The finance department is under constant pressure to increase its strategic value within the company while living in a world where they must learn to “do more with less.” If this sounds familiar, this blog might be for you.
I recently did some research to investigate some of the most pressing issues for FP&A in 2019. While most will sound familiar, these concerns are being compounded by today’s market issues.
At a high-level, the research indicated:
- CFOs are still not armed with enough information to confront their business risks head-on
- There is still a significant lack of business insights, and the data available is not being transformed into useful information
- Month- and year-end close and reporting still consumes too much time
- Your analysts are still spending too much time looking for data and not enough time acting on it
- Budgeting and forecasting are still very inefficient
- These issues are exacerbated by the size and scale of the company (multinational)
Sound familiar? You’re not alone. Unfortunately, there are newer trends that are further complicating the above.
- DATA: To make better decisions you need to analyze your data. However, the rate in which we collect data is compounding at an astronomical rate. As of 2018, there are 2.5 quintillion bytes of data created each day, meaning that 90 percent of the data that exists in the world was generated in the last two years alone. And this pace is only accelerating daily.
- MOBILE: The ability to do our jobs when and where we want is no longer a privilege but a growing expectation with both employers and employees.
The concepts of increasing data and the hyper-connected employee are further complicated by ongoing challenges in FP&A, putting an additional responsibility on the Office of Finance to consider not only improvements to financial processes but also to the technology and the tools they utilize without blowing their budget.
For me, the answer to these challenges is cloud computing.
What is cloud computing?
Cloud is the practice of using a network of remote servers hosted on the Internet to store, manage, and process data, rather than on a local server or a personal computer. Compared with traditional IT-managed server-based software, the benefits are many:
- Security – cloud vendors are simply the best at securing your data
- Scalability – as you keep collecting more data or need increased computing power to process it, cloud resources can scale to meet your changing needs
- Increased collaboration – access your application and results from anywhere, anytime on any device. Remember you have a growing mobile workforce, this 24/7 access increases their productivity and improves their job satisfaction
- Automatic software updates – get the most value out of your applications by having the latest features available to you instantly
- High availability and disaster recovery – the big cloud vendors are way better at keeping their environments running than in-house IT teams, and they have a massive investment in ensuring your business data is backed up
- More affordable – all things factored in, the cloud is simply more affordable and will provide a better ROI, especially as your company grows
- Ability to leverage Artificial Intelligence (AI) – this is the game changer! There is nothing artificial about intelligence that could help your Office of Finance be more proactive, make better predictions, and take on a leadership role in your organization. Researchers estimate that AI could automate repetitive tasks that eat up a third of finance managers time, freeing them up to work on more strategic operations. AI can also detect risky transactions and reduce fraud, speeding up financial processes and month- and year-end close with greater confidence. Artificial Intelligence is cloud-based and is predicted to be one of the leading factors driving greater cloud computing adoption by 2020 (Source: Forbes.com).
If this is new information to you, I might be little concerned, as the adoption of cloud in business has officially hit critical mass. 83% of enterprise workloads will be in the cloud by 2020. On-premise workloads are predicted to shrink from 37% today to 27% of all workloads by 2020 (Source: Forbes.com). Therefore, the most common platform for new business application adoption is cloud by a long shot.
Why should your finance applications move to the cloud? Well, the adage of simply throwing more people at the problem doesn’t economically scale anymore.
In the Prophix world, moving your Corporate Performance Management (CPM) software to the cloud facilitates the addition of AI capabilities. These new capabilities enable the finance department to gain deeper insights, improve and speed up financial processes, reporting and month-end close. It will do this more efficiently and affordably than ever before, regardless of how big or complex your company gets or how much data you have.
In my next blog, I will expand on this topic and dive into the emerging and compelling benefits of CPM combined with cloud and Artificial Intelligence. I’m calling that the Third Wave of Financial Automation.