What is really at the heart of Finance transformation?
Rote memorization of an organization’s expense codes is impressive but not essential. Even top-notch spreadsheet skills aren’t at the top of the list. Sure, these things help, but they’ll only take you so far.
The future of Finance requires unprecedented levels of speed, agility, and resilience. Our recent global survey of over 500 finance leaders shows that many companies are struggling to keep up with increased demands — especially if they remain dependent on spreadsheets and manual processes.
The right technology enables and accelerates transformation. Our research shows that Finance teams were the most successful when getting an assist from a Corporate Performance Management (CPM) platform.
Here’s what we know.
How CPM Helps Drive Agility
If minor tweaks to your forecast and budget take longer than a day, you may need to improve the agility of your Finance group. Changing FP&A processes is an excellent step in the right direction.
In particular, our CFO survey discovered that rolling forecasts are linked with significant boosts in agility. In fact, most companies who use rolling forecasts can quickly change forecasts and budgets — usually in less than a day.
So what are rolling forecasts? It’s the process of continually moving out the end date of your forecast as time passes. This means that a 12-month rolling forecast is always looking out one year into the future — whether you’re just kicking off Q1 or you’re deep into Q3.
But, right now, 12-month rolling forecasts are only used by about 25% of companies. Many companies struggle with siloed data and gaining buy-in from the organization. Many Finance leaders find it challenging to justify the added work, which quickly adds up if the company is dependent on manual processes.
Here are ways that a CPM platform can help companies leap the hurdles of data access while automating processes:
- Integrates data from business and cloud applications to improve data quality and access
- Eliminates manual and repetitive tasks — such as data entry — reducing the time it takes for forecasting while improving data accuracy
How CPM Platforms Drive Greater Reporting Accuracy
If your budgets are consistently off by more than 5%, it may be time to consider zero-based budgeting (ZBB). According to our CFO survey, 60% of companies who use ZBB can forecast revenue within +/-5%, compared to just 35% of those who take the traditional approach.
Despite the clear benefits of ZBB, adoption has been slow. Only about 13% of organizations have embraced ZBB across all areas of business — and 32% of companies don’t use it at all. So why is this? It comes down to a matter of ROI.
The truth is that ZBB takes a lot of time. It requires a lot from the departmental heads tasked with building a budget from ground zero, and from the C-suite responsible for approving the budgets. Plus, coordinating revisions and reviews can be incredibly challenging.
So, while ZBB does elevate budget accuracy, some companies aren’t convinced that the investment of time and energy is worth it. But if you have a CPM, it can shift the odds in favor of ZBB by streamlining aspects of the process.
Here are a few ways that a CPM platform helps support collaboration, data analysis, and budget review:
- Unified access allows budget owners, team members, and approvers to collaborate in real-time during the development and review process
- Better visibility of historical spending. For example, a budget owner can look at actuals to ensure that the budget is based on the best information
- Once the budget is rolled out, CPM software can surface the granular data behind the numbers to ensure that teams stay on budget, one line item at a time.
How CPM Drives Increased Resilience
Companies need to be prepared for whatever is on the horizon — whether that’s a worldwide pandemic or a competitive threat. Unfortunately, only about half of organizations can look out further than six months.
Disciplined scenario planning improves company resilience but, based on our CFO survey, a scant 4% of Finance organizations regularly employ this practice. For most companies — 80% in fact — the biggest obstacle is the time needed to compare and analyze outcomes for multiple different futures. It’s easy for organizations to feel overloaded and overwhelmed when tracking so much data in so many places.
Using a CPM platform to power scenario planning can make all the difference:
- Quick access to actual, budget, and forecast data without managing data in numerous spreadsheets
- Direct data integrations that make it easy to consolidate and analyze data from across systems
- Ability to quickly distribute scenarios for timely review and collaboration
- Visual dashboards to illustrate variables related to different scenarios
A CPM Platform Makes Business Data More Accessible
A CPM platform can be the tool to help you to transform Finance. But it needs meaningful data — something that’s only possible through integration with critical business systems like enterprise resource planning (ERP) software.
“The pressure is increasingly on agility and flexibility in forecasting,” says Andy Burrows, CEO, CFO and Founder of Supercharged Finance. “Ironically, the implications for CPM underline an even greater imperative for seamless integration with ERP.”
“Finance teams cannot afford the time potentially wasted fixing data integrity, consolidations, and reporting inconsistencies,” he says. “Following that, broad and flexible integration with a variety of forecasting and analytics tools will help to bring much-needed control to strategic review and forecasting processes that are often fast-moving and fraught.”
Strengthen the Heart of Your Finance Operations
Digital transformation is a foundational element for the future of Finance. To improve agility, flexibility, and resilience, as well as take on a more advisory role, Finance departments need to automate manual tasks and get granular with data. A CPM platform is the launchpad for all the above.
To learn more about the agility, accuracy, and resilience needed for the future of Finance, read the full survey results.
To see Prophix in action: Schedule a demo