Danielle Dahlstrom

Director of Product Marketing, Finance Solutions

Finance leaders must rise to the challenge to transform their organizations to stay relevant. Here’s how to chart a course to modern finance.

Maintaining a status quo approach to financial planning is inadequate for today’s volatile world. Relying primarily on historical data, minor adjustments, and manual aggregation is a recipe for disaster. This approach is not only resource intensive, but it’s prone to immediate outdating, rife with errors, and an inaccurate representation of the business today and where it needs to go tomorrow. It also limits visibility into every facet of performance, only taking into consideration the data individuals choose to —or are able to — share. Yesterday’s financial planning standard also puts finance leaders in the unenviable role as a “record keeper,” holding on to manual work, hundreds of spreadsheets, and legacy IT processes. This makes it nearly impossible to deliver timely, reliable business insights. 

Are you a record keeper? Here are some commonly shared traits: 

  • Static, predictable processes that don’t allow for unforeseen deviations when there is business disruption  
  • Lack of timely, reliable business insights from across the organization where the information resides 
  • Limited ability to reconcile data from multiple data sources  

If this sounds familiar, it’s because it’s not an uncommon situation for most organizations. Many finance leaders find themselves stuck in record keeper mode as performing the necessary plans and forecasts is so arduous, it doesn’t leave time for exploration of other tools or process improvements – it’s a vicious cycle of wanting to change but struggling to find capacity. 

If record keeping is your status quo, it’s time to chart a path to more effective, modern financial planning and forecasting.  

Cross-departmental partnership and efficient operations are early steps of modernization 

Even if being a record keeper feels functional, the fact remains: Limited lines of sight hinder the entire organization. Without open lines of communication and data sharing, each department is subject to uninformed decision-making and misalignment to organizational goals and targets. Aligning all corners of the business around overarching strategy creates progress, and from there, opportunities for finance leaders to drive efficiency and collaboration emerge. 

The efficient operator 

Investments in process automation and access to information has been the focus for many finance leaders who are pressured to make insightful decisions quickly. Efficient operators benefit from the ability to have fast and reliable processes, however, they’re still challenged by the inability to align objectives, plans, and tactics across the organization. 

This progress in operations but stagnation in collaboration happens because many moves toward digitization are focused on efficiency. This makes sense as it frees up analysts from the million-spreadsheet march and allows them time for more analytics. But transformational leaders can also start making moves toward being a partner across the business and aligning their processes for better outcomes overall. 

Finance is historically a lone wolf within the organization, as the collectors of information with imposed deadlines and the ultimate authority to approve or reject plans. This is key to why the efficient operator still needs to move toward shared ownership of outcomes and visibility into strategic targets and how each component of the value chain is critical for success. Connection builds bridges between finance and cross-functional stakeholders. 

The analytics partner 

On the other side of the coin, there are finance leaders who have evolved the function from record keeper to analytics partner. Where efficient operators made strides toward improved processes, analytics partners focused on improving data sharing across the company. 

This evolution aims to share data from all parts of the organization and allows finance and other stakeholders to collaborate on decisions using performance indicators from across the business. It adds strong business insight, improves partnership across the business, drives accountability, and better addresses the impact of possible moves. This cross-functional visibility and shared ownership provides an opportunity for finance to shine and create value across the organization. These partnerships require trust in information and the belief that collaboration will lead to both accuracy and confidence in the data being used for improved decision-making. 

These changes are a step in the right direction but aren’t a total course-correction for modern finance. It is the intersection of data, people, and processes that meet the new mission of finance to drive revenue, improve margins, optimize resources, and mitigate risks. This melding of capabilities across these areas truly differentiates the transformational finance leader from the competition and creates the foundation for agility, future readiness, and organizational success. 

Market differentiators create businesses with the biggest competitive advantage. 

To really transform legacy financial planning and forecasting into the future of finance, leaders need to become market differentiators. This role takes the improvements that both the efficient operators and analytics partners made from the traditional record keeper role, and addresses the challenges still faced by both. There are some key things the market differentiator does to transform finance. 

Automate core FP&A processes 

After evolving manual FP&A processes to automated systems, these leaders can use the time savings to adopt best practices such as: 

  • Leverage advanced forecasting methods, such as driver-based, rolling, demand-based, and more. 
  • Identify leading indicators and impact.
  • Monitor operational data versus exclusively financial data. 
  • Evolve the planning process to be dynamic and continuous versus calendar-driven. 
  • Evaluate a plan and perform a reforecast when there’s a market event like a competitive move, supply chain disruption, or regulatory change. 
  • Create an environment of planning as a strategic tool versus a necessary quarterly task to be performed half-heartedly. 

Link automated processes to specialty plans  

Once core financial processes are automated, it’s easier to link them to more specialized planning. For instance, the following can become part and parcel of the financial planning process rather than time-exhausting “extras:” 

  • Pricing modeling and scenarios 
  • Profitability and margin analysis 
  • Zero-based budgeting 
  • Liquidity modeling and cash flow forecasting  

Connect finance to sales, supply chain, and operations 

This is where transformational finance leaders actually transform the culture of the organization. By connecting finance to the other stakeholders in the company, regardless of department, the market challenger is able to: 

  • Break down silos. 
  • Operate as one team focused and aligned on strategic targets. 
  • Share responsibility for not just respective business units, but the whole organization. 
  • Find ways to open lines of communication for data-sharing, agile decision-making, and joint responsibility for financial results. 

By taking steps to move from a frustrated record keeper to a transformational market differentiator, finance leaders can bring their organizations to a new era of financial planning that leads their business to the forefront of the market.  

The technology exists. Become a market differentiator before it’s too late. 

Truly modern financial planning goes well beyond automation. Technology is now advanced enough to support real-time data sharing, align and involve stakeholders for current insight, enable machine learning for intelligent predictions, model “what-if” scenarios for impact and possible contingencies, and much more. With the path to modern finance laid out before you, the technology is there to usher you through the journey. The time is now to adopt the technology necessary to bring the business into the future. Are you on the path to becoming a market differentiator? 

Become a transformational finance leader.