Traditional methods of running your planning, budgeting, and forecasting processes, which rely heavily on manual effort and spreadsheet-based activities, are outdated. Higher demands and shorter cycles dictated by external market factors, the continuous pursuit of improved efficiency, and pressure to reduce costs are forcing CFOs to seek ways to transform their processes and operations. The key to this transformation is agility.
Organizations need more agile financial processes to enable the business to grow. They need rolling budgets and forecasts that better predict and react to evolving market conditions; continuous forecasting and real-time, ad hoc reporting; and process benchmarking that enables action based on that information. To adopt such innovative financial strategies, organizations must embrace an “agile finance” approach that is unencumbered by common challenges inherent in traditional systems, data integrity, and integration scenarios. Reengineering finance processes supported by new technology and redefining the finance strategy free up the wealth of skill and knowledge needed to enable true business partnering and deep analytics.
This approach involves using a set of related and integrated applications, which comprise three main functions:
- Finance performance management: The “heavy lifting” component of agile finance, finance performance management applications provide native, real-time integration with source data systems. Integrated applications for business planning combine demand-side and sales planning with traditional financial budgeting and forecasting to form the core of finance performance management.
- Data-driven processes: Agile finance gives you access to the data and information you want when you want it. It requires an environment that can store, manage, and process large data volumes regardless of the source, format, or type. In-memory technology unlocks the power of finance by providing seamless integration and unparalleled processing speed.
- Analytics: Modern analytics applications provide tools that combine financial information with operational information to create a largely user-driven graphical environment for analysis and reporting. Supported by in-memory technology and vast amounts of data, predictive analytics is no longer just a tool for actuaries and should be leveraged in everyday planning.
Simply implementing new technology on top of existing processes will yield only a few benefits. Instead, agile finance presents the opportunity to completely reengineer traditional finance processes. For example, the technology to implement rolling forecasting has been available for many years. The business process change required to forego the traditional annual budget and accept rolling forecasting as a means to measure performance is much harder.
An agile finance approach is not an “out-of-the-box” solution; it is a journey that finance must begin, evolve with, and take the entire organization with them. New deployment options, such as cloud, enable a more flexible alternative to traditional license procurement, making a phased implementation approach much easier.
By unleashing opportunities with agile finance, organizations can achieve significant and tangible efficiencies and leverage data and analytics to drive their business into the future. Adopting agile finance supports simpler data management by making financial process statuses fully traceable and visible, leading to fewer controls and more real-time information. This real-time information leads to more timely and actionable financial information that allows managers to avoid problems and recognize opportunities thereby transforming the business.
Learn more about the opportunities agile finance can provide your organization.
Don’t forget to register for the upcoming Art of the Possible event series and learn more about how finance departments can reengineer traditional finance processes to enable true business partnering.
This article original appeared in SAPinsider and is republished by permission.