As businesses become more digital, the charter of a modern finance executive is to increasingly focus on forward-looking tasks at a strategic and an operational level. To effectively execute at either level, finance needs a powerful arsenal to make the best use of the abundance of data being generated by the digital economy. Put to good use, data fuels growth, innovation, and acceleration. Poorly utilized, and the business becomes lethargic, clumsy, and in need of a good long nap.
No doubt about it, finance needs to change – and soon.
Addressing the growing need for dynamic planning
Senior finance executives around the world understand this. on financial planning and analysis (FP&A) by CFO Research summarizes the thoughts of executives of large companies around the world. The responses from 80 executives in the United States and Canada stress the growing importance of dynamic planning and providing managers with instant access to financial information. Other findings reveal the obstacles that prevent them from doing so – such as running a disparate software environment and struggling with the large amounts of data.
Overcoming the obstacles of data flow and disparate systems
Understanding needs and obstacles is the first step in identifying solutions. Companies in the U.S. have typically made investments in technologies with separate transactional and analytic systems – as compared to companies in Europe, which tend to run more integrated landscapes. To uphold the charter of the modern finance executive, businesses need to share data more seamlessly between enterprise resource planning (ERP) and financial planning software. The report showed that executives in North America believe that with better data flow, they would see substantial improvements across the finance function – from increased responsiveness and collaboration to improved data integrity and total cost of ownership. These improvements would enable finance to support other functions, resulting in better overall corporate performance.
Guiding decisions in the moment
Effectively sharing data requires an integrated live platform that brings together ERP software and advanced analytic solutions to guide decisions in the moment and enable predictive models rather than reacting to historic information. An integrated platform also helps fix data-flow problems. How could you ever align a local plan with a corporate plan in a fast-paced digital economy if you are not running on an integrated system? You can’t. Imagine the flow of data between an ERP system and an external analytics system not based on in-memory computing. The sheer amount of data being shared across a large enterprise and the time dependencies required for data flow, the consolidation of data points, and mapping the data into your corporate taxonomy would be crippling. You would need reconciliation middleware that is cumbersome, error-prone, and efficiency- and performance-eating. Running on a live, integrated platform tells you what you need to know up front.
Achieving better business outcomes
When running on a modern ERP platform, dynamic FP&A can identify weak performance before it occurs so the business can shift human, financial, production, or any other resources adequately to mitigate the risk. All the while, decision makers have full visibility into corporate performance and fully understand the financial impact of decisions. This is what dynamic FP&A is all about. Applying advanced statistical models directly on raw transactional data helps to produce higher-quality predictive models and better business outcomes.
If you are not on a modern next-generation platform, you have absolutely no chance of achieving a level of business performance even remotely related to this. Evolving to dynamic or continuous FP&A represents a tremendous opportunity for North American companies. From the planning perspective, businesses can stop making annual or even quarterly plans. By removing organizational barriers with a modern platform, you don’t need to wait until the end of the period to see results. It’s available at any point in time to support better decisions and more agile and nimble business planning. Now that a next-generation ERP platform is available, it’s time to shift your thinking towards remodeling processes instead of simply optimizing existing ones.
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.
More great resources on financial planning and analysis for CFOs are available here.