Welcome to the second blog in a series called Trending in corporate finance. This is our monthly roundup of the most important things happening in the world of finance, aggregated and packaged into a quick-to-read and easy-to-skim format. Here’s our selection of the articles and news that caught our attention during October.
- CFOs are hiring more consultants At a time when a new generation of software, such as Anaplan, is increasingly self-managed, it might seem counter-intuitive that finance executives are making greater use of consulting services. However, it’s true—according to staffing firm Robert Half, 61 percent of CFOs surveyed say they plan to bring in consultants in the next 12 months, up from 48 percent who planned to use consultants for the same duties in 2013. Self-managed solutions do appear to be having some impact, with the survey showing that the use of consultants for finance and accounting projects has fallen slightly to 55 percent from 57 percent in 2013. Why does it matter? The key issue here is that companies are preparing to tackle some of the big issues, such as financial transformation and implementing integrated business planning, that they do not feel they have the in-house skills or experience to manage themselves. With so much opportunity in the higher-value finance transformation projects, we see this news making our growing list of partners very happy. Hear more about the agile consulting methodology and approach to technology implementations from Deloitte.
- IT spending is at a tipping point This month we learned that 80 percent of the U.S. federal government’s $80 billion IT spend goes to maintaining legacy systems despite having a “cloud-first” policy. However, the public sector does seem to be the exception—analysts at IDC predict that enterprise IT spend on non-cloud infrastructure is set to slump in 2015 and that a third of all enterprise IT spending will be invested in cloud-based technologies this year. Why does it matter? Despite businesses doing almost all of its corporate banking and payroll online, it has taken a long time to gain confidence in the cloud. But research suggests that those days are over, and we are at the tipping point of the cloud becoming mainstream in finance.
- Technology is changing the way finance operates Technologies such as Software-as-a-Service (SaaS), in-memory computing, and mobile are already changing and enhancing the way finance operates. These innovations help finance teams improve efficiency, drive down the cost of ownership, and enable them to do more with less. But in an article published in the Wall Street Journal, Matt Schwenderman, principal and leader of the Performance Management Technology practice at Deloitte, encouraged finance to think about the disruptive innovations that are fundamentally changing the way business gets done. Schwenderman suggests that these newer technologies, such as big data, predictive and cognitive analytics, and social media, could greatly change the way finance operates three to five years from now. Why does it matter? Better technology will enable finance to capture and make sense of masses of data about customer interactions and events in the supply chain that are currently out of reach. CFOs who find ways to derive value from these technologies will be empowered to drive performance within the finance function and provide more value to the business.
- How to perform better under pressure Many companies will now be immersed in their annual planning cycle, so some great advice on how to perform better under pressure in CGMA Magazine is very timely. There is lots of practical advice about building rapport, controlling your state of mind, and establishing clarity about the ideal outcome along with exercises to help you maintain a better mindset during this busy season. Why does it matter? When working under pressure, the risk of errors increases. Don’t make yourself do double work due to mistakes. Staying calm will help improve accuracy and personal productivity. If you’re part of an FP&A team that still uses spreadsheets for planning and budgeting, this is probably an essential read.
- Best practices in building financial models Halfway through the month, MetLife Inc., the largest US life insurer, saw its stock suddenly drop as the company revealed what has since been described as an “accounting blunder.” Hidden business logic embedded deep within models is always risky and Data Science Central provided some detailed advice on best practices in financial modeling that are specifically designed to minimize the risk of material errors that result in financial results having to be restated. Why does it matter? Agile finance is built on a foundation of models rather than templates. With Anaplan, you can have forecasting models, cost models, and CAPEX models—everything is a model. So it pays to adopt a consistent approach to building them, making it easier for others to understand the logic while reducing the risk of hidden errors. This is important stuff and we would encourage you to sign up for Anaplan’s upcoming webinar to learn the five principles of effective model building, presented by Vicky Ascencio, an Anaplan Client Engagement Manager, who has a wealth of experience across many use cases with clients of all sizes.