Finance leaders everywhere are recognizing that they need to play a more proactive role in guiding their companies’ strategy for the future.
In a report prepared by CFO Research in collaboration with SAP, 87% of respondents said they believe finance functions will need to contribute more to the kinds of high-value activities that underlie performance management. These activities include setting expectations, business planning, and adjusting actions in response to changes in the business environment.
However, the respondents to the survey also recognize that changes are needed to get to this position. More than seven in 10 (72%) believe that automating more finance processes would raise the finance function’s importance within their organizations. They see automation as allowing them to meet some of their overarching goals: becoming more involved with operating or business units (71%) and having more time available for higher-value work (69%).
A great example of this change in finance’s aspirations is Carter’s, the iconic retailer and leading brand of children’s clothing in the U.S., whose business includes the well-known OshKosh B’gosh brand. Amazingly, for every child born in the U.S., Carter’s sells the equivalent of 10 products.
The goal: evolving toward decision guidance
In 2015 the company kicked off its “Vision to Value” initiative with the overarching goal of transforming its finance function from transaction processing to support analytics and decision guidance. “This meant streamlining and simplifying financial processes so the department isn’t so busy creating reports that it doesn’t have time to analyze and interpret the results,” explained York Rasmusson, senior director of finance transformation at Carter’s.
The current situation had to change: Transactions flowed through more than 20 legacy finance systems, including a mixture of in-house and bolt-on solutions. Carter’s recognized that the best way to achieve its goal would be to adopt an integrated, highly automated ERP solution that that could scale as the company grew. And the solution needed to support other lines of business besides finance, including supply chain, warehouse management, and order management.
Business process redesign
At the same time, Carter’s recognized that simply deploying a new ERP solution – however state-of-the-art – would not, in itself, enable the company to achieve its goal. Business process redesign would be equally important. That was one of the reasons Carter’s chose Deloitte as its implementation partner, along with Deloitte’s knowledge of the ERP solution.
According to York: “The very process of implementing new technology provided Carter’s with the opportunity to transform older and inefficient processes into modern, best-practice processes.” For Carter’s, this meant questioning the rationale behind every core financial process to see if it could be redesigned more efficiently with the new ERP solution.
In July 2016 Carter’s went live with its new solution and processes. By October 2016 the system was stabilized, and the company started to see the concrete benefits of its efforts.
Centralized invoice management
Instead of a highly decentralized, paper-based process, invoice management is now centralized and automated using workflow and a centralized chart of authorization. In the invoice-to-cash process, system-generated tracking of chargebacks, combined with improved visibility into chargeback status, has delivered significant time savings and efficiencies in billing and collections. In addition, management of fixed assets is also more efficient with the elimination of paper forms, manual routing, and spreadsheet dependence.
The combination of a top-tier ERP solution and business process redesign will continue to enable the finance function at Carter’s to drive greater automation and efficiency. In turn, that will allow the finance team to focus more on its new role of support analytics and decision guidance.
For more on the trends shaping the future of the finance profession and the actions finance professionals can take to be ready, download the CFO Research report Thriving in the Digital Economy: The Innovative Finance Function.