*Finance transformation and the digital vision for housing association Hyde Group*
Anna Brennan, Finance System Implementation Director at Hyde Group, shares why ESG is at the heart of the housing association’s finance transformation
Patrick Evenden, EMEA Staff Writer
The last few years have been an uncertain and challenging time for the UK property market. For housing association the Hyde Group, the responsibility to step-up for its 95,000 customers across London and the South East has intensified in the post-pandemic world.
At Workday Rising EMEA in Stockholm, we spoke with Anna Brennan, Finance System Implementation Director at Hyde, about how technology is helping the organisation to navigate economic uncertainty, her advice to organisations embarking on financial transformation and why environmental, social and governance (ESG) is at the heart of everything Hyde does.
The pace of change at your organisation has accelerated in recent years. As a finance leader, how do you go about managing that in terms of planning, budgeting and forecasting?
A couple of years ago we started an ambitious digital programme. We're ramping up the technology behind all aspects of Hyde to make us more efficient and user-friendly for our customers. They're who we are there to serve.
Part of that is also transforming the back office. Our legacy finance system was 20 years old. It was coming out of support. It wasn’t fit for purpose and so we needed to find a new platform to help us find the efficiencies that we knew were there, and that would enable us to spend more time helping support our partners on the front line.
And that was really made clear to us with the COVID-19 pandemic. We'd just finished our budgeting round. We then had to rethink everything that we’d just done. From a finance perspective, people worked ridiculously long hours to rework all our financial plans and assumptions to make sure we knew where we were sending the money and we could divert resources to things like cleaning, to getting PPE for our staff and so on. And we were doing it with a system that was incredibly clunky. We knew we needed to look for something else. And Workday was just the obvious winner for us when we went through that process.
Workday Financial Management and Workday Adaptive Planning give us very easy-to-use tools for our forecasting, budgeting and planning. We can then pull our actuals in. It's all very ‘low code’ or ‘no code’.
I'm a finance person. You give me debits and credits, I'm fine. You start talking to me about interfaces and I'm: ‘What's that?’ So the ability to be able to drag-and-drop scenario plans, without having to go into Excel, has really opened up a new world for us, and it means transactional stuff is becoming easy. You don't have to pay much attention to it.
We've set Workday up and configured it so it works as it's supposed to, which means that as finance, we can concentrate on the fun stuff. And we can support and act as proper business partners adding value. Not just going, ‘Oh, here are your numbers,’ but, ‘Here are your numbers. This is the trend. This is what it means. This is why it's important. This is what you should be looking at’. And that's how we add value to the rest of the business.
The years since the pandemic have been characterised by economic uncertainty. In the current environment, how important are organisations like Hyde Group?
A couple of years ago, we did a piece of research around the social value of our homes. So not just the value for money you're getting but what's the social value? For example, if you give someone a home, their kids are more likely to be in school and parents are more likely to be able to get jobs. Every pound we put into building that home is multiplied hugely in terms of the monetary value it delivers to the economy and society.
We can [now] support and act as proper business partners adding value. Not just going, ‘Oh, here are your numbers,’ but, ‘Here are your numbers. This is the trend. This is what it means. This is why it's important. This is what you should be looking at’. And that's how we add value to the rest of the business.
It was really uplifting and motivating to see what a difference we make to people's lives beyond just providing a home, because it's so much more than that. This is why a lot of us do what we do. It's why we work in the sector we work in. Can you imagine not having a safe place to go to every night or not knowing where your kids are going to be able to sleep?
How does ESG affect organisations like Hyde Group and how important is it that you continue to find more efficient and sustainable ways to operate?
When we think about ESG, the governance of how we do things is incredibly important. We're a charity. Our money comes from our residents. That is the primary source of income for us. So every time we do anything, we remember the source of that money. And that really makes you think, ‘I can't waste this’.
Somebody has worked incredibly hard to be able to pay their rent. I've got to take that responsibility seriously. So I can't just say, ‘Oh, well, let's try this’ or ‘let's cut corners here’.
People's livelihoods have paid for us and for what we do, and they trust us with their families. They sleep in our homes. Their safety is of paramount importance to us. And again, we're very conscious about making things as affordable as we can, so the environmental and sustainability side of that is huge for us.
If you look at what legislation is coming, we need to make sure our homes and everything we put in them are energy efficient. And that's not just for the environment, but also for our customers so they can keep their costs as low as possible.
From a finance perspective, we’re saying, ‘Right, we're going to invest in these technologies. We're going to invest in how we do all of this because that will pay dividends down the road’.
You can’t take a one- or three-year view. We have a 30-year financial plan because what we build isn't overnight, and the money that we invest in those homes and the way we change things won't be recognised immediately.
So as a finance team – my financial planning and analysis team, my treasury colleagues – we have to look that far out. And we're heavily scrutinised, as we should be, by the Regulator of Social Housing to make sure that we do all of that.
We have a limited number of resources, so it's a constant balance of how do we put the resources in the right place so everybody wins and nobody loses. People talk in our industry about profit being a bit of an ugly word. Well, it's not. Generating a surplus allows us to build more homes.
So there’s a lot that we have to comply with, and we need to make sure that financially we’re putting the resources in the right places to ensure we do comply and we’re still able to provide those great homes for all of our customers.
How has inflation and rising energy costs affected Hyde Group and what pressures has that put on the finance team?
We’re the same as everyone else. We're facing rising costs, in particular the cost of materials for building homes. And if it starts to cost 10% more, then that's potentially 10% fewer homes we can build and fewer families we can house.
We also have homes where we charge for the electricity and the upkeep of the communal spaces, which is passed onto customers. We're really conscious that if prices are going up and we're not prioritising energy efficiency everywhere, the costs our customers bear will be going up, as well as their service charges.
Month-ends are already getting faster for us. We're on our fifth or sixth month-end now. And each one, we can see that improvement and that level of knowledge rising. That means we can then provide the analytics behind it, the data insight behind it.
How has Workday Adaptive Planning helped you to respond to change and plan for the future?
I'm guessing we're not alone in that we were using incredibly complex Excel spreadsheets that we'd send out to our budget holders and ask them to fill in. They would come back into finance, we’d look at them, amalgamate them, load them up into the system – it was very clunky and there wasn't a quick way of scenario planning.
When I think about COVID-19, we had budget one, and then we had the pandemic budget that went over the top of it. That was almost like doing the whole process again, so that was a good couple of months' work to put that forward.
Workday Adaptive Planning makes it so much faster. You can change an assumption going, ‘Well, okay, inflation is raised by this’, or ‘The cost of these materials are going up’, or maybe ‘The date of when we're going to finish building this block of flats is going to change, so the income level is going to change’.
Or even today, if we're being really hot off the press, rents can now rise by a price cap of 7%. So factoring those kinds of things in, it's just immediate. You can then look ahead at what that means in the future. And that shows you very quickly. Budgets are only right on the day you finish them, aren't they? And then, you're straight into having to re-forecast.
So having a system that is that adaptive, that will make those changes quickly, means we can give that information straight to the people who need it.
Our development colleagues, our property maintenance colleagues, or our leadership team, know immediately what those changes mean to them in terms of how much income they're going to bring in, what the costs are looking like and what the service charges are that we're potentially putting onto our customers.
We've only launched [Workday Adaptive Planning] this year but the idea is to be able to get that detailed, specific information to colleagues much quicker. And we can already see it. Month-ends are already getting faster for us. We're on our fifth or sixth month-end now. And each one, we can see that improvement and that level of knowledge rising. That means we can then provide the analytics behind it, the data insight behind it, rather than just the numbers.
With budgeting, we're now starting our budgeting for next year. And we're using Workday Adaptive Planning for that. We've built some brilliant models around what our rents look like, what our workforce looks like. And again, that's all coming through in the models. It's all standardised.
It removes the chance of errors or the corruption of data. And it just means everyone's working off the same page, so that when we get the information back from our budget holders, my poor colleagues aren't sitting there going, ‘Okay. Well they've done it on three lines. But this person’s done it on six. So how do we get that together into one piece of information which we can present to the Board?’ And so that's the immediacy of what we're seeing within our first six months of going live.
What advice would you give to other organisations that are about to embark on finance transformation?
Know yourself. We had the old system for 20 years. So it's a bit like moving house after 20 years. You find things that you're like, ‘Oh, my God, I haven’t looked at that in ages’, and that's great.
So we decluttered, and that took a decent amount of time, but it also meant that with our nice, shiny new house, we didn't put rubbish in there. Know what your starting point is, and try and clear up as much of that before you start rather than doing it as you go along, because then you're working from a much better starting position.
We completely changed our whole charge of accounts. We started with, ‘Right, what data is it that we need? What reporting requirements do we have? What is it we've got to do for our end users?’ And then worked our way backwards.
And that's meant that we've really slimmed down our processes. We got rid of all the old purchase orders that had been around with one pence left on them. We got rid of suppliers we hadn't used for five years, all that kind of stuff. I would say really put your time in at the beginning because that will pay you dividends.
The next thing is to find the right partner for you. We've used Collaborative Solutions the whole way along, and they've been incredibly helpful to us in guiding us through it.
But also have the right people internally. I'm a finance person. And my project team were predominantly people seconded full-time from finance. Our roles were backfilled so we could concentrate 100% on putting Workday in.
And, as we're the end users, we could look at things from a user acceptance testing point of view from day one, because we knew that when we went back to our roles, Workday would be what we were going to be using.
So the ‘what's-in-it-for-me’ needs to be really clear from the outset.
Finally, don't see it as just a project that's run by your change professionals or your tech professionals, bring finance in super-early. And again, if you're doing Human Capital Management, bring HR in super-early. Keep everyone involved that's going to be using it because otherwise, you'll design a lovely, shiny system and the people using it on a day-to-day basis will be like: ‘Well, this isn't what I need’.
Keep your end goal in mind. Make sure you've got dedicated resources. Don't try to do this on top of a day job. And know yourself: if you've got a lot of stuff up in that loft, clear it out first.
