In my conversations with CFOs around the Asia/Pacific region, the need for finance to transform is a common theme. The growing digital economy, the accelerating pace of business, and the ease with which new competitors are entering the marketplace are harbingers of the world to come. Digital technology offers a means to prepare for the future of finance, yet many CFOs are holding onto antiquated systems and manual processes – which is a risky plan at best.
My experiences mirror the findings of the Asia/Pacific results of a recent CFO Research report, Financial Planning and Analysis 2016: Generating Value in a Fast-Paced Digital Economy. A survey of 76 CFOs in the Asia/Pacific region examined how well current financial planning and analysis (FP&A) systems and processes are able to support the CFO’s need for an accelerating flow of information.
The upshot? Finance leaders are under increased pressure to dynamically plan in the moment. Yet the lack of integration of their systems and processes, and difficulties accessing and analyzing accurate data, are preventing them from doing so. Here’s why it’s time for this to change.
Delivering FP&A in the moment
The role of the finance organization is to serve as an unbiased source of business truth while also providing insights that improve decision-making. But we have to find ways of doing it faster.
There is an imperative for businesses to become much more forward-looking when faced with the rapid pace of change. The ability to model the impact of numerous scenarios or decisions requires a firm understanding of your key business drivers and how sensitive they are to changes in the environment around you.
Reacting to a fast-changing business landscape requires a commitment to improving the ease with which decision-makers can use financial analysis, share insights across the business, and collaborate based on high-quality, up-to-date, credible information. To make strategic business contributions, we cannot be tied down by processes that require manual interventions.
Digital innovation can equip finance with the tools and technologies it needs to transform. By running integrated systems on a digital core, CFOs can access, analyze, and share data across the enterprise seamlessly. So instead of spending time collecting or questioning the data, you can focus on providing the data-driven insights necessary to serve as a strategic partner and performance accelerator to the business.
Balancing risk and reward
I see digital innovation as a great source of optimism for the finance organization, but it also introduces risk. There is increased risk from disruptive competition, and there are more serious consequences of making bad decisions. Some say that in 10 years’ time, up to 40% of today’s Fortune 500 companies may not even exist. These issues create today’s “burning platform for change,” and CFOs in particular need to get on board. As digital technologies are more widely adopted, companies that are slow to transform will fall further behind, widening the gap between the incumbents and their more agile competitors.
To achieve true transformation across the enterprise, there also has to be a concerted effort to change the way the businesses think and work. Transformation impacts areas such as organizational design, business process redesign, and change management. These changes – whether just focused on the finance function or more broadly on the entire organization – are more easily extended across enterprises that are not burdened with complex processes and legacy systems.
Read the entire report prepared by CFO Research in collaboration with SAP, “Financial Planning and Analysis 2016: The Value of Instant Insights in A Fast-Paced Digital Economy.