By Tim Wakeford, VP Product Strategy, Financials at Workday
From ensuring business continuity to mitigating risk – when it comes to leading an organisation through uncertain times, COVID-19 has propelled CFOs and finance teams to the forefront of business operations. During the pandemic, financial leaders have been under constant pressure to develop and replan potential financial scenarios, and produce accurate, timely reports. They have also had to take on the responsibility of aligning internal and external audience expectations of the business’ performance. At the same time, many finance teams have found themselves hamstrung by outdated systems that require manual processes, present a lack of data to drive insights, and offer very little collaboration between teams. In order to continue being the strategic guide businesses need and keep up with the rapid pace of transformation, this must change.
CFOs, therefore, need to adopt new cloud-based technologies that allow them to drive data-based insights into their business, and leverage finance intelligence. I know this because many of my CFO clients say this to me regularly. They know that to stay one step ahead and continue to play a vital role in contributing to an organisation’s health and agility, they must embrace data-driven insights and technologies. With this in mind, the question is what should CFOs and their teams be focused on? And crucially – how can they prepare their business to plan for a future of so many unknowns?
Ditch Legacy Systems
The uncertainty ushered in by the pandemic has compelled businesses to revisit financial planning on a continuous basis. This is because, as I have pointed out, they now must build and forecast for a range of scenarios, spanning several eventualities. For instance, CFOs need to plan around which path the business may need to take financially based on restrictions, or identify which of their products or services may grow as they aid customers in recovery. Critically, CFOs must articulate clear thresholds and suggest what financial actions a company should take and when.
Within this context, legacy, outdated processes that rely on Excel Spreadsheets and siloed systems need to go. Old technology, which limits visualisation and collaboration between departments has no place in a business that needs to constantly access the latest data to make effective decisions.
The More Data, the More Agility
In the European Parliament, a briefing questioned whether data is the new oil of the digital economy. We believe it is. Think about it this way, much like oil in the 18th and 19th century— raw data isn’t valuable, but when gathered accurately, viewed collectively, and connected to other relevant data in a timely manner, it becomes invaluable. Let’s look at the UK retail sector as an example. It was quickly evident that ecommerce sales remained solid throughout the entirety of 2020, as consumers continued to shop online. In fact, new data from IMRG states that online sales grew by 36%, which is the highest growth seen in 13 years. This is in contrast to overall retail sales, which fell by 0.13%, marking the lowest annual growth figure for 25 years. But retailers like ASOS could only make the most of this trend, as both their finance and HR teams had the right data to hand. The retailer reported pre-tax profits of £142.1 million for the year to August 31, up 329% from £33.1 million a year earlier, as sales jumped 19% including 18% growth in the UK.
When reporting this, ASOS suggested it was able to do so as it was able to shrug off soaring costs by making savings across the group, and identifying a trend that customers were buying more carefully and returning less. Something that no doubt would not have been possible without having intelligent data-driven insights to hand. It goes without saying – while sometimes painful, change can create new opportunities. To unlock these opportunities, finance teams must adopt new, data driven models. Fuelled by finance intelligence and predictive insights, only then can businesses respond effectively to today’s turbulent environment. CFOs and their finance functions must be adept in leveraging this technology. This will translate to less time verifying numbers, and more time making data connections, explaining its implications to the business, and applying the finance lens on decision making. Take Puma, for instance. Puma digitised its payroll processes, adopting Workday’s cloud-based system. In doing so, the business streamlined its operations, enabling them to access absence rates, turnover and data in real time.
The Quest for Transparency
Communication and relationships are cornerstones in the strategic role of the CFO. Taking the lead in proactively conveying the financial and strategic elements of crisis management to the wider business is therefore vital. Think about it. CFOs must establish relationships with the CEO, the board, department leads as well as the wider workforce, to ensure they have the insight to make crucial and timely business decisions. However, to do so, finance leaders must have access to a holistic view of data across their organisation and be transparent with the decisions and planning process. Yet despite this need, over 50% of CFOs believe access to data within their organisation remains outdated and siloed across departments.
By sticking with a fragmented approach, finance teams will struggle to harness the true power of finance. On the other hand, finance teams who embrace digitised processes can offer and communicate timely solutions to change. For example, analytics platforms which incorporate clear visualisation capabilities will enable the dissection of high-density data sets. In turn, this will offer CFOs a deeper understanding of insight, such as efficiency and profitability analysis, across their organisation. This will ensure transparency across the business and allow them to focus on opportunities for growth and ultimately – lead their business through difficult times.
Harnessing the Power of Finance
The recent transformation experienced by finance teams will continue to enshrine CFOs and their teams as trusted business advisers. However, to fulfil their purpose and deliver for customers, sustain profitability, look after their employees, and succeed – today’s finance professionals must harness technology. And that’s because the right technology will enable collaboration, arm the organisation with the right data-driven insights to make better decisions, and ultimately make the organisation more agile and adaptable to change.
