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In fact, in a recent study by SAP and CFO Magazine, more than two-thirds of financial executives noted that in the last five years, it has become harder for a company to maintain a competitive advantage in its respective market, and 59 percent feel doing so is only going to get more challenging in the coming years.
In adapting the finance department to succeed, technology innovation emerged as an overall trend echoed by financial executives across industries.
Agility Key to Staying Ahead
More than three-quarters (77 percent) of survey respondents noted that greater agility in responding to business threats and opportunities has become a larger source of competitive advantage in the last five years.
For financial leaders, having an agile business is closely tied to their ability to deliver real-time analysis. Beyond reporting on historical data, finance executives who will lead the pack in the coming years will be able to deliver clear, actionable, future-looking insights to company decision-makers. By working closely with IT, and leveraging technology to automate outdated systems and standardize financial reporting across an organization, CFOs can not only widen the breadth of data insights available, but also deliver those insights more quickly.
Current IT Systems Fall Short
While technology is key to improving real-time insights and overall business agility, the study also found most financial executives feel their current FP&A systems fall short. In fact, more than half of respondents feel their company often trades off when it comes to the depth of data and complexity of calculations used for financial planning and business analysis to produce reports in a timelier manner.
Additionally, data migration is another area where respondents feel IT systems should be doing more to automate processes. Eighty-three percent of respondents believe their companies would financially benefit from devoting less time, attention and resources to data migration and manual reconciliation.
By reevaluating current IT systems, and implementing new technologies that allow for greater automation, finance leaders can ensure they have the tools needed to stay competitive in the market, especially as agility becomes a core element of success. So what can CFOs do to improve financial planning and maximize the impact of advanced technology?
There are four steps CFOs can take to improve the reporting process:
Step One: Plan
The key to the planning step is centralizing and standardizing. CFOs need to assess their existing checklists and design templates for each process. By comparing the steps taken by each entity, finance departments can identify best practices while weeding out negative steps.
Step Two: Execute
After the plan has been made, it is time for the execution stage. Using the templates created in the previous step, financial leaders should create a task list with hard deadlines. In the execution phase, it is critical to identify what tasks can be automated and leverage an advanced technology solution to help in that automation process.
Step Three: Monitor
Close monitoring helps finance teams identify issues, overdue tasks and resource bottlenecks earlier in the close cycle. This is another area where the right technology can play a critical role in allowing you to monitor progress and drill down into specific details. Being able to monitor effectively helps the whole process run smoothly.
Step Four: Analyze
Analyzing the results of a planning process effectively with manual tools like Excel can be extremely difficult. Tools that can automatically record results are critical for finance departments in helping to analyze how long it took to complete each task and to compare completion to the plan. Having the ability to analyze this makes it easy to identify bottlenecks in the process and highlight areas for improvement.
As CFOs are increasingly challenged to improve their contributions to high-value planning and analysis, finance is becoming reliant on IT integration to deliver insights that help inform company decision-making. Finance leaders need to put pressure on IT and evaluate current support systems to stay competitive and opportunistic in the market, and drive overall business value.
Henner Schliebs is vice president and head of Finance Audience Marketing at SAP.