CFO Strategic Empowerment Series 4 – How CFOs Can Achieve Flexible, Real-Time Analysis as Strategic Players
The third stage of the business empowerment maturity model involves gathering and analyzing data, forecasting financial performance and making plans based on those predictions. Everything from asset management and market differentiation to business budgeting and target setting depend on reliable business intelligence and accurate data analysis, so the structure and efficiency you developed in the earlier stages 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 must address a number of issues to ensure that each point receives the attention it deserves.
The most pressing complication you’re facing here is the proliferation of unreliable information extracted from outdated or incomplete data, little communication between the responsible parties and a lack of ad hoc analysis. These three issues combine to create inaccurate figures and, in turn, fallible projections.
It also takes a lot of effort to consolidate information for analysis, forecasting and planning purposes, which slows down the business intelligence process. Even with adequate business intelligence, the only options many companies have for reporting the information are inflexible standard reports and spreadsheets.
Ever-changing regulations and a dynamic business landscape are two additional obstacles to getting through this stage. Unfortunately, they are also some of the hardest aspects to control.
All of these issues lead to the final dilemma CFOs must confront: planning versus creating a plan. Differentiating these terms is imperative for success.
Moving to the Next Stage
This stage is all about facilitating analysis, prediction, planning and decision making. CFOs have to overcome four hurdles to complete this level successfully.
1. The first step is acquiring accurate information on which to base your analysis and predictions. Having a unified finance system across the organization that provides access to real-time data is the best way to accomplish this task, but you must also make sure the analysis that comes from the data is specific to the questions you’re trying to answer. Otherwise, you can end up with a thorough analysis of the wrong aspect of your company’s finances.
2. Next is finding a way to quickly adapt to changes in the business environment. You can’t stop the outside forces that influence this area, but you can minimize the turmoil they stir up. By utilizing a flexible data system, which can take new statutory regulations and company standards into account automatically, you will be one step closer to staying abreast of pertinent business developments.
3. Third, 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; display analyses and reports in graph, chart or table form; and 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.
4. 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 call for it.