CFOs have certainly opened their eyes when it comes to increasing digitization. The work of the traditional accounting and compliance department is changing to self-driving finance, self-service intelligence and integrated business planning and budgeting. CFOs are most definitely aware of the need to transform.
Finance departments are increasingly expected to act as business partner and increase their impact on the profitability of the company – but many companies struggle with that change. The work of finance departments is roughly divided into three layers. One layer is transactional; specialized expertise forms another layer, involving reporting, audits and planning; and finally, there’s decision support.
The third layer is where interpretation is given to the role of business partner. But in practice only few finance departments get to that top layer. What I often see is that 70% of the time is spent on transactional business and roughly 25% on specialized expertise. That leaves only about 5% to spend on supporting strategic business decisions.
The CFOs we talk to want to turn this division of work around and they understand that modern technology can help free up a lot of this time. So, why is it that business partnership often does not materialize? By measuring their department’s maturity across four stages – standardize, optimize, predict and drive – using the Business Empowerment Maturity Model, CFOs can use that insight to produce an action plan to remove structural deficiencies and free up time for high-value activities.
1. Structure your finance procedures
CFOs must be confident in the information they use for finance analysis, audits, regulatory compliance and statutory reporting. You simply cannot properly analyze and measure financial performance nor create solid analyses, projections and plans without accurate and comprehensive data. However, making this elementary concept a reality can often prove to be a formidable task.
The focus has to be on two main points to overcome this hurdle. First, to develop a sound data infrastructure and standardized data procedures. Second, to determine who is responsible for each task in the process, and make sure they are properly trained on the data standards.
2. Execute your processes efficiently
To engage in a successful revamp of your process structures, you’ll need to be supported by applications empowering every department to contribute to your strategic goals. A best-fit software solution should:
- Provide an adaptable, centralized framework for your data and departmental workflows.
- Serve as a holistic support platform for your structured finance procedures.
- Give you flexible reporting and analytics tools to help form the big picture for future strategic planning.
Making your process execution more efficient gives your organization a strategic edge that will yield far reaching dividends. From a cost reduction angle, a unified framework for processes lets you finally find the ‘single version of the truth’ that is often elusive in fragmented work environments where each department has its own procedures and systems. Additionally, the holistic perspective provided by shared services lets you maximize the impact of your strategic planning, ensuring that any given choice is built on the truest framework possible. From there, the costs of disruption avoidance and general finance operations will fall dramatically, and can be cut by as much as 55%, according to analyses from research firm IDC.
But truly efficient process execution is about more than the cost savings, and can serve as the backbone of a new system that’s equipped to effectively handle every challenge you’re likely to face, now and into the future. Besides standardizing processes, modern, sophisticated software can also take away a lot of manual work. Think about entering receipts for expense claims. Modern software can – based on a photo of the receipt – extract the most relevant data and enter expense data in the appropriate fields. It can even pre-populate an expense report based on travel plans in your calendar. The user simply confirms and sends for approval. These seemingly small innovations can ultimately save enormous amounts of time that can be spent on more important tasks.
3. Deploy flexible, real-time analysis
Everything from asset management and market differentiation to business budgeting and target setting depends on reliable business intelligence and accurate data analysis, so structure and efficiency really come into play here. Implementing a flexible, real-time system can help you create better forecasts, develop more effective financial strategies and meet future challenges head on.
The keys at this stage are improving the business intelligence process, maximizing financial analysis and forecasting performance, and improving the planning process. These are some of the most basic tasks CFOs carry out, so they may seem like easy fixes at first glance. However, there’s a lot more to making permanent changes in these areas than simple tweaks. These concepts are deeply intertwined, so small problems with your business intelligence can lead to inaccurate analysis, which then snowballs into big issues with any predictions and plans you develop.
CFOs need to be able to customize, visualize and restructure data and reports according to their needs. The ideal solution is a system that can provide both granular and summarized views of data sets, can display analyses and reports in graph, chart or table form, and offers a central dashboard from which you can access all of this crucial data. In addition, integration of this system with mobile devices and cloud storage technology is essential.
Understanding the difference between ‘a plan’ and ‘planning’ forms the final part of this stage. Planning is the process of setting objectives and developing strategies to reach those goals, and it happens continuously. A plan, on the other hand, is the specific blueprint you use to implement your planning. Planning results in plans, but a plan cannot be set in stone. It has to evolve when the planning process calls for it.
4. Achieve automated self-service
The final stage of the model is where you bring it all together. CFOs are becoming increasingly involved in general business strategy, and need to display a full understanding of the company’s operations. Maximizing business information performance and driving reliable information are big parts of this function, along with leveraging data to stay ahead in an increasingly competitive business landscape. At this final level, CFOs learn how to utilize the data and insights provided by the previous stages to make more knowledgeable business decisions and increase the bottom line.
The focus at this level is applying business intelligence to drive overall business growth. This centers around forming a clear data strategy and specific protocols for increasing the performance of your finance information system. In turn, it also involves increasing opportunities and expansion. You must be able to leverage financial data technology to make crucial information available to the people who need it as soon as they want it. The main goal should be putting an accessible, intuitive and automated self-service system in place to provide the necessary functionality.
Technology offers the opportunity for finance departments to make big changes, but CFOs must have the courage to show leadership. Disruption is lurking at every level. Finance should not stand by idly and wait for automation to take over the majority of the tasks. Finance must take the lead when it comes to automation and performance management by aligning strategy planning, business planning and budgeting processes and providing real-time intelligence.[“Source-diginomica”]