We asked Doug Henschen, vice president and principal analyst at Constellation Research, for his thoughts on the opportunities presented to internal finance teams by the new generation of cloud-based planning and analysis tools. Doug’s focus is on data-driven decision making. His data-to-decisions research examines how organizations employ data analysis to reimagine their business models and gain a deeper understanding of their customers.
Tell us about your organization and your role.
We’re a Silicon Valley-based research firm that’s passionate about how business models can be transformed with disruptive technology. Our goal is to help our clients realize the art of the possible.
My role is to research the technologies and business models that are disrupting established business practices and creating transformational innovation. I share this insight with market leaders and fast followers who are seeking more than just a rubber-stamped approval of products. The research focuses on how to deliver business value, applying real-world experience and insights.
How important is the new generation of planning and analytics tools in relation to the cloud?
Cloud-based planning and analysis tools started seeing adoption by small and midsize businesses more than a decade ago. They’re now gaining adoption in the enterprise arena – following in the footsteps of other software categories – on the strength of rapid deployment, low initial cost, and minimal IT overhead as compared to on-premises options.
Cloud-based corporate performance management (CPM) systems have a reputation for being easy to configure, change, and administer. These new-generation tools are also more intuitive and easy to use for business users seeking budgeting, planning, forecasting, analysis, and reporting capabilities. This ease of deployment and ease of use both lead to broad adoption beyond the office of finance.
What are the biggest challenges facing internal finance teams at present?
We live in disruptive times. Companies not busy innovating are likely doing their best to fend off new competitors. When you’re trying to innovate or respond to change, you need visibility into business conditions and solid planning and forecasting. You need what-if analysis to test new business models and gauge the impact of new products and services.
In this environment, old-school spreadsheet-based financial planning and analysis confined to the finance team just won’t cut it anymore. CPM systems introduce powerful budgeting, planning, and forecasting capabilities that bring consistency, traceability, and more reliable data to budgeting, planning, and forecasting, but adoption has to extend to line-of-business users. That’s where easy-to-deploy, easy-to-use cloud options come into play.
What are the biggest opportunities for internal finance teams at present?
What are the breakthrough products or services that will make a difference to your customers? Can you do what-if scenario planning, quickly sense demand, or predict whether new products will be base hits or home runs? Can you quickly change the structure of your business, shifting funding, staffing, and sales priorities toward growth and profit, and away from products and services that are dragging the organization down?
Too few organizations can say yes to these questions. And too many are hunkered down, just trying to make sense of conditions that aren’t matching old, familiar patterns. It’s hard to make sense of disruption when you can barely make sense of the current quarter. All too many business and financial leaders rely on months-old budget projections and lagging financial measures to gauge the state and direction of their business.
The shortcomings of spreadsheet-based approaches are blatantly obvious. Fortunately, CPM systems are evolving to embrace social, mobile, analytics, and cloud capabilities and consumer-grade (intuitive) user experiences. Broadly deployed, next-generation CPM applications will enable companies to better plan and budget new products and services so they can be the disruptors rather than the disrupted.
Looking to the future, in just a few words, do you have an opinion on what aspect of technology you think will have the biggest impact on your business or your role? And how will it do this?
Analytics and cloud technologies, in particular, have reshaped corporate performance management software. On the analytics front, modern data-platform capabilities, including in-memory processing, massively parallel processing (MPP), and columnar and NoSQL database engines, are becoming commonplace.
These technologies bring scale and unprecedented speed to analysis while making modeling of data, and therefore business scenarios, far more agile. Data-platform breakthroughs like in-memory technologies are now table stakes in the latest CPM offerings. It’s time to bring performance-management tools beyond the confines of the office of finance using the cloud so finance can better collaborate with line-of-business leaders and plan for and budget the products and services of tomorrow.
To learn more about how finance executives can empower themselves with the right tools and play a vital role in business innovation and the value chain, review Thriving in the Digital World.