In my last blog in this series, I illustrated the reasons that successful finance functions must transform as they become even more integral to overall business success. This week I’d like to show you how this transformation can actually be accomplished.
I mentioned that in top-performing organizations, executives commit to financial transformation and push that down through the organization. It is their job to communicate these strategies and to provide the technologies and capabilities I have outlined below.
Financial transformation requires a strategy that will lead to changes to the business. But where to start? The number-one strategy of Best-in-Class (50%) is to conduct an internal investigation of financial processes and technologies. This is why organizations that commit to financial transformation are more likely to implement technologies that improve the organization’s ability to execute on its financial goals. This starts with an end-to-end business suite, but extends to individual functionality tailored to handle individual finance disciplines. For example, organizations that commit to financial transformation are 2.5 times as likely to have a financial controls solution. Note that a majority of organizations that commit to financial transformation have implemented business analytics. These tools enable users to interact more effectively with data and use it to make transformative decisions.
Table 1: Key Technologies
Unfortunately, simply having a solution that can help to record and share financial data while automating processes may not be enough in the current environment. My report “In-Memory and Social Business: Coming Soon to your Large Enterprise” found that leading large enterprises are already 27% more likely than followers to have in-memory analytics technology, with another 42% planning to implement this technology in the near future (Figure 1). In-memory analytics is a way for organizations to consume the increasing amount of data that they are exposed to. Querying large data sets can be handled in random access memory (RAM), resulting in quicker access to reports and analysis. This is important to large organizations with millions of transactions and interactions as they attempt to analyze data and processes in real time to react to trends and monitor compliance. It is also important for individual business functions as they attempt to transform their operations to become more effective.
Figure 1: Consider In-Memory
For organizations that are focused on financial transformation, in-memory analytics can provide some interesting benefits. There are process improvements to be gained as well as a better ability to provide information for decision-making. These benefits could include:
- Centralized financial data for ease of access
- Improved compliance monitoring on a real-time basis across a larger enterprise
- More dynamic, agile, and accurate plans and budgets
- A better ability to take advantage of available cash
- Quicker financial close
- Ability to connect financial and operational data for more valuable insights
This environment is perfect for introducing transformation across an organization. In fact, my research has proven that organizations that commit to financial transformation are more likely to have implemented a variety of capabilities. As shown in the chart below (Figure 2), the most essential capabilities fall into a few main categories.
Figure 2: Transformative Capabilities
- Real-time data repositories. In order for organizations to report effectively, remain compliant, and support the line of business it is important to provide an easily accessed, sharable, and accurate picture of financial information. Organizations that commit to financial transformation are 3.2 times as likely to have real-time updates to financial metrics. Further, 72% of those organizations store this information in a centralized repository.
- Collaboration. Finance is morphing into an essential source for organizational decision-making. Additionally, transformative organizations understand that communicating with the extended enterprise (including regulatory bodies) is essential for business success. Transformative organizations enable collaboration both inside and outside of the organization with finance.
- Streamlined processes. In a modern environment, finance must be a well-oiled machine. Aberdeen’s research finds that transformative organizations have tools in place that ensure compliance, automate financial processes such as tax calculations, introduce emerging technology such as mobile, and enable the individual functions within finance to succeed.
- Support for change. Innovation and change are, of course, core components of transformation. Organizations that commit to financial transformation are 2.2 times as likely to have business solutions that can be easily tailored to reflect business change.
By implementing these capabilities and technologies, top-performing finance executives provide a platform for their finance department. If your organization implements them, you will be amazed by the improvements you will see in a variety of essential metrics. In fact, my research has uncovered quantifiable benefits as a result of a financial transformation strategy (click here to see an infographic highlighting this research). To learn what I found, check back soon for a blog where I will reveal those benefits and give you some final tips to achieve them.
For more on how real-time analysis is transforming finance, see Can Running In Real-Time Make Finance A Major Player?