Moving To Continuous Finance: Strategy And Buy-In

Elizabeth Milne

Part 2 in the “Continuous Accounting Action Plan” series

Globalization, the acceleration of the business cycle, and rapidly evolving technology that improves collaboration, automation, and insight are all leading finance drivers to shift to a continuous model for their accounting, planning, and measurement processes. That means changes like moving from “period-end” accounting to “as-it-happens” accounting, and from periodic forecasting to rolling forecasting (read Part 1 of this series to learn more). But how, and where do you start?

Setting your continuous finance vision

It pays to establish a quantified vision for finance transformation. That vision, in turn, should break down into short-term wins and long-term goals—and all be aligned with business strategy. For example, if efficiency and increasing board-level trust are goals for the organization, perhaps begin with continuous accounting to allocate resources more effectively and improve accuracy. Or if shareholders are looking for better business predictability, and that has become an important concern for executives, consider dynamic planning. Mapping initiatives and vision to business strategy just makes sense, and can enhance outcomes. PMI Research recently found that 80% more initiatives meet or exceed forecasted ROI when they are aligned with business strategy.

Consider benchmarking to pinpoint opportunities

Performing a review of how your organization stacks up from an organizational and process perspective is an important place to start. One opportunity is to begin with some preliminary benchmarking—while always keeping in mind how it all ties back to organizational goals.

For example, if profitability is an important goal for the enterprise, then benchmarks to start with might include staff productivity. Top-level benchmarks could include overall costs of full-time equivalents (FTEs) as a percentage of revenue. But those benchmarks could also get as granular as intercompany accounting spend as a percentage of intercompany trade, with productivity measures such as the number of items, like reconciliations, that are processed per FTE.

Alternatively, if a goal is predictability, then finance benchmarks can include measuring how forecast accuracy stacks up based on different days, or by gaining a perspective on variance from budgets.

One way to visualize all of this is with a scorecard, such as with a hierarchy of benchmark comparisons―a top-level benchmark like FTEs as a percent of revenue, for example. The hierarchy can extend to showing how individual areas stack up, such as the time to close the books or create financial reports.

Note that, as you move further into your transformation initiative, you can move from benchmarking comparisons to outside industry measures to measuring the pace and success of change based on internal measures―such as, how forecast accuracy is trending, or whether the frequency of reforecasting is improving or declining.

Conducting an “as-is” review, and understanding how your organization stacks up based on the metrics that matter, is an important first step to pinpoint the best, and best-aligned, opportunities to improve.

Define your vision and benefits

Once you’ve established opportunities, and which of them are most closely aligned with business goals, the next step is to define a vision and benefits. With benchmarks in hand, you’ll be in a great position to assemble an ROI model and business case. Your vision should include and one-, three-, and five-year plans, with short-term benefits and longer-term wins.

For example, if your goal is efficiency, a short-term win might include automation and auto-certification of account and intercompany reconciliations. Quantifiable benefits should be assigned to the initiative, such as reduction in time taken to complete monthly reconciliations, and an improvement in reconciliations processed per FTE. Longer-term, it might be a more holistic approach to the financial close, such as the number of resources and time spent on financial consolidation, or preparing internal and external reports. Consider tying everything together with a high-level mission statement.

Get executive sponsorship

If you’ve followed the previous two steps, you should be in a great position to get buy-in. You have:

  • Measured where your organization and processes stand—and which ones are mostly likely to move the dial on your organization’s overall strategic goals.
  • Established a multi-year benefits analysis and can project anticipated results and payback, year one through five, and the investments required―and it’s tied back to your executive team’s strategic objectives.
  • Constructed a clear mission statement for your initiative and where your organization is headed. For example, “Our goal is to improve our efficiency and accuracy of everything we do, by employing continuous accounting to reduce our time spent on transactional, repetitive tasks; be more productive at every step of the financial close; and continually measure and improve our progress.”

The result is finance transformation that’s quantifiably aligned with where the business is headed. However, “transformation” can often come with concerns around large-scale projects, with long timelines and value realization far in the future. That is why it’s important to shoot for short-term wins, alongside longer-term projects. That way you can overcome initial inertia and get increasing momentum with success. In our next blog, we’ll show you three quick wins to do just that.

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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