Journey to Transformation: think big, start small, deliver quickly
Business & Digital Transformation is having a huge impact on the Office of the CFO. However, while enabling significant opportunities to increase Finance’s influence throughout an organisation, it also challenges CFOs and their teams to optimise key transactional processes, improve their reporting and build out key analytical processes.
Finance teams recognise that their responsibilities are changing. In addition to traditional functions such as accounting, controlling and closing the books, as well as value added services like insights and decision support, M&A activity and risk & compliance, today’s Office of the CFO is increasingly expected to help manage volatility and enterprise complexity. Finance teams also need to help drive the delivery of competitive cost advantages across the business, as well as being instrumental in architecting digital strategies.
What’s clear is that the classic finance model is changing quickly. Previously the Finance department could expect to spend around 50% of their time on operational activities, with just 20% apportioned to performance issues. That model has now flipped, with performance analysis, interacting with decision-makers and other strategic initiatives now accounting for around half of Finance’s time. How the Office of the CFO adjusts to its evolving role is critical, particularly as it works to build both its understanding of digital technologies and the increased importance of data analytics.
What’s clear is that the classic finance model is changing quickly. Previously the Finance department could expect to spend around 50% of their time on operational activities, with just 20% apportioned to performance issues. That model has now flipped, with performance analysis, interacting with decision-makers and other strategic initiatives now accounting for around half of Finance’s time. How the Office of the CFO adjusts to its evolving role is critical, particularly as it works to build both its understanding of digital technologies and the increased importance of data analytics.
It’s against this background that Jedox has worked with ACCA – the global body for professional accountants – on a sponsored survey of Office of Finance members and gain a clearer perspective of where exactly Finance is on its Business and Digital Transformation Journey, and to detail how a pro-active strategy – thinking big, starting small and delivering quickly – can help close the gap towards achieving their transformation goals.
Are Digital Transformation ambitions outpacing today’s Office of CFO realities?
While the survey found that Finance professionals listed customer satisfaction, growth and profitability as key strategic objectives, it was perhaps revealing that only 15% cited the ‘ability to adapt’ as a critical factor given the collective impact of change drivers such as increased competition, new market entrants, M&A activity and Brexit. The survey found that just 35% reported that they already had a business/digital transformation roadmap in place. Interestingly, 42% of those surveyed believed that their own organisation wasn’t adaptable enough to adjust to the impact of a significant event.
Similarly, the survey found that although 56% felt that their board was fully equipped to take them forward, just 36% had the kind of overall dashboards and scorecards in place needed to provide CFOs and other board members with full visibility around key KPIs and areas of risk. So there’s clearly a disconnect between transformation ambitions and current Finance realities. The Office of Finance acknowledges the need for change, but there’s a significant delta between perceived strengths and the actual systems needed to deliver them.
Closing the gap - think big, start small
In addition to traditional transactional and reporting systems, Finance teams are increasingly focused on building out their analytical capabilities. At the same time, innovations in process automation, data visualisation and machine learning are all helping to drive an automation imperative, while next generation technologies such as Blockchain and Big Data complete a picture of almost unlimited technologies. But where to start?
This can be a daunting challenge, not least because 75% of those organisations surveyed acknowledged that Excel is still the principal technology skillset for their Office of the CFO teams. This perhaps explains why so much of the Finance working week is taken up with basic data collection and maintenance activities.
For many CFOs, the gulf between their current planning, reporting and analysis capabilities and the more integrated planning solutions needed to support digital transformation can be overwhelming. However, it doesn’t need to be that way. McKinsey advises that more than half of a transformation’s cumulative value arises from smaller initiatives, so CFOs need to investigate how to make the journey from spreadsheets to Enterprise Performance Management much more accessible and achievable. Jedox believes that delivering on this requires a combination of thinking big but starting small will allow them to deliver on their goals more quickly.
Du skal vide, hvor du skal starte. Det er vigtigt at tage in mente, at rejsen mod transformation ikke altid er lineær, den skal dog have fremdrift, især for de 43% af ACCA-respondenterne, der følte at deres ledelsesmæssige tilgang ikke være proaktiv. For at opnå dette skal økonomiteams vide præcis, hvor de starter fra; kan du importere dine data? Kan du konsolidere det? Kan du dele ud over af denne viden ud over økonomiafdelingen? Vores undersøgelse viste, at omkring halvdelen af respondenterne var i stand til at håndtere komplekse multidimensionale oplysninger effektivt, 65% havde vanskeligheder med konsolidering, mens visualisering var mindre god med kun 44% i stand til at skære de anvendelige oplysninger til. 75% rapporterede også at ikke-integrerede systemer skaber en udfordring for 2 ud af 3 respondenter, der siger at dette ofte fører til data uenigheder under møder. På plus siden, bliver flere systemer mere fleksible, dog kan 62% stadig ikke understøtte mobile løsninger eller mulighed for at understøtte direkte data indtastninger.
I undersøgelsens konkluderede man at 80% af virksomheden stadig var afhængige af Excel til budgeting, planning og forecasting. Taget i betragtning af økonomichefernes kvalifikationer, er dette ikke overraskende, men det faktum at mange websites og pressionsgrupper eksisterer for at advare mod Excel – den rolle som forecasting fejl i regneark endte Convivialitys kollaps i 2018, for eksempel – vil mene at for meget Excel er en dårlig ting. Vores undersøgelses respondenter svarede at 75% brugte Excel for reportering og analyse, men kun 24% fik deres planning og forecasting rigtig første gang. 58% svarede at rapportering ikke automatisk giver rettidige beslutninger. Deltagende i undersøgelsen svarede også at Excel også benyttes af 71% for headcount planning, specielt når det er tid til forecasting. Ud af disse brugere siger 80% at de faktisk ingen workflow havde til revision og godkendelse. Mange virksomheder lider også under ”multiple versions of the truth”, med 64% erfaret lækage af data offline til lokale Excelark, og 60% bekymrede for sikkerheden i workforce planning.
Best Practices - latent demand for planning & performance management capabilities
The survey also investigated how far organisations had progressed in terms of achieving best practice performance around key issues such as drivers, scenario modelling, rolling forecasts and standards adherence. The survey found that even though 51% were active around scenario modelling, 80% used Excel for this – and just 7% worked with a budgeting, planning and forecasting tool. This might explain why just 27% were able to adequately forecast key drivers, with 69% saying they had no way of measuring positive or negative bias.
And while only 42% currently conducted rolling forecasts, 60% said that they would like to. 42% also acknowledged evidence of ‘sandbagging, but there was uncertainty about how to address it – and questions about whether the other 58% were just not seeing it. We also found that only 35% can easily incorporate external data – making benchmarking more difficult, while 62% aren’t able to accept remote contributions or participation, making it difficult to collect timely information from the field, or wider participation in forecasting.
Partnering to move beyond the Office of the CFO
With the role of the Office of the CFO evolving to support decision-making across all of a company’s functional and market-facing areas, it appears that many Finance departments still have some way to go if they are to deliver on this goal – and yet 81% of respondents are still seeing Finance as a trusted advisor within the business. 71% perceive Finance as ‘owning’ the forecast – a status that 67% would like to change – engaging the rest of the business to a greater degree
However, while 78% do feel their planning process does extend beyond the Office of the CFO, 38% still don’t include HR in their planning, 37% miss out Marketing, 34% overlook Sales input, and 29% aren’t involving Operations. According to the survey, 56% of Finance teams also don’t support the business with the right dashboards, 44% aren’t in a position to leverage historical data, 64% don’t empower other parts of the business to make decisions using predictive analytics, and only 36% support decision-making utilising Big Data.
Work still to be done around Strategic Alignment
Tools such as scorecards and KPIs are key to successful strategic alignment and ensuring that operations stay focused on an organisation’s strategic direction, however 67% of the organisations polled in the survey didn’t currently use scorecards – and 65% don’t offer a global dashboard to give visibility to the C-suite and support them in their decision-making. Given this lack of integration, it shouldn’t be a surprise that 62% consider that their final plans often come across as a top-down dictate. This results in only 51% stating that their different budget and forecast contributors feel ownership of the plan.
Helping the Office of the CFO to think big, start small and deliver quickly
Jedox’s survey – in association with ACCA – demonstrates that there’s still considerable work to be done if the Office of the CFO is to succeed in creating a more unified approach to planning, reporting and analysis. The survey found that, while there is considerable expertise and user familiarity with Excel spreadsheets as a management tool, their widespread use has led to a disjointed and generally uncontrolled planning environment. The scale of the challenge is evidenced by the survey’s finding that 56% of those wanting to, haven’t yet identified and built a business case for a budgeting, planning, forecasting and BI tool.
Jedox believes it makes sense to leverage the undoubted Excel expertise that already sits within the Office of the CFO, and provide a way for organisations to bring all their multiple and disjointed Excel sheets into a more controlled environment. However, it’s important to do this in a way that lets Finance teams retain their familiarity and accessibility of their current spreadsheets.
Adopting this approach means that users get to work – whether online, via mobile devices or in their familiar, native Excel environment – with an interface they’re comfortable with, that’s easy to use, and that provide Finance operations with faster time to value. By connecting Excel and all their data sources to a Jedox multi-dimensional database, Finance teams can begin a staged approach towards transitioning their operations from Excel to a more seamless Corporate Performance Management and BI approach. And, by pursuing a stage-by-stage strategy, the Office of the CFO can systematically work to automate processes, allow best practices to be deployed, and partner with the rest of the business to ensure full strategy alignment – effectively creating the kind of ‘Agile Enterprise’ they’ll need to complete their digital transformation journey.
