PUBLISHED JUNE 3, 2022
CFOs Of The World
You’ve Nothing To Lose
But Your Chains!
By Prakash Subramaniam
Executive Director & Head: Customer Success, AMCO Solutions APAC
Newton’s Third Law of Finance (with due respect to Sir Issac Newton) says that for every operational action there is an equal financial reaction.
In a day and age where every business transaction has a financial ramification, CFOs today are being increasingly challenged to provide critical information, almost on a real-time basis, that enables the Enterprise Leadership to make data-based decisions.
The FSN Global Survey 2020 revealed that only 14% of the Finance Functions in the enterprises surveyed could prepare Reports & Analytics and deliver in the true sense.
Bringing us to the question as to what chains tie-down CFOs / Finance Functions in being able to do so.
The reasons could be many. But the crux of it boils down to one fact: Traditional / Legacy financial systems limit availability of information in a timely manner. Finance teams therefore end up spending more time on data preparation rather than on analysis and insights.
Consider the situation analysis from the FSN Global Survey 2020:
In just two years, the percentage of organisations that are facing the pinch in obtaining the data required or facing technological constraints to use the data available has grown considerably.
Couple this fact with the situation faced globally. The Covid 19 lockdowns had most of the enterprises on the ropes and the Enterprise Leadership needed focused information to be able to take the right decisions to move the organisations forward and out of the difficult situation they were engulfed in.
With this background, relying on multiple spreadsheets, siloed and fragmented financial systems, lack of proper
Business Intelligence and Data Visualisation tools result in situations where the Finance Function literally wastes its time just pushing data around from application to application, not only undermining their inherent intelligence and capabilities, getting frustrated but also exposing the enterprise to serious risks.
Which is why 86% of the organisations still work with feeble standard reports or siloed reports or ad-hoc reports that often offer hardly enough valuable insights.
So how do CFOs lose their chains and get unshackled?
It is no secret that Excel / Spreadsheets are what Finance Professionals swear by. You may offer them the ultimate solution in the universe, but the team member will still want to transfer the data to Excel for their own review. There may be times when an urgent one-off report may be demanded. It would be essential for CFOs to make sure that the systems or solutions being used by their teams can easily integrate with Excel. And even better, with drag and drop capabilities.
Siloed/functional reports do not offer the entire perspective to the Enterprise Leadership. This has resulted in situations where enterprise leaders find themselves reading conflicting information given by various functions, each putting their own perspective. Very much like the parable of The Blind Men and The Elephant2. CFOs must confirm that the solution or system being used or to be used by the enterprise therefore must be able to offer a total viewpoint with financial and operational data. Reports, analytics, dashboards should be able to offer an enterprise-wide perspective and not a functional perspective.
While sending correct, timely and well laid out reports is very important, does it justify the waste of time of the Finance Function resources to labour on that? CFOs need to review and ascertain the ability of the solution to automate and dynamically update the reports for distribution to ensure quality and correctness. Also, by cutting out manual intervention, it will ensure that the resource time so saved is available for deployment in areas where intelligence is required to be applied.
The best CPM solutions today also support a plethora of dashboards that can be customised to the needs of the user. CFOs should ensure the use of a unified solution so that the same underlying data and analytics are presented in the reports and dashboards. And to make life easier, if the solution can provide self-service visualisations and guided reporting, it creates so much more flexibility and empowerment.
Further, such tools must be accessible to the Finance Functions and ideally be controlled by Finance and not be dependent on the IT teams for each and every small thing.
CFOs today must not bind themselves and their Team Members in the traditional chains of spreadsheets and legacy tools. They need the right kind of tools and technologies to use so that they can offer the right information and analytics, at the right place, in the right way and at the right time. The vision should not be restricted to only financial information but must pro-actively cater to the information requirements of all functions, be it Sales, Operations, SCM, HCM and others.
The data provided by the CFOs and the Finance Functions must be “The Single Source of Truth”. This is only possible by using systems or solutions that can integrate data from multiple input systems, be it ERPs, CRMs, HRMS or other sources on a regular basis.
By doing this CFOs can ensure that they provide the Enterprise Leadership with complete operational analytics and financial reporting they need to take the right decisions. And in tumultuous times that we live in today, it will be the most valuable input to pilot the enterprise through the dense fog of uncertainty and making mid-course corrections where necessary.
A case in study is the example of a global electronics manufacturer providing bespoke drawing to delivery solutions worldwide. Given the intensity and complexity of their operations, the accounts reconciliation process involving around 1800 users for over 40,000 accounts was a major thorn due to data quality and timeliness issues. The volume of transactions, disintegrated approach (using spreadsheets), lack of standardisation, lack of visibility of transactional data and importantly, lack of reports and analysis at parent / consolidated levels rendering it impossible to slice and dice the data at group or segment levels resulted in the absence of consolidated list of action items by person and date.
The implementation of OneStream’s unified CPM platform enabled them to gain accuracy and agility in the process, streamline internal controls with a guided certification process, integrate data between GL, Consolidation, FP&A teams and enrich the key factor decision making process. A highlight of the implementation, driven by the platform’s superlative reporting capabilities was to equip the users with the ability to zoom to sub-ledger levels and drill back to transactions, devise high level executive dashboards that provided group level financials and analysis at the flick of a button giving complete visibility and transparency of critical process.
Another very revealing case is about one of Europe’s leading fastest growing consumer food producers with a portfolio of over 68 international brands which are sold globally across 92 markets. With continuous acquisitions and the existing process, they realised they were wasting too much time in manual efforts to collect and collate data. Both management and statutory reporting was completed in Excel and was becoming increasingly cumbersome and prone to error.
The implementation of OneStream’s unified CPM platform enabled them to realise significant improvement in management reporting and financial statements - which was considerably appreciated by many stakeholders. They reaped benefits from the increased reporting transparency and analysis possibilities based on a single version of the truth. Crucially, this enabled the Group Finance team the opportunity to spend additional time on the review and analysis of data and results, as opposed to merely preparing reports. The timeliness, accuracy and utility of the reports has spurred them to move forward to Phase 2, where KPIs would be defined and non-financial data would be gathered, to gain an understanding of BI data quality at an operating division level. Once accomplished, they would deploy driver-based forecasts on both group and local entity level as Phase 3.
And so, I say again: CFOs of The World - You Have Nothing To Lose But Your Chains.
FSN The Future of Analytics in the Finance Function Global Survey, 2020
The Blind Men and the Elephant – John Godfrey Saxe