For too long, the Finance function has been seen as an afterthought, but this perception is changing. Finance no longer just collates historic information up to a particular point in time. Instead, Finance is critical in making decisions or adjustments about future operations for a company and its customers, and this strategic role depends on data. For Finance to have any credibility, it must be able to manage data, analyse data and drive improvement across the organisation.
Today, the question Finance teams must answer is not WHETHER they have enough data from Sales, Finance, HR or Supply Chain groups. Rather, Finance teams and organisations must tackle HOW they plan to leverage their data to develop insights, drive performance and create a competitive advantage. And that starts with strategic Finance Transformation.
Software is Changing the Status Quo
As organisations consider their own Finance Transformation, they need to recognise that their customers are living in a world where Finance is also changing for them. How? The consumer’s relationship with money is changing very quickly in a way that’s both significant and permanent. New stores of value, such as digital wallets, exist. New point-of-sale options like Klarna are also emerging. The physical incarnation of Finance devices, products and services may soon disappear (e.g., we won’t need cards if there is stored value, or perhaps a biometric payment option).
The pandemic drove forward the digital economy, and changes in how people can transact directly impact revenue opportunities in the market too. If, however, an organisation can’t cope with new streams of data, new payment methods, new financing options and how people interact with money, then the organisation as we know it will not succeed. In effect, software is changing the status quo.
This pace of change will only increase over time, including with developments in AI and machine learning, and businesses need to understand these changes. Most importantly, though, enterprises must understand how these external changes can create internal opportunities to leverage new technologies and new techniques to drive performance quickly and intelligently. Over time, embracing change and future-proofing the Finance function will create opportunity to gain a competitive advantage.
Data is key to success.
The efficient collection, storage, management and dissemination of data are increasingly critical to developing and sharing critical insights. Why? Because this agility means you can learn, develop and iterate on important plans that impact internal processes, products, suppliers and customers – and do so quickly and at scale. Unfortunately, the largest and most complex organisations struggle with such agility due to over-reliance on legacy software and fragmented tools. Now is the time to rise to the challenge through innovative Finance Transformation.
Consider that monthly reports give you just 12 data points in one year. Wouldn’t decision-making be more effective with weekly and daily data (see Figure 1)? Data latency and slow reporting will inevitably mean data is not fully leveraged or used effectively. And what a large enterprise cannot manage effectively, many newer and smaller entrants can.
Data and reporting must be delivered in a useful, visually pleasing (see Figure 2) and understandable format which can be interpreted and leveraged to improve your business, your processes, your supply chain and, ultimately, your customer experience. Access to relevant and timely financial data is a competitive advantage because it enables and empowers decision-makers.
Leave legacy behind.
The future is software-driven. Today’s incumbents can be disrupted almost overnight, usually due to a lack of planning and future-proofing. They leave themselves vulnerable by not asking how technology can help them understand the business in real time and create additional value. Newer competitors don’t suffer from the same legacy- or process-driven inertia. Instead of focusing on rebuilding backends, they concentrate on delivering solutions that add genuine value. Furthermore, we will increasingly see that Finance does not require a long supply chain of people involved in making financial decisions. Unsurprisingly, with the right data at the right time, software is actually very good at creating predictive forecasts.
Ultimately, business success boils down to customer success. Whether related to your internal customers, the end customer or your supply chain, the ultimate key business indicator (KPI) is always what it costs to deliver the best level of customer experience. Businesses must understand their critical KPIs and have access to them to create real-time analysis. The days of the Finance department being the data laggard are over. Focusing only on internal reporting does not add value to the customer. Finance therefore needs to be an internal business partner, feeding not just data but “information” in the correct format to the right people at the right time to enable them to make better plans and decisions.
As we move into the future, change will be exponential, and once it accelerates away, it will be very difficult to catch up. Future-proof your Finance team now. Consider how technology can help you leverage your existing and future data to ensure your enterprise comes out on top.
To learn more, click here to watch a replay of my recent webinar, “Future Proofing Finance.”