Part 2 of “Leading Through Digital Transformation” series
In a high-speed marketplace that requires even faster decision-making, small and midsize businesses are feeling the pressure to act decisively, take advantage of emerging opportunities, and mitigate incoming risks. While this may be challenging for all areas of the firm, it is, without a doubt, disrupting the finance function.
Traditionally known for providing historical, period-end perspectives, finance leaders are now finding that no one has the luxury to wait for their information. The balance sheet may not have changed, but the way it’s managed certainly has. Real-time strategic decisions are the new mandate for moving forward in a competitive, growth-oriented manner.
According to CFO Research’s study of small and midsize businesses, “Embracing the Promise of a Digital Economy,” 86% of finance professionals say that their organization is expected to contribute and lead high-value activities such as planning and analysis, strategy setting and execution, and financial performance management. To demonstrate value and unique insight, finance leaders must reposition their entire organization’s role.
Evolving finance from data caretakers to forward-looking information analysts
Every year, finance leaders are expected to provide a forecast of the future business outlook. Without question, the tolerance level for missing financial expectations is very low. If expectations are met, the leadership team and investors are thrilled. But if the company falls short, the finance leader is placed under intense scrutiny.
Considering the increasing demand for 100% accuracy at all times, finance leaders have no choice but to reassess how they generate insights into the firm’s future over the next six months, one year, or five years. To accomplish this task, small and midsize businesses should address three major tenets of analytics.
1. Power decision-making with unified, in-the-moment data
The very first step in digital transformation is getting a better handle on data. This is not just a matter of knowing how to access financial data; rather, it’s about connecting finance to information captured and maintained by all other business areas in real time.
In the CFO Research report, 75% of respondents stated that business success increasingly depends on instantaneous access to a unified, comprehensive, and fully up-to-date set of financial and performance data. By making connections between financial performance with, for example, production output and sales revenue, finance leaders can better understand the profitability of products, customer relationships, supplier contracts, assets, and growth strategies.
2. Ensure data is secure – without exceptions
Concern over data security is on the rise. Every day, we see headlines warning us of the disastrous effects of information being leaked into the public sphere and landing in the wrong hands.
With their rich history in maintaining compliance with legal, regulatory, and corporate mandates, finance leaders within small and midsize businesses are best suited to determine the requirements and policies needed when using technology and protecting all information. All the while, actionable, well-rounded insights are consistently delivered to the right people.
3. Translate data into swift, decisive action
When it comes to financial planning and analytics, there’s always too much planning and not enough analytics. And it seems that most finance leaders agree: 68% of finance leaders felt that high automation of financial processes could free up significantly more time to focus on higher-value work, according to CFO Research.
By automating number-crunching, accessing accurate scenarios, shifting their focus on outcomes, and visualizing the story behind the data, decision makers throughout the business can understand the current situation, potential actions, and likely outcomes.
Finance and analytics: Reimagining the small and midsize business
After years of economic uncertainty, ever-changing regulatory requirements, and increasing investor scrutiny, finance leaders are still facing constant pressure to cut costs, grow revenue, and deliver control. But this is only the start. Not only are they regarded as the finance expert, but also the line-of-business generalist, performance leader, and growth champion.
Considering any role as the master of all things may be unrealistic; however, finance leaders in small and midsize businesses do have a once-in-a-generation opportunity to get ahead of the digital transformation curve. By combining analytics with their intimate knowledge about the areas they serve, finance leaders can bring a realistic perspective on opportunities that can increase sales revenue and market leadership as well as emerging risks to be overcome along the way.
To learn how your business can embrace the promise of the digital economy, check out CFO Research’s recent report “Embracing the Promise of a Digital Economy.” Next week, we will share additional insights from this research. Be sure to check every Wednesday for new installments to our blog series “Leading Through Digital Transformation,” to explore the various leadership roles in today’s growing small and midsize companies.