The lost art of financial collaboration
Posted by Alar Lange
There's a myth that there are numbers people and social people. The fact is most successful business leaders throughout time have excelled at both. The CFO of the future will spend more time explaining numbers than crunching them.
The collaborative aspect of finance has been lost at a time when it is needed most. While the latest tools allow finance professionals to dig more deeply into the numbers than ever before, what enterprises need is financial leaders who can explain to the rest of the organization what those number signify. In a report from CFO Research, 76 percent of finance executives admit that they need to do more and work more closely with operational units in guiding business strategy.
Profitability and Planning
The latest financial software and tools have done wonders for accounting, identification of market risks and short-term cash flow projections. However, Ventana Research found that less than 50 percent of leaders in finance today are effective at managing top-level tasks like profitability management and long-range planning. In fact, less than one in five CFOs say that their influence in the organization is at the strategic level. That has to change for organizations that want to stay profitable and adapt to market changes in time to make a difference.
Financial leaders need the support of software platforms that simplify the art of financial collaboration. A full-featured financial platform running in the cloud gives financial leaders access to the enterprise's most vital data in an instant on any device. A range of built-in collaborative tools can enable CFOs or other finance execs to show their colleagues exactly what the most updated numbers mean using visual presentations.
When you can access data through the cloud, you gain a collaborative hub that speeds decision-making while maintaining company information far more securely than exchanging documents through email. With the cloud, you can eliminate version control concerns. All your reports are automatically updated and historical data is searchable by date or region. Furthermore, you can instantly pull in global data for analysis, seize opportunities on the spot and create a better customer experience from real-time insights.
The Primary Stumbling Block
Earlier this year, Ventana Research followed up on past research on financial leaders and found that deploying the right software was their number one stumbling block to succeeding in the market. The top three challenges that finance leaders cited were in process design, the proper use of analytics and the availability of the most up-to-date data. They reported that what is holding them back in all three areas is inadequate financial software.
Poor process design locks a finance department into putting out fires and concentrating resources on daily operational issues. Analytics reports that don't tell a story to those outside finance might as well be unstructured data. As for the third challenge, old data carries the same risk profile as bad data in a volatile, hyper-competitive market.
The Cost of Ineffective Tech
The Ventana Research report concluded: "There is a connection between the technology that a company uses to support its processes and the issues that arise when it uses ineffective technology. Persistence in using such tools to execute finance processes is an ongoing barrier to improving the performance of finance departments."
The positive side of this finding is that automation is helping to define new market leaders by their speed and efficiency. For example, they reported that companies deploying sophisticated automation platforms for their reconciliations process posted significantly faster close rates over those with manual, spreadsheet-driven processes. A full 57 percent of those using finance automation can close their books in six days or fewer, compared to 27 percent of those still dependent on spreadsheets.
Legacy spreadsheets introduce even more uncertainty into the equation. More than a third of finance leaders (35 percent) said they've found substantial data errors in their mission-critical spreadsheets. The more manual data entry there is, the greater the chance of error. That directly translates into more bad decisions based on bad data, more time wasted correcting those errors and a greater probability of customer impact from compromised financial reports that affect billing or credit. Inexorable market forces will eventually select for those companies that are able to act faster on more reliable data, burying those that cannot.
The Promise of Automation
Companies that have moved ahead to cloud-based financial solutions are accessing day-to-day analysis and reports with data as rich as monthly or annual reports. It may be an unfair market advantage, but it is unfair in your favor. Effortlessly drill down into details and act instantaneously on the information right in front of you. You'll be responsible for minimizing finance and disruption costs, thereby driving up profitability. That's something everyone can get on board with, from the front line to the C-Suite.
The age of the collaborative finance executive has returned, and it couldn't come at a better time. Next generation financial software is delivering on the promise of automation to free up finance leaders for more valuable tasks. You'll be able to spend more time on long range planning and be more of strategic partner for the organization as a whole. Automate, work smarter, collaborate everywhere and prove your worth. Companies that employ proactive decision-making will always beat competitors struggling to react to rapid market changes.
CFO Strategic Empowerment
To find out how Unit4 can help you on your journey to become a truly strategic player see our strategic empowerment series:
CFO Strategic Empowerment Series part 1: Strategic empowerment for CFOs
CFO Strategic Empowerment Series part 2: Structured finance procedures
CFO Strategic Empowerment Series part 3: Efficient process execution for CFOs
CFO Strategic Empowerment Series part 4: Real-time analysis of Big Data
CFO Strategic Empowerment Series part 5: CFO business empowerment maturity model