How to Become a Digital-Economy CFO: Part 4, Reimagine Business Performance

Thack Brown

Part 4 of a Series. Read Part 1, Part 2, and Part 3

In today’s world, volatility is the “new normal.” CFOs must equip their businesses to respond quickly in an uncertain world. Today, too many members of the organization, from senior executives to front-line employees, lack the visibility they need: relevant insights in the moment of need. To achieve this objective, finance will need to provide flexible, personalized, and on-time information to decision makers.

Companies with this anytime, anywhere access to critical information at the moment of need have a clear and competitive advantage in today’s economic climate. CFOs and their finance teams can help the business quickly assess opportunities and risks, react decisively and effectively, and become drivers of results instead of mere reporters of performance.

Instant foresight

CFOs continue to face ongoing volatility on many fronts: central bank interest rates, currency fluctuations, and variability in product demand. Therefore, being able to sense, predict, and respond as autonomously as possible gives businesses a significant advantage. Digital systems can identify significant deviations from plan and unusual trends, and provide smart alerts to key decision-makers in real time. They also help predict future performance forecasts, which can help decision makers better understand the impact of fluctuations in currency or product demand, resource bottlenecks, or cash flow. This provides a new level of foresight into potential new business opportunities. In addition, with new digital systems’ embedded simulations, decisionmakers can evaluate multiple options in real time to make decisions with more confidence.

Instant insight

All of this decision-relevant information can be made available to business executives on their mobile devices, in real time. They no longer need to wait for a financial analyst or a batch report. They can drill down on their own by any dimension to line-item detail for root-cause analysis.

This is all made possible through a harmonized up-to-date single source of all financial data. No manual reconciliations are required, as all finance applications access the same data in real time and at full granularity. This removes the effort to align data and prepare reports.

CFOs and finance executives are now armed with up-to-date, detailed information on key areas of the business such as transfer pricing, tax, revenue, cost allocations, and working capital. With real-time insights into customer and product profitability, they can help drive business decisions.

Fully integrated cycles

Real-time integration and embedded planning and predictive tools enables treasury and finance teams to work on unified finance data. They can manage liquidity holistically, including cash balances, with detailed accounts receivable and payable information. This information can be made available to all relevant people in the organization. This way, they can play a role in capital management – from the CFO through to a salesperson analyzing unpaid invoices on the way to a customer meeting.

Effectiveness and efficiency

For most companies, closing the books is a process that typically takes from one to four weeks. However, leading companies have reduced month-end close to one or two days through radical process automation and near-real-time analytics.

Executives are often flying blind during the month until the results are finally published. However, technology is already available that allows many processes to be run anytime during the month, providing executives with insights into performance with a “soft close” whenever needed and freeing month-end resources to focus on more value-added activities.

To recap, digital innovations allow the finance team to become partners in improving business performance by providing:

  • Instant insight to action, including prediction, from the board to the front line
  • Fully integrated and dynamic actual-to-plan for the P&L and balance sheet
  • Real-time cash, exposure, and working capital management
  • Detailed and real-time visibility into customer profitability and product cost along the entire value chain
  • Real-time results and soft close that breaks the barrier of the month-end close

To learn more about how finance organizations are using digital innovations to help improve overall corporate performance, read “Digital Finance: Transforming Finance for the Digital Economy” and “Financial Planning and Analysis 2016. More great resources for CFOs are available now at the SAP finance content hub.

Thack Brown

About Thack Brown

Thack Brown is General Manager and Global Head for SAP’s Line of Business Finance. In this capacity, he is responsible for the full suite of SAP solutions for the Office of the CFO. SAP has the market’s most robust portfolio of solutions for finance professionals, covering all the major financial process, including: Financial Planning and Analysis, Managerial and Statutory Accounting, Treasury, Risk and Compliance and core finance operations such as Shared Services, Real Estate, Travel and Expense Reimbursement, Accounts Payable and Accounts Receivable, etc.