Bringing the siloes of financial processes and insights closer together

An interview with Glyn Morris, Partner – Head of Finance of Higgs & Sons

“They’re not opposed to each other but they’re very separate siloes,” Glyn Morris, Partner – Head of Finance of Higgs & Sons says when talking about financial processes and better information and insights; two key components of digital transformation of the finance function.

“I think one of the things I’ve found in a senior role in finance is the business interest in the process side is considerably lower than the need for the insights they’re looking for,” he adds.

But this subsequently creates a challenging dilemma, as, according to Morris, many senior executives know they need to know more but they often don’t know what it is that they really need to know more of.

A key example Morris gives is the idea of artificial intelligence (AI) taking over many roles in business. He says that while this is something that may be happening in some industries, where there is access to large resources, great R&D and the best skill sets, in a law firm it’s a much more difficult concept to implement.

“This is because a partner or certain people in the organisation have a knowledge of these things existing but what they often haven’t any knowledge of are the steps, the process, the development, the trial and error to actually deliver those solutions within a law firm,” he says.

So while there is a growing clamour for having processes automated, Morris suggests that law firms in particular are reluctant to add the additional support department roles into the business that can deliver those automated processes in conjunction with lawyers. In addition, there is a real disconnect between the skillsets of a traditional CFO or an accounts function and the technology skills, acquired by experience, required to make this work.

“The times when I’ve been most successful is when my skill set which is financially driven and process driven, is teamed up with a technology specialist. You need the analytical skills, the person that can operationally deliver a process and then you need the hands on data extraction and manipulation skills that are more business analyst like,” he says.

“Generally, at least one of those positions is missing in midmarket and below. They may have the named roles but the full skill set isn’t there, or they are not working well enough together,” he adds.

One example that highlights the issues with a lack of personnel or skills in law firms is that of implementing paperless billing.

Higgs & Sons acquired a practice management software system that enables the billing process in legal finance to be paperless.

“Last year, when I was at a global conference focused on legal practice management software, I was in a room of people from all different firms around the world and not one of those firms had got the paperless billing process functional,” says Morris.

According to Morris, the software had the capability necessary, but the firms were lacking the people within the organisation that could convert such a ‘well trodden path’ required process, into a deliverable paperless operation, and then apply it within the business.

“We managed to do it, through a unique combination of the system, technical expertise from a consultant, our understanding of the process and direct contribution to delivering and building the process,” he says.

But the other issue of hiring new people persists, because there isn’t always easy to make a business case to do so; particularly as the requirement for those carrying out existing responsibilities will always be there until processes have changed and therefore their duties may change. It’s made even harder by the fact that the assumption from other employees and the board is that new tools shouldn’t require additional resources.

“What you find is that bringing in automated systems does not mean they’re maintenance-free. These systems are doing far more activity within the organisation than was previously being undertaken, but there will still be people who ask why additional resources are required,” Morris says.

This makes the challenge of digitally transforming much harder for FDs.

Automating has to provide value

Morris emphasises that organisations should not just automate processes for the sake of it; they have to add value to the organisation.

“The paperless billing process was of a significant scale and impact to the business that it was worth doing – whereas although we still sign pieces of paper to get invoices approved, because purchase ledgers are a very small part of what we do in legal finance transforming this would have provided less added value,” he says.

Morris bats away any criticism about some legacy archaic processes because it is his duty to deliver value – and projects that can provide more value are prioritised. He believes that other FDs may end up trying to satisfy someone else’s agenda and therefore not focus on their core responsibilities of providing value to the business. For instance, a firm’s managing partner may ask a head of department why performance is down and they point attention toward finance processes.

“They may say it’s slow or stopping people being more efficient so then the managing partner presses the FD to fix this or that,” he says.

It is then up to the FD to consider this and if it isn’t a priority, explain that they’re focusing on elements which could provide more value for the entire firm.

This dynamic adds to the challenge of digitally transforming the finance function. Morris believes it is a combination of resources, politics and lack of implementation know-how that are the biggest obstacles in getting there.

Key takeaways:

  1. Lack of know-how for delivering new processes

There is more of a focus on the need for insights rather than on financial processes. But without technical know-how, legal finance functions will struggle to benefit from new technologies. It requires a mix of analytical skills, the hands on data extraction and manipulation skills associated with business analysts, and someone that can operationally deliver processes.

  1. New tools may require new resources

Even automated tools and new software may require a new set of skills, and people to maintain the system – but getting approval for this from the board and from other stakeholders is a challenge

  1. Prioritising value over politics

There has to be some value in any process that is being digitised – doing something for any other reason, be it political or because the technology sounds good undermines the function and firm’s ambition to go digital.

To read the full report ‘Digital transformation and strategic forecasting in a legal finance function: four FDs give us their take’ commissioned in partnership with Katchr please click below.

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Glynn Morris

Glynn Morris

Higgs & Sons
Glyn is Partner – Head of Finance at Higgs & Sons.