maturity model is helping to encompass all of the things that are past challenges, our current challenges and our future challenges. And how do we address those and drive the evolution of our finance function? Ultimately, it's a way, you know, for finance professionals, CFOs, VPs of finance, controllers, whoever it may be, to step back and look at their function holistically and then also drill-into it into the different functions. So if you look at that model and how it's structured, it's designed to look at everything at a high level, but then start applying at the subfunction level and looking at it there. And why that's important is because you know everybody wants to have leading edge, right? Everybody says, I want to have AI, I want to have predictive analytics, I want to be the leading edge for my organization. But the reality is that's not always the right thing for every organization. Every organization has a different spot in their life cycle, they have a different growth trajectory, and they have a different operating model. So, what it really comes down to for that finance model, the maturity model is really like where do we best sit and where are we best served as an organization across that maturity? And what should we be keeping our eyes out for in the future? You know, I mentioned the change in technology, right? And, you know, if you go back five, six years ago, that maturity model was pushing everybody to move to the cloud, move to integrated systems, right? And we're still pushing that way. But we've achieved that. A lot of organizations have moved out of the legacy on-premises solutions and moved on to the cloud. But there are so many more things to be done there that it's not just about moving to one place and staying static. It's you gotta keep evolving. Like that maturity model will continue to evolve over time. And while the buckets and the categories may stay the same, what's in those will change, you know, based on the evolution of technology and business.

[00:06:46] Melissa Howatson Well, and you mentioned how, you know, it's not one size fits all necessarily. You have to look at your own business and where you're at and what you need. You know, I think about, I've spent time working in startup companies. And what we needed looked a lot different when things were easier to understand. A few people like, you know, you could have knowledge in your head or in the heads of a couple of people, and it was okay, and it worked. You know, counter that with I helped a company go public. Well, what we needed to look like as a finance team to be able to get through that, get ready for that, go through the process, be ready to report, looked drastically different in terms of our own maturity. And, you know, you don't get there overnight. It is a process, and you have to, you know, first know where you are and then figure out where do I need to be as a company scales. You know, it gets harder. So you've got to start evolving some of your processes, etc. So let's dive into the model then. You've got five areas that you assess to help people figure out where they are in the model. Can you tell us a little more about that?

[00:07:55] Peter Emerling The five areas builds on our, you know, the traditional people, process and technology view of an organization. We've expanded it to include data and governance. And the reason for adding that is, you know, data is just so centric to everything we do today, data cleanliness, data hygiene, data quality is really, really critical. In fact, I actually saw an MIT stat the other day that said, you know, roughly 50 percent of finance teams' time are lost errors and manual fixes and workarounds, you know, resulted by either bad data or bad processes or issues with technology, right? So it's kind of interesting to understand the impact of that on an organization. But when I step back and look at, sort of people, process, technology, data and governance. If we kind of break those down, right, the people, it's not just about the individuals that you have in your organization, right? It's how the finance organization operates as a whole, you know, where the roles and responsibilities lay, and then alignment of those, you know, with the people and ultimately the effectiveness of those individuals within those that function and in their roles, right? When it comes to process, it's, you know, it's obviously looking at sort of end-to-end process, but it's thinking about it in the way of where are there opportunities for automation, where are there opportunities for centralization and also rationalization of processes. Do we need those? You mentioned about taking a company public. You know, I've done the reverse. I've taken companies private from being public. So you think about the processes that sit there and the need to start scaling back on processes, reducing controls and things like that. From a technology standpoint, you know, it's really about do we have the right technology sets in our organization? Are they serving us properly and effectively? And are we getting the value out of those applications, right? If not, we really need to think about looking at those and rationalizing them and saying what's the best for us from a technology standpoint. And lastly, governance, which is one of the most important components, but often overlooked, right? Because governance includes policies and procedures, you know, oversight and internal controls. And in some organizations, that isn't as critical, right? If you're publicly held, then that is an absolute critical requirement to your operations. But when you're smaller and privately held, you know, those oftentimes aren't as necessary. But you know, from our view, they are, right? You need to be able to manage all of the components above, right? People, process, technology, and data in a way that's structured and consistent so that you get the outputs that you're looking for in a reliable fashion.

[00:10:21] Melissa Howatson I like that you've added data and governance because people process technology, like you said, that's pretty common, and it's makes an easy way for people to think through, okay, these are the categories I need to assess. But data, especially in this world where we have so much of it now, and trying to understand where should we keep it, how should we keep it, how are we protecting it, is becoming so critical in order to even enable some of those other categories, I would say. And then the governance piece, you know, that comes with part of our responsibility in finance. And it's something we don't want to ignore. I think having all five of those categories helps us be able to see, because it's a balancing act, that as we consider across those different categories, where exactly a business needs to be leaning in as we mature our way through. So we've got the different attributes, characteristics that we want to look at. Can you now tell us about the different stages of finance maturity, the way you look at it?

[00:11:27] Peter Emerling Yeah, happy to chat through the four levels of our finance maturity model. The first level starts with what we call sustaining. And so finance organizations that fall within this level, you know, really just trying to keep the lights on at the end of the day. And oftentimes for them, you know, it's a little bit of survival mode. And in their organizations, some of the typical characteristics are, you know, having disparate systems, right? Systems that don't talk to each other, having disjointed or inconsistent processes. And, you know, oftentimes, there's a few people within that organization that hold that institutional knowledge. And they are the gatekeepers to the past, present, and future of that organization. You know, ultimately, the effects of being in this level, you know, is the fact that, you know, closed timelines often take a long time. Financial management reporting isn't as effective as it could be. And from a CFO perspective, you know, being in this sort of reactionary, sort of keeping the lights on phase, it really makes it difficult to make decisions with current and relevant data, right? Because oftentimes we have to wait for such a long time to get there. The next phase is called reactionary. And so, you know, for organizations that fall into this bucket, they've evolved past their sustaining phase in the sense of, you know, maybe they do have evolution in their systems, and they maybe are a little bit more integrated, or they've defined their processes a bit better. And so they know what they're doing when it's supporting the business, right? The business runs day to day, but they're not providing insight and more strategic value to the business. So oftentimes, you know. Finance functions that fall into this level are really just reacting to the events that happen in the organization and to requests from the business for information. So oftentimes there isn't this cadence of reporting and information sharing that's really necessary to become that strategic partner and to enable others in the organization to make decisions, you know, backed by data and other components. As we kind of evolve past the reactionary phase, we get into transformation. And, you know, those that fall into this level, you know, are really have done the work to drive the evolution of the finance function to the point where they do have automation in the organization. Data flows seamlessly from system to system. Individuals within the finance function understand their roles and responsibilities, and they work together to get things done. And it's very clear as to what they're doing. And you know, what's key with this is that this is where, in my opinion, finance becomes that strategic partner in the business. We're no longer focusing on just keeping the lights on. We're no longer being reactionary to what's going on in the business. You know, finance is looking at what's going on, looking at data across the business, starting to think about, you know, what's going to happen in the future, and what are the changes or decisions that need to be made in order to facilitate achieving those goals into the future. So, and those instances, we really think of like customer service. You know, finance is serving their internal customers very well, but they're also serving their external customers very well. So there's both sides to it as well, when you think about finance functions at that transformation level. And then if you think about kind of where we go after that, right, and everybody wants to be in this phase. This is innovation. So having an innovative finance function is, you know, really an instance where we're leveraging our transformation efforts plus leading-edge technology and leading-edge approaches to driving the organization forward. So that might take place in the sense of AI, right? So we're leveraging AI within our finance function to help get processes done. We're using predictive analytics to mine historical data, current data to start thinking about what's coming down the future, but also looking at where we can drive further optimization within our business today. Right. And I mentioned before, I mean, across all of these different levels, these are not set it and forget it, right? These will continue and evolve as the technology hype cycle evolves and we see AI come down into our applications, and we see other business applications become readily available to the middle market. I oftentimes go back throughout my career and thinking about where I've come from, right? And when I started out, when I started out, we were talking about moving people to the cloud, right? And that was a really difficult thing for people to get their heads around. We've made that movement since then. Now it's, you know, AI and everybody's really interested in AI because it's it's they've already seen the tidbits of how powerful it can be, right? So, you know, as we think about years from now, if we revisit this in a couple of years, it's gonna look a little bit different. But overall this the phases or levels won't change, right? We're still gonna have innovators, we're still gonna have transformers and so on.

[00:16:08] Melissa Howatson As I'm listening to you talk about the different levels. And as a CFO, you know, a finance leader, when you want to assess, then, okay, where is my team at? Do you often see that assessment being done holistically? Which I can think how that would make a lot of sense, given how interconnected the different parts of finance are. But do you sometimes see where there's different parts within the team that maybe are at different stages? I'm thinking, for instance, you know, you've got your payroll, your data processing team, you've got your FP&A team, you've got your controllership function, for instance. And, you know, is it that, hey, you're only as good as, you know, where the one is lowest in the levels of the across those teams, and that's where you need to focus? Or do you see in clients where they're operating at different levels of maturity within the same finance team?

[00:17:02] Peter Emerling No, that's a great question. So typically it's latter, right? We have, you know, organizations in various stages of evolution, right? And that's a good thing, right? So maybe we drill into a little bit deeper, and we look at a finance organization. So we think about like procure to pay and the AP function. That is a function that has seen a lot of benefits from automation and AI solutions coming into that market, especially in the middle market, right? You've seen a lot of solutions come in that have taken over that process for you know, picking up a vendor bill out of email, looking at it, reading it, finding the PO that goes with it, matching it, and then carrying it forward, you know, and then obviously into payment. You know, so in those instances, those, you know, when we look at the procure to pay, for example, that maturity lifecycle has been achieved by a lot of organizations. Now, when I go outside of procure to pay, we look at FP&A, right? And we've seen for a long time that spreadsheets, the evolution out of the spreadsheets into a corporate performance management tool was the right path, right? And so that was that initial path. But then when you look at sort of, you know, what is that future of FP&A now? And you start seeing AI coming into the picture, you start seeing those that the functionality being embedded in the tools, but it's just not as mature as it is in the other areas. So I think in those instances, the technology is driving some of that. You know, obviously the adoption of technology drives it, but you know, in many organizations, they may not also need to be an innovator across all the different functions within finance, right? If I have a lot of clients that are very heavy and procure to pay. And so for that it makes sense to really invest there and put the time in because at the end of the day, you can only have so much time. You only have so many limited resources around money and people. So you really gotta pick where your investments are best made.

[00:18:49] Melissa Howatson Can you share with us an example of one of your clients where their evolution through the stages of maturity resulted in real business impact?

[00:18:59] Peter Emerling Yeah, I'd be happy to share a couple of examples with you. I'll share one that talks about an organization that went from, sort of that sustained phase to transformation. And then I'll talk another one about one that had reached that transformation phase and needed additional help. The first organization, you know, was on a legacy ERP system, had been on it since the mid to early 2000s. And through time, you know, while that system had supported them, they were squarely in that sustain phase, right? They were just keeping the lights on day to day. Financial reporting often took 15 plus days, you know, after the end of the month. And it was really difficult to see the organization on paper from the financial statements and through management reporting. So for this particular organization, we kind of step back and look at it, right? Technology was a huge piece of it. The processes were not well defined. And the individuals within that finance organization, while they had great institutional knowledge of the organization, their roles and responsibilities weren't well defined to the point where they didn't know what they always should and shouldn't be doing on a regular basis. So for them, you know, what we helped them do is kind of think through, okay, what's the most impactful for you? And in that case, for them, it was going out to market and finding a new ERP system and replacing their legacy system, aligning that new ERP system with their operations and thinking through that management and financial reporting layer. To support that, we also layered in a corporate performance management solution and an AP automation solution to help them. Know bridge the gap on the AP side, you know, where previously they had manual purchase orders, like literally paper purchase orders running around the organization. They had, you know, inner office mail for vendor approvals and such, to a point where we now have structured system-driven purchase order creation and approvals. We have vendor bill approvals, right? And so that process just for a procure to pay has become highly, highly automated in the sense of managing the information and flow through the business, but also just keeping it in one place. In addition, when I think about the financial management reporting piece, you know, moving them out of Excel and into a system was key, right? But now they're able to drill in when they have cost overruns. This particular company has a lot of hourly laborers as part of their business. And so managing payroll and managing workforce costs is really critical to them because it is one of their greatest costs on their on their financial statements. So for them, they've made that move from sustained to reactionary to now into that transformation phase. And so they're in that right now and continuing on that journey as they start building out and continue to build out their ERP system. The other example would be an optimization client. So this is common for us to walk into a scenario where a client has made the efforts to invest in their organization. They maybe have rolled out a new ERP system. And, you know, they might be six months to a year into that new system. And a lot of times, they come to us and say, “Hey, I don't feel like I'm getting the value out of this system. I don't really feel like I've ever exited my stabilization phase. Can you help?” And so in those instances, we'll come in, and we'll take a look at what's going on. You know, what was that original plan for that system? Did you achieve that? And then looking at it from that finance maturity model standpoint of okay, let's take this and look at each of your subfunctions and how is the system supporting it, and how are the other aspects of people process data and governance affecting those functions. And so in those instances, we were able to say, okay, well, based on where you are today and in your stabilization phase, here are the things that you're gonna want to tackle in what we call an optimization phase. So often times people will go through that effort. I mean, ERP implementations are tough, right? Any system implementation is tough, right? But a lot of effort goes into designing it, making sure it's right, testing it, and then rolling it out to the organization. And the reality of it is a lot of people then say, “Okay, I'm done.” But when we think about our maturity mode, and we think about the need to continue the transformation exercise and then starting looking at innovation, you've really got to continue that evolution of that system. The one thing I'll add to that is just, you know, when we think about ERP and CPM and other critical core business applications, now that they're in the cloud, a lot of those vendors are releasing updates, major updates, one to two times a year, if not more frequently. And the reality is implementing it to your system today using the capabilities of that system is great, but there's going to be more functionality coming down the pipeline that needs to be considered. And so what we see, the key differentiator for a company that's in that, you know, reactionary phase, or maybe they're in transformation, kind of in between there is that those that drive up through the maturity are the ones that are paying attention to the status of their system and whether they're using it to its full capabilities, but also looking out at those releases and leveraging that new functionality and driving it through product champions within the business to implement that functionality to take advantage of it. Because at the end of the day, you're paying for it. You're paying for your annual subscription fees, you're paying for those new updates and enhancements. So you should take advantage of them.

[00:24:09] Melissa Howatson Before we continue our conversation, I think this would be a great time to answer one of the questions we got from a listener. Make sure you stick around to catch the second half of our discussion. This is a question that we got from a listener. What are some red flags that indicate that a finance team is plateauing in level two? And how can leaders start moving the needle towards transformation? So, I would say when I think about this one, first off, a reminder that level two is react and level three is transform. So, a couple of indicators. I think you could ask yourself questions, like are people coming to my team and asking for advice, which tells me that we're moving into helping to transform the business. Another one would be: have I automated most of my routine everyday processes, or am I still doing a lot of things manually? That's another indicator I'm not moving into transformation. And a third really easy one is am I consistently closing the books in five days? If I'm not doing that, I know that we're not able to yet move into that transformation stage. And I think one of the ways to get unstuck on that is simply to declare that is a must-have. You need to close those books consistently in five days because it's going to fuel your ability to move forward on so many transformation initiatives. It's interesting. Back in the day, when there was on-prem software, you'd get what you bought originally. And then if you wanted to do an upgrade, you'd be doing a mini reimplementation often, if not a full implementation. And it is a different world now as these technologies evolve, yet we could be leaving some stuff on the table that is available to us because we're not paying attention. You've touched on the important role of technology throughout this. Are there some key technologies that you see commonly coming to bear as companies go through, you know, that moving from level two into transformation and ultimately innovation, some categories of technology?

[00:26:24] Peter Emerling Yeah, great question. I've hammered enough on ERP. And not everybody can go out and get a new ERP system. That's the reality of it. I do want to recognize and acknowledge like the disruption that can cause to some organizations and the level of investment and effort that's needed. And sometimes it's not necessary, right? So when we think about kind of stepping back and thinking about other technologies, you know, the one that I think is most impactful is a technology that supports reporting and budgeting and forecasting. So, your typical corporate performance management solution. Why do I feel that this is most impactful is its ability to pull data from multiple systems that may not be connected, right? So, I can enhance my reporting. I can do my analysis. Obviously, it gets me out of spreadsheets and into a centralized place to do budgeting, but it also enables distributed work, right? As I have folks from a department level being wanting to be able to run reports or look at budgets, I think that's been really impactful for some organizations. Another area that's often not looked at, and it's not as exciting, I'd say as ERP and CPM is the integration layer, right? And using a, what we call IPaaS or Integration Platform as a Service. You know, going from having disparate systems to having highly connected systems is not as easy as it sounds, of course, right? And so you have integration options as part of that. And as we all know, integration is sometimes a scary word because it's often difficult, it's technical, and it sometimes doesn't work right. So, you know, when we think about IPaaS, you know, it really helps be that traffic controller and one central hub for data to flow in and out of, but it also makes our integrations easier, right? So as we evolve the systems that are in our environment, we're able to pick and choose those and implement them and integrate them much easier than if we had to do sort of more manual integrations. And the last item, I think from a technology perspective is AI, right? And now AI is a very broad topic. But when I think about what I'm seeing today, and being most impactful is really the use of AI assistants, like a Microsoft Copilot, for example. You know, those, they're, they're taking away a lot of those, you know, the highly manual tasks of collecting information, allowing us to find information a lot easier and faster, but also, you know, helping us, you know, remember things, you know, and remember the decisions we made that maybe weren't memorialized otherwise. So I do think that there's a lot of benefits to many organizations today.

[00:28:50] Melissa Howatson And I think about then, you know, the world that we operate in now, which is one of never-ending uncertainty. And especially in this current climate, you know, there's so many factors in the macro picture that are changing around us, whether that's to do with supply chains or tariffs or the economic impacts of those things. And before that, we've had other uncertainties along the way. I imagine that these can become things that become barriers for companies trying to evolve their way through these levels, because now it's yet another thing that might keep you stuck where you are because you don't have time to transform and evolve. And yet it probably is also becoming a big differentiator in terms of which organizations are able to navigate some of this uncertainty depending where they are. How do you think about that relative to the model and what it means for companies, and how they should think about that?

[00:29:44] Peter Emerling Yeah, it's certainly an interesting world today. And the volatility in the external environment is making it much more difficult for us, for organizations to, you know, chart a plan and stay on that plan. If you went back a year ago for now, you think about many manufacturing organizations that may have been going through a transformation initiative, they weren't thinking about the volatility of tariffs and the impact to the market. And even going back to COVID and the impact of the supply chain on organizations. I think, and I try not to be biased because of having an FBA background, but all roads kind of lead to FP&A, right? You know, being able to analyze the impacts of these potential issues externally and also helping the organization understand where they can reallocate resources and time and money, you know, to those investments. When I think about the business itself of, you know, trying to handle those external factors and you know, and trying to work on their transformation, the reality is that these things are always going to be there. There's always going to be an excuse. So it's trying to box out, you know, what do we know, what can we control today, and what do we and what don't we know and what can't we control tomorrow? And trying to figure out, in building a framework that allows us to be flexible enough to take on those challenges. So when I come back to the maturity model, and I think about people, process, technology, data and governance, you know, from a people perspective, is do we have the right people with the right skill sets and are they at risk? And so managing. Them, you know, in that fashion as part of that. When I think about from a process standpoint, these changes, you know, ultimately these external changes may impact the way we do business internally. So we need to be flexible enough and have knowledge of our processes at the right depth to be able to pivot them and make that transformation change. You know, and the same goes on, I think outside of that, you know, the technology piece we've addressed as far as, you know, oftentimes having to make investments within technology and trying to evolve past, you know, being on-premises to the cloud. But I think for many organizations, when they're faced with these challenges of trying to deal with the external environment and the internal environment, they should have a backup plan. If we can't make transformation happen in this way, let's make transformation happen another way. And that may mean delaying your technology investments for a year or two. Right. But that doesn't mean you can't work on all the other factors. It doesn't mean you can't go back and improve your processes or try to clean up your data. So those are the ways that I think about how you could potentially use that maturity model when looking at the current environment.

[00:32:18] Melissa Howatson Well, and I would even go so far as to say it could be the difference between companies that are able to navigate some of this uncertainty or not by staying true to okay, where am I and where do I need to be? And making sure that the transformation efforts that need to happen stay in scope and stay a priority for your business because you could really help your business fall behind if we don't get on top of some of these things so that we can react in the current climate and make sure that we're there able to be a helpful business partner to help the business figure out how to navigate on certain times. You've consulted with lots and lots of different companies. What are some of the biggest roadblocks that you see them facing as they try to mature their organization?

[00:33:11] Peter Emerling Where to start? Yeah, I think the roadblocks to driving maturity in an organization is oftentimes the willingness of the people within the organization to embrace change. And that comes from leadership down to, you know, sort of the individuals within the function. And leadership can mean a couple, lot of different things, right? You know, in family-owned businesses, it's often, you know, more complex because you have multiple family members involved in the process. In large organizations, you have boards and other more structured involvement and oversight. So it really depends on who's involved, but the common denominator is the tone at the top, right? So ultimately, you know, the leadership has to embrace the fact that changes need to happen and that they will benefit the business. So that is oftentimes one challenge that I see, especially when you have, you know, maybe a CFO that says, I've figured this out, I know what we need to do. I just need you to pay for it. You know, I need the approval to go ahead and make this happen. And it oftentimes gets stuck at that upper levels where they're not seeing the value, the future potential value of that investment. So I think, you know, value creation as a topic is really important and getting leadership to understand what it takes to create value in an organization is more than just selling, product or selling a service and improving your profit margins. It's also improving the way you do it, which I think a lot of folks understand, but putting it in practice is key. Another roadblock, you know, would be just the technology itself. You see organizations that have spent, you know, the last 20 years investing within their technology stack, and it's very deep rooted. And for them to break that up and move on to something else is one, it's overwhelming. Two, it's risky, right? The concern that I might organization's gonna grind to a halt. You know, and three, you know, there's always the fear that it negatively disrupts the organization and ultimately takes us off our focus. You know, the reality is there's always ways to do this. You know, you can break up and carve out and phase, you know, technology implementations and enhancements if you have a right plan for it. So, you know, and there's always also the cost too, right? Those technology investments sometimes can be fairly sizable. Again, it's oftentimes looking at what are my options for making this happen and whether it's external financing, whether it's internal phasing of that implementation or descoping of that implementation. There's ways to manage those roadblocks around the cost side of it, you know, but it's important to really understand, you know, what that future benefit could potentially be, you know, as part of that analysis. The third roadblock that I often see, you know, is really the timing of that change and wanting to drive change. We could be, you know, it could be external, it could be, you know, we have an external market changing like we do today, we just discussed, or it could be, you know, internally, maybe there's a transition happening in the business. Maybe the business is thinking about the owners are thinking about exiting and selling, or maybe they're thinking about doing an acquisition. Each of those business events oftentimes require the energy and focus of key stakeholders in the business so that they can accomplish those things. And so oftentimes, you know, any sort of finance transformation initiative or even broader company business initiative gets put on the back burner. You know, every situation's different. I think in that instance, to overcoming those roadblocks is really looking at, okay, what are our different scenarios in our business based on kind of our intentions currently? And where are the areas that we can drive transformation that is going to be beneficial regardless of the outcome of that scenario? Right. And then where are the areas that will be beneficial based on that outcome of that scenario, and then where are the areas that aren't impacted at all? And so I think based on that analysis, you know, and then picking and choosing, you know, within there to try to drive that transformation while the focus is elsewhere within the business.

[00:37:06] Melissa Howatson You know, it's interesting as I'm listening to some of those roadblocks. The word transformation, which is something we all aspire to and it's easy to get behind, can also seem a bit scary and daunting. And I think sometimes it's in unpacking, it doesn't need to happen overnight that we are transformed. We can break this up into bite-sized pieces, you know, phase parts of a project. It doesn't have to be that you're gonna get all of a sudden everything out of the box in your implementation, but you're going to work towards a path that you're on, so that you can be feeling like you're making progress and get unstuck from getting overwhelmed with the very daunting nature of the entire thing.

[00:37:50] Peter Emerling Totally agree.

[00:37:50] Melissa Howatson Now, one last question for you. For finance leaders that may be trying to figure out where they need to get started in terms of assessing their financial maturity, what advice would you give them?

[00:38:03] Peter Emerling I would start off with, you know, making sure that the leader has a good understanding of the business applications that are within their organization. It's smaller organizations, you know, typically a finance leader will have good visibility to those systems. They'll understand the current state and what, you know, intended plans are for those systems long term. And large organizations, you know, that there's oftentimes pockets of systems that exist and people don't know about it, or they're not readily available to the finance leader. So, getting a good understanding of those systems and maybe the potential impact on the finance function is good to understand, and whether you need to pay attention to those as part of your transformation exercise. The other area that I would say, you know, for finance leaders to think about is stepping back and really coming up with the, you know, the top 10 items that are really most either disruptive to them or that are most challenging to them in their organization, right? And start focusing on those and use the people, process, technology, data and governance model to get there, you know, making sure you're thinking about those aspects, but I think, you know, getting those on paper and really think saying, you know, what am I looking to solve for? Yeah, at the end of the day, what is going to be the most impactful for me? And it's not always one thing, right? There's it's usually a collection of things that will get you there, but at least having good visibility to that. And then lastly, you know, is really start with your vision in mind. What do you want your finance function to operate? Like, how do you envision that? What areas do you envision excelling at? What areas do you feel like you're just you're gonna be checking the box and making sure that they're getting done? Because ultimately, those are the most impactful to the rest of the organization as well. So that's the way I typically think about it, and that's how I'd suggest finance leaders going about it.

[00:39:41] Melissa Howatson Peter, thank you so much for sharing the model with us, helping us to unpack, you know, why it matters and how we as finance leaders can go about assessing our own financial maturity. Now, whenever we have a guest on the show, we do have two rapid-fire questions that we like to ask. So are you ready?

[00:40:01] Peter Emerling Yeah, let's go.

[00:40:02] Melissa Howatson All right. First one's going to be so easy for you. What is the hallmark of a mature finance team in terms of how they operate?

[00:40:11] Peter Emerling I wish this one was easy. No, I mean I think the hallmark of a finance team that, you know, of a mature finance team is really the cohesiveness of the team, right? They're they're a team that understands each other's roles and responsibilities, understands how to work together and leverage the systems they have. But ultimately, you know, at the end of the day, the common denominator to a highly effective mature finance function is a team that understands the value of transformation and how to achieve it. And an understanding that transformation isn't always a big thing, right? Transformation can come in small bits like you talked about and comes over time, right? We don't just flip a switch and things change. We've got to build up over time to be able to achieve that transformation and ultimately get the realize the benefits of it.

[00:40:57] Melissa Howatson Excellent. I think that's a great summary. And the next question, if you could recommend just one book that has had the biggest impact on your life or career, what would it be and why?

[00:41:10] Peter Emerling I think the book that's probably been most impactful to me would be The Power of Full Engagement. It's a book by Tony and Loehr. And really the premise here is we're all pushed to be engaged every day, all day, and to operate at 110 percent. And oftentimes we take that, you know, personally, and we push that on ourselves and we create anxiety over that. And so I've definitely struggled with that through my career. And I think for this particular book, it was really interesting because it, you know, looked at high performing athletes and how they perform at such a high level all the time. And there are a couple of notable things there. They were able to control their heart rates in between plays. So if you think about a basketball player, a professional basketball player, the pressure for them is constant to perform, right? And what the book found and through their research was that professional athletes are able to manage their anxiety and their heart rate and their body during competition, right? And during those high pressure situations. So example of a basketball player would be going, you know, to take free throw shots in front of a large crowd, you know, as that individual is stepping up to the line, calming themselves, bringing their heart rate down and focusing on the task at hand. Now we think about professional basketball players is that, they don't play a basketball game every day of the week, five days a week for 50 plus weeks of the year. And so, you know, their expectations and energy management is much, much different than ours. But here we are, professionals expecting to us to give 110 percent every day of the week that we show up to work. And the realization of that book was that, you know, in order to be fully engaged, in order to give that 110 percent, you really need to structure your work and life balance in a way that allows you to get that breath and lower your heart rate to some extent, right? Allow you to get that break from what you do from a day-to-day basis, but also finding the things that interest you and bringing them into your day-to-day work, right? So being able to get down to that level of engaging purposely and focused for the periods that you need to, and then disengaging and relaxing and sort of recovering in between activities.

[00:43:15] Melissa Howatson Well, that sounds like a good one. And it's not a book that I've heard of before. So I'm definitely going to be adding it to my reading list. Thank you for sharing that. Peter, thanks once again for joining me. Really enjoyed this conversation. And we will be sharing some of the materials as well with our audience because Citrin Cooperman has a document on this finance maturity model that is a great resource for companies looking to evolve. Thanks again for joining me.

[00:43:42] Peter Emerling Yeah, thanks for having me.

[00:43:46] Melissa Howatson If you enjoyed this episode and want to learn more on this topic, sign up for our free newsletter with exclusive resources designed to help you grow your leadership skills and drive strategic transformation across your business. For The CFO Show, I'm Melissa Howatson. Until next time.