This is the first in a series of three articles that explore how a Connected Planning approach can help finance organizations accelerate from record keepers to market differentiators.
The office of finance is no stranger to disruption* and CFOs today seek the mecca of finance transformation—a focus that Ernst and Young describes as enabling corporate strategy and capital and competing agendas. To this end, finance has moved irrevocably past cost-saving and record-keeping disciplines. FP&A teams can now influence business leaders to make better decisions through the use of intuitive planning, analytics, and best practices.
Even with new opportunities for finance to drive improvements across the business, herein lies the rub: Traditional planning architecture, both on-premises and point solutions, as used in organizations today, remains the primary roadblock to unlocking true finance transformation.
A recent research report from FSN revealed that 67 percent of CFOs and senior finance executives say that too many of their resources are tied up with legacy systems and traditional ways of working. (Click to Tweet)
Let’s discuss some of the traditional planning challenges that prevent finance transformation and why implementing a Connected Planning approach can help FP&A teams break down those barriers.
A brief history lesson in traditional financial planning
Not so long ago, in a finance office not so far away, corporate finance professionals were tasked mostly with record-keeping and accounting responsibilities—aggregating, consolidating, and reporting financial data. When Microsoft Excel® hit the personal computer market in the ‘80s, decision support pros made a career spinning turntables of formulas, spreadsheets, and cells to report on actuals and run numbers for what-if planning.
As technology evolved and a steady proliferation of big data ensued, spreadsheets began to lose rank as the be-all and end-all for finance. They lacked the viability and reliability they once had and the dimensionality they never had, which became a flagrant constraint for modelling the business.
Enter: enterprise resource planning (ERP) solutions.
ERP systems made their grand appearance in the ‘90s, bringing the systemization of business processes. Yet even though the back-office capabilities of ERP supported the transactions of finance, they didn’t necessarily support management, planning, and reporting. This shortcoming kept spreadsheets alive and finance teams continued to manually import and export data between the ERP platform and Excel.
Problem solved. Until it wasn’t.
The timeline progression that came next looks something like this:
- Technology continues its path of disruption. Although organizations begin to invest more in front-of-house solutions, finance has to incorporate increasingly more data sets into spreadsheets and inflexible software.
- Globalization grows, and economies shift. Finance is expected to glean new insights into evolving business dynamics through spreadsheets and rigid tools.
- Consumer demands and markets fluctuate. Finance is under pressure to adapt quickly to market conditions using the same cumbersome combination of spreadsheets and slow software.
Flash forward to the present, where layers of traditional architecture and manual processes are peeling under the complexity, uncertainty, and volatility of disruptive business environments—and cause finance teams to struggle to deliver timely, reliable business insights.
All cloud technology is not created equal
The good news for finance is that the emergence of cloud technology has not only lightened the load, so to speak, but it also enables them to shift their focus from functioning as data collectors to influencing decisions as business partners. Cloud, in-memory, self-service planning solutions help businesses automate and structure processes to develop and execute optimal long-range planning, annual operating planning, and forecasting processes.
The bad news for finance is that not all cloud technology is created equal. Adopting a cloud-based tool that can automate FP&A processes is only the first step in a more significant transformation journey that accelerates operational efficiency and stronger business partnering.
Connected Planning technology in finance differs from traditional legacy solutions—even those moving solution architectures to the cloud—because it’s not constrained by inflexible, hardwired templates that restrict optimal planning methodologies. Further, because it functions as a platform, it eliminates the need for multiple point solutions, which still depend on spreadsheets to cover gaps in process and automation.
How Connected Planning fuels finance transformation
For finance, Connected Planning technology can help achieve transformation by first connecting planning processes within the finance department before ultimately connecting plans across the entire enterprise. Its flexible modeling platform can connect processes to business drivers that are related to demand plans, as well as align corporate objectives with financial plans and operational tactics.
Finance teams using a Connected Planning approach can continuously analyze business performance, make real-time adjustments to forecasts and plans amid fluctuating market conditions, and instantly communicate any impacts of those changes to the entire business.
Today, organizations have a tremendous opportunity to completely re-imagine and redefine what one can accomplish through next-generation business planning—you can’t make a transformation omelet without first cracking a couple of traditional eggs.
By transitioning the business mindset to connecting finance with other parts of the business, such as supply chain, sales, operations, and human resources, organizations will be able to implement the tools and capabilities needed to blossom into a market differentiator.