Gavin Fallon, General Manager for Board International in the UK, Northern Europe, Middle East, India and Africa, explains how intelligent planning can help combat uncertainty
Uncertainty is here to stay. Rising costs and inflation, an ongoing pandemic and continued supply chain pressures all mean that survival is tougher for businesses. As a result, leaders across the globe are looking for unique approaches to manage the impact of change to remain competitive. For many, this means planning for new unknown scenarios to navigate these challenges successfully.
Digital transformation has changed the role of finance
At the same time, many businesses have undergone digital transformation, spurred on by the pandemic, yet as digital transformation permeates throughout organisations, the role of the finance function is changing. Until relatively recently, finance leaders were focused on reducing operating costs, while that dynamic still remains, continued transformation is now a first priority for finance leaders. According to our research , more than one third (36%) of global financial decision-makers believe that a fundamental transformation of the finance function is needed to survive.
After the last few years, finance leaders know that they now need the ability to adapt at a moment’s notice and make quick decisions to stay ahead of the market. Companies want to move faster, make more accurate decisions, and see quicker returns to compete with agile competitors for ever more discerning customers. But most finance leaders also know that this is an impossible task when planning and decision-making is disconnected across the organisation. A siloed approach can only take you so far.
The hidden cost of inaccurate planning
The cost of living crisis has brought this challenge again into the spotlight for many CFOs, and this dynamic of change is here to stay. From rising energy costs, the impact of Brexit to the post-pandemic reset, organisations will always face challenges when it comes to planning and successfully navigating macro-economic change.
However, many organisations still rely on disparate data and point solutions for planning and analytics. This can lead to miscommunication between departments, significant manual efforts from teams and a high risk of human error. This slow, outdated approach makes it challenging to deliver the quick and accurate insights needed to make strategic decisions to respond to uncertainty.
Data: the most strategic asset in the digital age
When change happens, businesses need financial planning and analytics capabilities more than ever to capture the insights needed to drive more accurate business decisions to maintain or even increase profitability. In these circumstances, CFOs need complete transparency of the business so that performance can be reviewed quickly, plans adjusted and the impact of different decisions analysed and simulated.
For finance, that demands a shift from its traditional scorekeeper role to being a performance driver. Our research reveals that 91% of finance leaders see monetising data as holding the highest transformative value, specifically by generating measurable economic benefits using enhanced data analytics.
They believe that CFOs will have technology-driven insights delivered over the cloud, enabling them to see opportunities and work on these with the business side-by-side. This requires in-depth but accessible reporting that can project performance and accurately adapt forecasts to reflect changing market conditions
Unlocking the true potential of finance
Many businesses overlook the potential of the office of finance. Less than half (44%) of finance leaders have total confidence in their organisation to harness the finance function as a key business asset, rather than simply back-office support. This means that the organisation’s leadership needs to support finance to become more strategic and accelerate the digital enterprise by making the function the hub of strategic data.
The true impact can only be understood through a smart finance function that has access to data instantly and a good understanding of the expected outcome of any strategy or change. That means aligning finance with operations, not just to cut costs, but to identify new strategic opportunities. Those who embrace digital transformation will continue to benefit from a faster, more integrated way of working across finance, strategy and operations.
The role of financial planning and analytics
Finance leaders have seen the benefits technology can drive over the past few years and now many want it for themselves. Unsurprisingly, in a world of continued uncertainty, they want to be able to plan effectively with scenarios that cover a range of events and challenges and adapt to whatever comes their way.
There is a clear appetite for real-time scenario planning tools. The vast majority (94%) of finance leaders see those applications as important to navigating uncertainty and moving away from a single view of the future. This stems from the fact that two-thirds (67%) believe their role would largely benefit from being able to model key business and operational drivers into financial plans. Uniting strategic, financial and operational planning can ensure that the business can respond quickly as a whole to change and help to unify the team towards working together to the same goal.
As many finance leaders feel they are emerging from navigating the challenges that came with a global pandemic, they are now facing a shift in purchasing habits due to the rising cost of living. Many will be asking themselves what the worst-case scenario could be, how they can cut costs or how to shift stock, for example. These are questions that are always on their mind at the best of times but in crisis mode they are exacerbated.
There are decisions that need to be made quickly based on an accurate picture of the business’ operations and finances. Organisations with a resurgent finance leader focused on more intelligent approach to financial planning will be better equipped to tackle the vagaries and unpredictability of the today’s evolving marketplace to plan for what comes next.
