What CFOs Need To Know To Reach Financial Analytics Success

Elizabeth Milne

If yours is like most finance and accounting organizations, you’re probably hearing a lot about the need for finance to become a better, more responsive business partner. In the financial close, it means not just creating the board report pack and external reporting, but also modeling and analyzing the data to identify risks, variances, and understanding how the results are tracking to different forecast scenarios across the dimensions of the business that matter.

One of the biggest issues most finance organizations face is that much of the resources allocated around reporting go into producing and checking reports, and often little is left over for analyzing them. For example, one recent study (The Future of the CFO, Forbes/KPMG Survey, 2015) found that 32% of CEOs are frustrated that their CFOs don’t have the resources to assist in interpreting and explaining financial results. With the growing expectation of finance business partnering, providing decision support, and acting as a business adviser, it’s time to flip the equation away from back-breaking management and financial report production at the end of the close, to value-added analysis.

What the reporting and analysis end game looks like

For organizations that move finance from tactical reporting to a more strategic and analytical approach, what does success look like? We asked SAP customers who identified as best-in-class, and they conservatively quantified the core benefits in three areas:

  • Process benefits: Through automation, they typically saw 15%–40% cost savings on key reporting processes. Many achieved up to 90% automation of standard financial and non-financial reports.
  • Improved cycle times: They saw an 80%–90% reduction in time spent maintaining reports, and a 50%+ reduction in planning processes.
  • Reduced IT burden: Using self-service technology takes the pressure off IT, resulting in 15%–25% reduction in IT support calls and 30% reduction in IT resource costs devoted to data.

Four pillars of financial analytics success

So how did they get there? They typically followed a minimum of three of the four pillars of financial reporting and analytics success:

  • More automation and self-service: Typically organizations start with the basics – freeing up time in board report production by focusing on automation, e.g., scheduling, running, and formatting reports automatically. They then shift gears to analytics – providing visualizations and dashboards without adding overhead by moving to a self-service – slicing and dicing finance data without having to iterate with IT. These are all key facets of a strong business intelligence platform.
  • Improve forecasting and planning: In terms of planning, they’ve often closed the gap between financial results and planning by using the same system to manage both sets of data. On the leading edge, FP&A teams are using predictive modeling to explore alternative business outcomes, scenarios, and plans with simulation modeling, and beginning to explore technologies like machine learning to build more accurate forecast models. Enterprise performance management (EPM) suites provide a range of capabilities to conduct what-if analysis, compare scenarios, and reduce planning-cycle times, while the latest predictive analytics provides a range of prebuilt machine learning and statistical tools to apply to financial forecasting.
  • Upgrade to real-time performance: With an elevated focus on analytics and timeliness of insight, leaders often looked closely at upgrading their existing transactional and data-warehouse infrastructure to ensure it is responsive and scalable enough to keep pace with their goals around self-service, real-time, and predictive analytics. Technologies like in-memory processing can deliver 80% efficiency improvements in key business functions by running queries without having to wait hours for results.
  • Strengthen governance and controls around reporting: Finally, they ensured their automation and self-service efforts were surrounded by a governance framework. Approaches include centralizing metrics, calculations, report definitions, traceability and auditability of data, and reducing spreadsheet usage and data sprawl, which can all contribute to creating multiple versions of data or losing the provenance of where data has come from.

Demonstrating leadership with data

With CEOs and the board looking to finance to lead with data, surfacing financial insight the right way in a digital boardroom is a powerful way to demonstrate success. IDC defines a digital boardroom as “providing business leaders with a unified and trusted view of their organizations. Most importantly, business metrics are available both at a high level and with the ability to drill down deep into the far corners of the organization to look at the detailed functions of any given line of business (LOB) or division.”

A digital boardroom eliminates spreadsheets and static presentations, and all the manual preparation behind them for the boardroom meeting. Instead, it becomes an interactive experience based on the latest data.  A typical digital boardroom provides stakeholders with a clear view of all the critical metrics, including revenue, expense, growth rate, geographical, product, and entity breakouts. Rather than “I’ll get back to you later” on business questions, decision makers can instantly explore predefined metrics more quickly and easily – down to the line-item level if needed – to understand business performance more fully and address questions as they arise in the meeting.

Using financial data more strategically is one of the biggest opportunities for finance organizations. As stewards of some of the most important data assets in the company, and with an increasing expectation around business partnering and analysis, there has never been a better time to cut out manual report production and focus on the areas that really add value – analysis, planning, and forecasting.  In the next post, we’ll drill down into disclosure management – meeting external reporting needs, while reducing risk and manual effort.

Technology like SAP HANA provides the performance to provide answers on the spot in the boardroom, rather waiting on long-running (or perhaps never-ending) reports.

Learn how organizations are gaining instant financial insights and using them to make better decisions—both now and in the future. Register now for the 2017 Financial Excellence Forum, Oct. 10-11 in New York City.

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Elizabeth Milne

About Elizabeth Milne

Elizabeth Milne has over 20 years of experience improving the software solutions for multi-national, multi-billion dollar organizations. Her finance career began working at Walt Disney, then Warner Bros. in the areas of financial consolidation, budgeting, and financial reporting. She subsequently moved to the software industry and has held positions including implementation consultant and manager, account executive, pre-sales consultant, solution management team at SAP, Business Objects and Cartesis. She graduated with an Executive MBA from Northwestern University’s Kellogg Graduate School of Management. In 2014 she published her first book “Accelerated Financial Closing with SAP.” She currently manages the accounting and financial close portfolio for SAP Product Marketing. You can follow her on twitter @ElizabethEMilne