Technology is changing the role of the CFO in unprecedented ways. Externally, it’s transforming how your company does business through new competition, new market opportunities, and new ways to deliver value to customers. Budgeting software also delivers an opportunity to transform how you work inside the organization. Tech-savvy CFOs are looking to modernize their company’s systems and IT infrastructure to help the business boost productivity, gain a competitive edge, and stay flexible for the future.
The pace of change from a business perspective is increasing the demand on your organization for insight from all stakeholders, including executive peers and operational managers. They’re asking questions such as:
- Are we hitting our revenue per customer targets?
- Why are operating costs higher for our newest locations?
- Are our new services offerings as profitable as the existing ones?
- Has the new pricing model reduced customer churn?
More Numbers Do Not Equal Greater Insight
Finance teams are rushing to meet the demands for insight by providing more visibility into what’s going on with the business. In one study from CEB (now part of Gartner) 64 percent of respondents said that the amount of data contained in management reporting packets over the past two years had increased. In fact, the average length of management reports is 21 pages and contains a staggering 6,000 to 7,500 data points.
The same survey found, however, that the average amount of data deemed useful in management reports was only 5%. Clearly, the current process for delivering relevant information and visibility into whether your strategies are effective is not serving your business. It’s not serving your finance team, either.
The problem can be found in the rows and columns of your favorite spreadsheets. In its study, Spreadsheets in Today’s Enterprise, Ventana Research found that even casual users spend a day a month on spreadsheet maintenance. In organizations where spreadsheets are in heavy use, about 18 hours a month is spent on maintenance. So while you may be getting a lot of visibility—remember the 6,000 to 7,500 data points—you’re not receiving useful, helpful, insight.
It’s no surprise, then, that an Ernst & Young survey found that CFO confidence in reporting had dropped across all key aspects relative to the prior year. “Corporate reporting needs to be all things to all people—relevant, timely and cost effective,” says Peter Wollmert, EY’s global and EMEIA FAAS leader. “CFOs need to step back and evaluate what they are producing and address concerns over confidence and effectiveness quickly. To delay means that the timeliness and accuracy of reporting will continue to affect performance. Corporate reporting will only serve its intended purpose if the CFO is confident of its value.”
Active Planning Turns Visibility Into Insight
The rapid pace of change demands that CFOs embrace technology to deliver insight that’s useful and relevant—something that spreadsheets can’t provide. This requires a solution that enables a process called active planning. Active planning gives you the power to better manage your business, by analyzing and understanding historical performance to inform and predict future performance. An active planning process is the key to accurate, agile plans that help drive business growth.
Specifically, active planning delivers three benefits:
- Better collaboration: Active planning encourages broader participation across the organization, by leveraging technology that makes it easier to establish a single source of shared data and customized dashboards that give users ready access to information. Now, individual users are accountable for their part in the budgeting process, which drives ownership.
- Comprehensive capabilities: A single, comprehensive process drives optimization widely across the diverse parts of the business, and the organization. You can reap huge benefits from real bottom-up planning and develop a robust picture of the business.
- Continuous planning: Plans are produced rapidly and can be quickly iterated so ongoing, real-time planning and rolling forecasts become the norm. Financial planning and c analysis professionals can provide insights to help the business respond rapidly to changing market conditions or competitor activity.
Technology has forever changed—and will forever continue to change—the role of CFOs. Tech-savvy CFOs will use this innovation to help their finance team work more efficiently and help their business maintain its edge in an increasingly competitive marketplace.