Is Your Finance Organization Thriving or Merely Surviving?

Coffee-break with GameChangers

Enterprise performance management (EPM) solutions are redefining how organizations manage and grow business. New technologies have exploded and the possibilities must seem endless to those in charge. In a recent SAP Game-Changers radiocast, panellists Steve Sussman, VP of sales and marketing for Column5; Michael Svolos, senior director of TekLink; and Karuna Mukherjea, senior director of product marketing on the SAP solutions for EPM team, offer insights into three main areas: enterprise mobility, cloud, and social and beyond.

Determine the value of your enterprise mobility processes
Moderator Bonnie Graham quotes Mukherjea as saying that “mobility is core to a successful EPM solution workforce.” Mukherjea asserts that EPM processes have gone mobile, giving users the ability to provide real-time input while on the job.

Mobile solutions are helping companies expand and accelerate EPM advancement, but, as Sussman cautions, “without doing the hard work up front of rethinking the process, they are putting themselves at risk of actually seeing any value from that investment in the project.”

He continues, “The big challenge sometimes is to convince the organizations not to just apply the technology to the existing process but to really use that as an option to rethink the process and how it currently operates today.”

Svolos echoes, “It’s important not to fall in love with what you are doing but rather understand why you are doing it.” This is the kind of distinction that makes the difference between surviving and thriving.

Accelerate innovation through cloud adoption
Svolos explains that many of his larger customers – Fortune 500 companies – are not adept at quickly shifting technology. With the cloud, however, they’re able to quickly see results such as proof of concept – enabling them to take their data, try it out on a cloud-based system, and achieve the ROI that they are expecting.

Mukherjea adds that cloud “has not only reduced the barrier to entry into organizations as we develop new solutions… but more importantly it’s about agility.” Svolos agrees that part of the allure of cloud is the predictability of cost to implement and support the platform over time.

Get ready to go “mocial”
And get ready for another industry buzzword. According to Mukherjea, the terms mobile and social have formed the amalgam “mocial,” referring to social collaboration that promotes work-life balance.

Many new technologies, such as the SAP Jam social software platform, foster real-time collaboration within a small network. Integrated with EPM processes, such platforms can greatly simplify and accelerate problem solving or keep problems from cropping up in the first place.

So where can all these innovations take EPM and finance? The panellists foresee a new title called “Chief Financial Technology Officer (CFTO)” coming into the mix to more seamlessly handle the new technologies that will define EPM.

To learn more, listen to the full radiocast.

How do we transform finance to cope with constant change? One word; Collaboration!

From Steve Player, North America Program Director for the Beyond Budgeting Round Table (BBRT)

Throughout my ten part blog series I have been discussing how CFOs can use new technologies to help leverage the finance team in providing greater organizational value. In the capstone summary I also wanted to note that underlying each of the changes discussed is a theme of greater collaboration.

Businessman and businesswoman using digital tablet in office

In many ways technology is enabling this collaboration. But your speed of adoption will increase if you start with a spirit of collaboration before any implementation begins:

  • A strong CFO looks to collaborate with his or her key lieutenants. More effective plans are developed when everyone is looking to optimize the whole organization.
  • A strong corporate finance team looks for ways to team with the business units they support. How can information be shared across units to make the whole stronger than the individual parts?
  • Strong finance teams also look to gain advantage by teaming up and down the value stream. For instance, the concept of eliminating duplicate data entry extends up and down the value stream. Why re-key a key vendor’s data or ask your customer to re-key yours?

New technologies such as integrated planning modules are leveraging collaborative work flows which are often imbedded into the design of new modules. These systems provide real time status of work flow which can be tracked automatically. Group messaging and polling functions facilitate online dialogues which can be happening with people around the globe. Joint work efforts can be tracked by automated audit trails maintaining change history. Teams can access the organization’s knowledge bases though on-line content management systems – anytime, anywhere. Even security concerns are better addressed as prepackaged solutions build in the security checks.

Old approaches that relied on linked spreadsheets had finance teams constantly trying to validate if they were working on the right numbers. Past surveys [1] have estimated that FP&A teams spend 47% of their time collecting and validating date. They spend another 30% of their time administering the planning process. As a result, they only have 23% of their time to do any real value added planning work. The new technologies we are discussing (mobile, in-memory, predictive analytics, and cloud) can flip this equation leaving finance teams free to focus just on collaborating and doing real planning work.

In addition to collaboration, success with these new technologies requires three key elements. The first is leadership and whether they are willing to explore new ways that finance can improve organizational value. This is likely a CFO who is looking to have greater impact. The second is an organization with a willingness to change. In addition to collaborating, there also needs to be an openness to what is possible. This leads to the third element which is experimentation. As Peter Drucker advised, systemic innovation “consists in the purposeful and organized search for changes, and in the systemic analysis of the opportunities such changes might offer for economic or social innovation.” [2]

Whether you are a CFO or just someone in looking to add greater value, ask yourself these questions:

  1. What changes should we be making to expand the value our finance team creates?
  2. How should our planning, budgeting and forecasting process change to take advantage of the next generation planning tools already here?
  3. How can in-memory computing help us harness Big Data for greater insights?
  4. What predictive analytics will provide us with greater lead time for improving?
  5. How can we better reach our strategies by aligning our execution efforts? What should be dropped to create capacity for what needs to be added?
  6. Which customers provide our current profitability? How will that change in the future?
  7. How can we improve the return on all expenditures?
  8. How can we eliminate wastes by moving to real time consolidation?
  9. How can we increase our response times using real time close and disclose approaches?
  10. How can finance improve collaboration?

Finally, how can finance find the time to pursue these goals? That begins with your leadership and identifying dumb stuff you are currently doing that should stop. I hope this series of blogs have helped get you started.

[1] See joint studies by APQC/ Beyond Budgeting Round Table (BBRT) and by Business Finance Magazine and BBRT. See “The Budget (1922 – 2009) Is Dead” by Jack Sweeney, Business Finance magazine, June 1, 2009.
[2] Drucker, Peter, Innovation and Entrepreneurship: Practices and Principles, (New York: Harper & Row) 1985, page 35.

Steve Player

Real time close and disclose

From Steve Player, North America Program Director for the Beyond Budgeting Round Table (BBRT)

As we continue to examine how technology is helping CFOs successfully deliver greater value, I wanted to extend last week’s discussion of real-time consolidation to also include real time closing and disclosing of financial information. These can provide real benefits to all organizations from small to gigantic and everyone in between.

Technology has expanded the work day. Many business are 24/7/365 (hours per days/ days per week/ working every day of the year). The business is like a ship on the ocean, constantly serving. In most organizations, the work does not stop. For these, an accounting close of a month, a quarter or a fiscal year is merely a defined reporting period for comparison purposes. You want it to be accurate, but you also want it to be as unobtrusive as possible. For most, that means cut-off procedures with minimal disruption.

Clock in train station, Liege, Belgium

Achieving real time closing follows this same steps discussed in last week’s real time consolidations – it starts with finance efforts to stop doing dumb stuff. This means eliminating the need for duplicate data entry, converting manual account reconciliations to automated approaches, simplifying other monthly systems interfaces, and getting systems to exchange and validate information.

About 15 years ago, this approach was described as being able to do a virtual close. One of the key benefits claimed was providing management with financial information faster. Frankly, I see this as a misleading claim. In successful organizations, any critical information needed by management is already being provided.

The real reason that CFOs need to move to real time closing is that doing so will free up a huge spike in the finance team’s work load. Streamlining the manual interfaces and account reconciliations means digging up the root causes and eliminating them. The monthly time saved by these improvements is better spent developing and implementing improvement plans.

The most recent advances have extended real-time information to also include the disclosure process – which has been called the last mile of reporting. The use of the new XBRL reporting language enables information to be tagged and reused. Initially, the benefits of this development was sold as a check to make sure that any late changing numbers would be captured and updated. When Sarbanes/ Oxley began to require CFO the sign that their financial statements were accurate, this feature became an even bigger deal. Adding this capability has been a must have for most publically traded companies.

As finance teams have become more familiar with XBRL, they are beginning to see opportunities to expand its use. From its roots in financial reporting, new disclosure reporting is expanding additional external reporting such as:

  • Linking to all footnote reporting including executive compensation
  • Covering sustainability reporting issues
  • Tracking social responsibility issues

It is also begun to be used for internal reporting such as:

  • Tracking total costs of ownership
  • Quality performance reporting
  • Measuring employee personnel productivity

By using these technologies to help CFOs cover the basics, they also create more capacity to expand into additional areas. Next week, I will recap our process and look at what else the future may hold.

Steve Player

The drive for real-time consolidations

From Steve Player, North America Program Director for the Beyond Budgeting Round Table (BBRT)

Our exploration of how technology has expanded the roles of CFOs has covered a lot of territory. Whenever I am facing tremendous change, I remember Stephen Covey’s advice “The key to the ability to change is a changeless sense of who you are, what you are about and what you value.”[i] So it is also with the roles of CFOs. When CFOs focus on key objectives, they can leverage process innovation to achieve amazing results. While technology enables us to reach out, it also improves the day-to-day work at the core of financial operations. A prime example is the move to real-time consolidations.

But I need to warn you, be prepared to break through the walls of resistance.

I provide this caution because many in finance are jaded by past systems that were built with IT tools that often look like they were invented in the Stone Age by comparison. I think that has to do with the historical role that CFOs played. Because the CFO historically provided the voice of reason and “prudent” investing, my experience has seen investments in finance related systems enhancements that were frequently delayed, deferred, or simply ignored. As a result, many finance teams still struggle with systems that are poorly integrated and require too much manual intervention.

Frankly, this is a waste that modern CFOs recognize must be eliminated if an organization is to have any chance of realizing the potential benefits available. Does your organization face manual reconciliations, repeated monthly systems intervention, duplicate data entry, and redundant maintenance of financial accounts? If so, you have likely turned your valuable finance talent into a team of data monkeys who spend most of the time just trying to make sure you are working with the right numbers. It is dumb stuff… and in finance you often need to simply begin with a pledge “to stop doing dumb stuff.”

Today’s technology enables real-time consolidations. Why is that important? Consider these reasons:

  1. Real-time consolidation allows the organization to eliminate batch mode processing. Finance processes are often a series of time based batches that spike work-loads near month, quarter, and annual year-ends.
  2. Real-time consolidation levels the work requiring fewer people and less overtime.
  3. Implementing real-time consolidation requires better technology integration that reduces cycle time by eliminating manual interfaces, redundancies and duplicate processing. This leaves more time for finance personnel to actually evaluate operations.
  4. Real-time consolidation provides rapid analysis of the impacts of debt covenants. Potential strategic changes such as acquisitions, mergers or spin-offs can be compared under different financial structures to see which provides the greatest flexibility and lowest capital cost.
  5. The ability to monitor a consolidated position enables deeper understanding of foreign currency exposures from both an income statement and cash flow perspective. This better supports effective treasury management.
  6. Real-time consolidation reduces planning time and frees the planning team to run more planning scenario simulations to further develop game plans for defending against risks or capturing opportunities.

The bottom line is real-time consolidation provides more time for finance to support operations and assist in improved decision making… and these are the type of benefits that CFOs have long sought.

Next week we examine how technology is changing two key outputs of finance – how we close and how we disclose.

[i] Stephen R. Covey, The Seven Habits of Highly Effective People, New York: Simon & Schuster, Inc., 1989, page 108

Steve Player

What Keeps Your CFO Awake at Night?

Coffee-break with GameChangers

Are you accustomed to receiving e-mails from your CFO’s office in the middle of the night? Chances are, it’s about your financial close. As the pressure mounts on the finance department to deliver faster results while remaining compliant, the financial close is becoming a major area of focus for many companies. This topic was covered in recent installment of a financial excellence radiocast for SAP Game-Changers. Three panelists weighed in.

Perfecting the close

According to moderator Bonnie Graham, a recent survey revealed that more than 70% of companies placed continuous close improvement as a top priority. Or more simply: Most companies aren’t satisfied with their financial close.

Gabe Zubizarreta, CEO of Silicon Valley Accountants, thinks that constantly shifting priorities are what cause the most anxiety. The close is a dynamic activity that moves from manual to automated processes and back again as business changes.

He also mentioned the numerous sides from which the close must be viewed. “I’m one of these analysts, I might need to see the close in what I’m doing, if I’m a manager managing five or six analysts, I need to see the close from who’s falling behind. If I’m a CFO, I might want to see the close as in an overall process for maybe my worldwide close.”

Elizabeth Milne, manager of accounting and financial close portfolio for SAP Product Marketing, thinks the often-ignored ‘people aspect’ might be part of the issue. According to Milne, “You need to work on the dynamics between all of the people that are working on the close and being able to communicate effectively.”

Wendy Reinitz, director of professional services for Performance Analytics, thinks it just comes down to a time squeeze. The business wants answers immediately, but demands are increasing and regulations are tightening. Working these considerations into the close simply takes longer.

Bridging training gaps

The panelists concur that effective introductory training has waned, leading to on-the-job training that does not provide enough consistency. Zubizarreta cites turnover and workload as some of the reasons that training is less of a priority. Milne goes a step further, explaining that each company’s training is highly specific to its own needs and not generally applicable across companies. Also, the skills being taught in universities don’t fully address real-world business needs, widening the gap for the new workforce.

Reinitz says that accounting professionals and IT also view themselves as unique, making it even more difficult to bridge that gap. She adds, “I think there needs to be more focus on the actual accounting degrees, professional designations… when it really comes down to it, every single organization has an IT department and a process and a system that needs to be run.”

Keeping pace with change

All panelists described distinct ways that the finance department can keep up to date with the shifting market and improve the close process.

  • Sync up the relationships between accounting and IT as technology progresses
  • Move beyond compliance and realize that the financial close is about providing information internally as well as externally – and thinking about stakeholders, not just stockholders
  • Drill down to a detailed analysis that will inspire confidence in potential investors
  • Stay agile in a changing market while taking the burden out of compliance processes

In the near future, panelists hope to see the finance world catch up to the rest of business in areas such as cloud functionality and enterprise mobility. Accessing reports anytime, anywhere on tablets has the potential to enhance collaboration, streamline the close, and give your CFO a few extra hours of shut-eye. To hear more on the state of the financial close, listen to the full radiocast.

What Defines the CFO of the Future?

Coffee-break with GameChangers

It’s no secret that the financial world is dealing with a period of rapid change. Effectively managing these fluctuations is ultimately the job of the CFO – but what does the role of CFO look like now? A recent SAP Game-Changers radiocast explored this question with three panelists. Here are their opinions.

Diversify your duties

“Remain constructively discontent” might be the most useful advice to current CFOs and other financial leaders. This quote from Coca-Cola CEO Muhtar Kent was invoked by Kyleen Wissell, Corporate Director of Internal Controls within the office of the CFO at the Coca-Cola Company. She believes in a culture of innovation and growth – and that starts with strong entrepreneurial mentality at the top levels. Contentedness can lead to complacence, especially in a time of rapid advancement. A watchful eye on possible improvements inherently enables progress.

Elena Shishkina, CFO of SAP UK and Ireland, agrees. She multitasks in as many areas of the company as possible, because, as she says, “I don’t know how my role will look tomorrow. I strongly believe you can only achieve the best outcome for the team and for the organization if you lead with excellence.” Shishkina views herself not just as a leader in finance but a leader in overall business transformation.

Many CFOs now realize that their position is defined by more than a collection of numbers. Richard Sernyak, principle at PricewaterhouseCoopers responsible for the SAP finance transformation practice, concurs that statistics don’t paint a full picture of an organization’s financial health. Greater focus should be placed on unstructured data such as social media. He explains, “What’s important is that not everything that can be counted counts…you need to look beyond the data and really understand what’s important.”

Take control of a new role

The paradigm is shifting as CFOs need to keep up with their traditional, spreadsheet-intensive responsibilities while creating more value for the business. Some of the unique responsibilities now require CFOs to:

1. Act as the lynchpin across the company for presenting actionable information in a dynamic way.
2. Enable proactive, predictive modelling in real time on mobile devices.
3. Enhance performance by spending less time on tasks that don’t provide added value.
4. Look past the numbers to see their context.
5. Take a more holistic view of the business by adopting innovative technologies (which we discussed in another recent radiocast).

Leading a top-notch finance department requires more soft skills than ever before, according to Wissell. CFOs must draw upon emotional intelligence, considering their internal customers, external customers, and opportunities to introduce a pure model that touts more of a specialist view.

As the transformation marches on, all panelists agree that championing technology will become paramount for the CFO. Sernyak sees the role becoming more intertwined with that of CIO as more millennials flood the marketplace and eventually move into leadership positions. Beyond an affinity for fast-paced innovation, Shishkina asserts that CFOs of the future must be culturally aware and sensitive to different aspects of diversity.

That’s quite a list of attributes! So are you a CFO of the future? Listen to the full radiocast.

Real-Time Finance: Helping Strong CFOs Transform Their Businesses

From Birgit Starmanns, SAP

Life happens in real time. Buying a new TV? You probably research your purchase , read reviews, and compare prices online. Get store opening times, directions, and parking. Even check your account balance. All the information you need is at your fingertips.

You’re constantly making decisions based on the best available data at any given moment. So why can’t you do the same for your business?

Particularly in times of market volatility, when organizations are bombarded by risks and opportunities, finance functions need a precise view of the past, immediate insight into the present, and a clear perspective on the future.

But all too often, a disjointed landscape of IT applications and silos of data mean that the best you can hope for is reliable historical information. Why? Because it takes so long to piece together the picture that the present has already elapsed.

What Is Real-Time Finance?

Real-time finance starts with being able to align all corporate data effortlessly to provide a single source of truth. It demands agile information delivery—to help you make decisions, take action, and adjust plans based on what’s happening right now. And increasingly, it relies on predictive capability to anticipate risks and understand trends and business drivers before they impact the business.

Real time isn’t simply about accelerating your business—it’s about reinventing it. It’s about having insight and foresight whenever you need it, wherever you need it, and business processes that can adapt dynamically. That might mean:

  • Being able to provide intercompany reconciliation on the fly
  • Detecting potential fraudulent activity
  • Gaining visibility into your cash position at any given moment
  • Evolving from a periodic to a continuous financial close

To find out more about the transformative potential of real-time finance and the art of the possible, visit the innovations radio show.