What’s New in Cyber Security?

What’s New in Cyber Security?

One of the hottest topics in Finance in 2015 is data security.  In fact, in a recent survey by Protiviti and FERF, cyber security ranked as one of the top 5 priorities for Finance executives, along with margins/earnings performance, strategic planning, periodic forecasting, and budgeting.

Given the increasing interest in this topic, the CFO Leadership Council’s New Jersey chapter recently Planfuled a panel discussion titled “Cybersecurity: Practical Protection for the Modern Age.”

The panel was moderated by Glen Badach, a leading consultant for a cryptocurrency startup. The panelists included Albert Murray, Special Agent, FBI; Daniel McKenna, Partner, Ballard Spahr; and Fred Rica, Cyber and Threat Intelligence Leader, KPMG.

Here’s a recap of the key points highlighted in the panel discussion.

General Industry Trends

Cybersecurity is becoming a high priority – both for C-Suite executives and at the board level. This isn’t something new.  It’s been a long-term issue that’s getting more headlines recently. In fact, the increased media attention to security breaches is making many companies gun-shy about reporting incidents.

The hacking threat has evolved over time from amateurs to professionals, nation-states, and terrorist organizations.  This topic is in focus for both large and mid-sized companies – every company has something of value, and that something is at risk.

According to Albert Murray of the FBI, one of the most common threats is email scams – criminals posing as CEOs, asking their companies for money to be wired to an account. Another threat is “ransomware” attacks, basically malware that takes over a computer and encrypts files until a ransom is paid.  If the company doesn’t have a backup, it pays the ransom, and its data is freed. Another common problem is when email accounts are compromised and wire transfer instructions to vendors are modified by criminals. In many cases, the FBI can help recover funds or at least freeze payments.

Employee Training and Awareness

Phishing emailThe panelists agreed that, in many of the cases cited above, it’s usually a result of the CEO, or another executive or manager, responding to a false (a.k.a. phishing) email. Some companies will even run internal tests with “phishing” emails. And it’s often the most senior executives who are easily duped. Another simple example is the issue of employees attaching rogue thumb drives to computers, which can include malware.

Technology alone cannot solve these problems. Employee training and awareness is key. Companies need to raise the security IQ of executives and staff.

Guidelines for Finance and IT

As the security function in an organization matures, it should move out of IT and become a standalone function.  This topic needs high visibility with reporting on the program as a whole – people, processes, access controls, third-party relationships, a recovery plan.  It’s healthy to have tension between IT and security teams and to have a well-controlled rollout of security programs. 

However, security guidelines are often too complex. They need to be boiled down so that employees can easily understand and comply. Every company’s employee manual should include information security plans, guidelines, dos and don’ts. Consultants and cybersecurity experts are being engaged by boards to review security programs and make recommendations.

Third-Party Evaluations and Benchmarking of Security Programs

There are third parties that can evaluate and rate a company’s security program, but confidentiality is a big factor here.  Benchmarking vs. competitors and peers is an important step for companies.  Information security is not a temporary trend – it’s a long-term strategy need.

Thus, establishing your company’s risk profile is a key starting point. You need to understand your company’s maturity level with regard to information security and your ability to support specific business processes.

Disclosure Obligations in Cases of Breach 

The panelists recommended using the term “data incident” vs. “breach” as breaches require public disclosure.  The biggest concern is customer perception and trust.  Companies would prefer not to disclose publicly and just let impacted consumers know about an incident. In most states, the Attorney General must be notified as well.  Another area of risk is vendor and supplier contracts.  These should include information-security language as well as remediation and communication plans.

Incident Response Plans and FBI Reporting

Incident response planAlbert Murray of the FBI said that any issues should be reported. Reporting to the FBI raises awareness regarding potential risks to other companies and any required government action. The FBI doesn’t hear about all breaches. Usually consultants are initially engaged.  While many companies don’t want to be exposed to an investigation, every company’s “incident response plan” should include a relationship with the FBI.

The reality, however, is that most companies don’t have an incident response plan. Having this can create competitive advantage, assure customers. The plan should define the core team who will focus on a security incident response. It should highlight reporting deadlines – FBI, Attorney General, etc. And it should include a decision tree that guides actions in a crisis. Companies should not only follow the plan after each incident, but update the plan based on key learnings along the way.

Fred Rica of KPMG quoted boxer Mike Tyson: “Everyone has a plan until they get punched in the face.”  Security breaches are a punch in the face, one you need a proactive plan to deal with.  You must keep the business running while taking action.

Securing Internal vs. Outsourced/Cloud Based Systems

Typically older, mission-critical systems are most at risk. Critical system failures can have a big impact on a business. But in general, all systems are at risk – companies need to evaluate who has access, what the exposures are. A big challenge in large companies is that they often cannot keep track of all computers and connected devices that need to be secured.

Thus, you need to have your house in order whether processing is in-house or outsourced.  Bad processes are bad processes. It’s your responsibility either way. The FTC will hold companies liable for data breaches, not third-party IT vendors. This makes it even more vital that you understand and evaluate the security measures of cloud-based providers you are partnering with.

Impact of use of Mobile Devices

The panelists highlighted that mobile devices themselves are typically not used to execute a breach, but the data on mobile devices is sensitive and can be used to execute a breach (e.g., user IDs and passwords). Content on mobile phones can be risky – email attachments, pictures of contracts, etc. Companies must enable employees to work remotely, with security, to avoid workarounds like using personal email for company data.

How can Companies be Proactive, and Aggressive, on Cybersecurity?

Companies must separate criminal vs. non-criminal hacking risks. They need adequate employee restrictions and easily understood guidelines. They need to provide training for employees and acquire an attestation from every employee that they understand the guidelines. They need to know where their data is given the sensitivity of specific information. It’s about governance – people, process, and technology.

Companies need to raise the security IQ of employees.  Younger employees, a.k.a. Millennials, are accustomed to mobile devices, social media etc. – companies need to raise their awareness about the risks, acclimate a new generation of employees.

Company size isn’t an issue. All companies must assess their own risk and decide how much risk they want to take vs. how much they want to focus on information security. Compliance is a starting point. It should not be the only driver. Thus, every company needs to understand its own risk profile. What data is being stored? What’s at risk? Companies must weigh out the risk vs. costs of putting a program in place – it can even be as low as $25K to create an initial program – without undervaluing what they get in return – safe, secure data.

Planful and other cloud-based application providers like us, take security very seriously as it’s core to our business. To learn more about our approach, download this free white paper titled “Ensuring the Security of Customer Data.”

Download the Security Whitepaper

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Finance and Accounting in the Digital Age

Finance and Accounting in the Digital Age

Change is inexorable, inevitable and guaranteed. Change is not something people like, though. And for those who like their change in nice, neat, bite-sized doses, the changes impacting finance and accounting today are particular disconcerting.

The business world is going digital. It’s starting to use all of those digital breadcrumbs that you, your cell-phone, your social media posts and your sensor-enabled world are leaving behind. Your employer is likely using these digital artifacts to its benefit, too. Is this a fad? No, it isn’t as no one’s giving up their smartphones and businesses are just beginning to wire up the planet in a giant Internet of Things network.

New Opportunities in Big Data

How big will this get? Several firms have pegged the number of internet-connected devices by the year 2020 to range from 25-75 billion devices with the majority of estimates coalescing around 50 billion devices. Let’s put that in perspective. There are only 7.3 billion people on the earth currently. In just four years, there will be 7 devices per person. Many of those devices will be ‘phoning-home’ asking the company responsible for them to repair them, replenish their consumables or just to pass along data.

It is the vast of amount of data that will be generated that is staggering. For example, a single sensor-enabled turbine engine making a two-hour flight creates 2 terabytes of data. Who will sift through this much data? What tools are needed to spot anomalies, recommend actions, etc.? Are finance and accounting departments staffed with the right people, skills and tools for the Digital Age? Probably Not.

Digital Age firms differ markedly from their Industrial Age counterparts. Digital firms have a different set of metrics and measures. They care about customer acquisition rates & costs. They assess their effectiveness in driving up monthly and lifetime customer revenue and carefully manage any churn in their customer base. They create ‘networks’ and ‘network effect’ around their firm. To be blunt, they don’t really need much of what many of us learned in college cost accounting and managerial accounting courses. Those courses spoke to an Age that is less relevant today.

One recent study showed that 43% of Marketing organizations were selling their company’s data – big data. When I confront CFOs and Controllers about this, no one is aware that this is going on in their firm. They are worried that Marketing may not be valuing this data correctly but the accounting profession has yet to provide guidelines on how data is to be valued. They worry that Marketing isn’t anonymizing the data thoroughly and this could expose the firm to new risks. Data is not only flooding into companies, it’s flooding out, too.

Putting Stress on Financial Systems

There will be challenges for those Finance organizations that want to become Digital Age relevant. One of the biggest challenges may be in long overdue rehabilitation of their existing financial systems.

Reporting challenges

There are several common problems with many of the accounting and financial systems in use today. Many companies have a veritable “dog’s breakfast” of software that was acquired over the years. Worse, the software in use may vary widely across every plant, legal entity or division. Acquisitions often bring their diverse systems into the mix, too. What’s holding all of this together is a bunch of interfaces, spreadsheets, integration programs and APIs. However, the data within these financial systems is often defined differently in each system and there is often a lot of latency with this data.

Why is this so problematic? In the Digital Age, large volumes of data are available for review and decisions must be made within seconds. Waiting until a week after the accounting period is closed is not viable in the Digital Age. What modern Finance groups need are solutions that were designed for:

  • Large operational and third party datasets (i.e., Big Data)
  • Scale – can the solution scale up and down based on changing business needs
  • Cloud deployments
  • Unconstrained IT (i.e., no worries about inadequate disk storage, memory, throughput, etc.)

The problems with older, non-real-time, loosely interfaced systems really start to show up when operational executives want to include big data sources in financial plans, budgets and forecasts. If your firm’s leaders still can’t agree on your total headcount, you probably have too many, redundant finance solutions that were designed for a time when all of your company’s key data fit in a spreadsheet. That just won’t cut it anymore.

To learn more about this topic, check out my presentation from the Planful Future of Finance Tour.

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Are You Ready to Move Beyond Budgeting?

Are You Ready to Move Beyond Budgeting?

One of the highlights of Planful’ 2015 Future of Finance Tour was a guest keynote delivered by Steve Player, North American Director of the Beyond Budgeting Roundtable.

His session was titled “Getting Future Ready: How to Master Business Forecasting.” I recently connected with Steve to learn more about his research and the Beyond Budgeting Roundtable. Here’s what he had to say.

John: Steve, can you start by talking about the mission of the Beyond Budgeting Round Table (BBRT)?

Steve:  Sure, John.  The BBRT is a member-based consortium of companies who have joined together to find better ways to plan and control operations.  Beginning in 1998, the BBRT has researched why organizations create budgets, the processes they use, and how effective (or ineffective) these processes are.  This research has resulted in finding fundamentally better ways to plan and control operations.

The Round Table captures these best practices and helps member companies implement them. This has resulted in the Beyond Budgeting network creating a community of practice that regularly helps its member companies assess their current practices, identify and apply the current best planning practices, and implement improvements much faster and more cost-effectively than other approaches.

John: What’s wrong with the way companies do budgeting today?

Steve: Our research has uncovered over 30 problems with current budgeting practices. The top seven complaints are:

  1. Budgets take too long to complete, often making them out-of-date as soon as they’re published.
  2. Budgets are too costly to prepare, particularly when you consider the senior management time required.
  3. Budgets are based on assumptions that are nearly always wrong.
  4. Budgeting causes gaming that erodes the ethical foundation of the organization.
  5. Budgets trigger unnecessary spending.
  6. Budgeting gives the illusion of control, often robbing the organization’s potential.
  7. Budgeting “sucks the energy, time, fun, and big dreams out of an organization. It hides opportunity and stunts growth.  It brings out the most unproductive behaviors in an organization, from sandbagging to settling for mediocrity” (Jack Welch).

John: Thanks, Steve, I love the quote from Jack Welch. What’s the better approach for companies in today’s business world?

Steve:  Organizations are much better served by adopting the 12 Beyond Budgeting principles, which help split budgets into four separate tasks. By separating these tasks, each one can be improved.

  • Target setting should be aspirational and focus of reaching the organization’s strategic goals and objectives as quickly as possible. Organizations should shift from one year targets to medium-term (3 to 5 years out) targets.  This provides clear direction linked to achieving the strategic plan and avoids the problem of annual targets being negotiated stopping points.
  • Forecasting should provide realistic assessments of where the organization is currently headed. This is needed to clearly identify what projects and initiatives are needed to improve and how well the organization can move to close any gaps identified.
  • Resource allocation needs to shift from being done annually based on anticipated demand to becoming real time based on what is actually happening. This keeps resources matched and responding to actual needs.
  • Evaluation and rewards should be based on what was actually delivered in the actual environment it was delivered into. Performance should be evaluated compared to peers, to competitors, and to world-class best practices.  This eliminates game playing and the need for sandbagging found in traditional systems.

John: These are definitely practical suggestions. How can companies get started on the path to “beyond budgeting”?

Steve: Companies adopt Beyond Budgeting by taking either the revolutionary path or the evolutionary path. Selection of the revolutionary approach is typically led by a visionary CEO or CFO who understands all the pitfalls of traditional budgeting. These senior executives provide guidance to make the changes as quickly as possible and pave the way for the organization. Key examples include Handelsbanken, Guardian Industries, tw telecom, and SlimFast. These implementations typically take 12 to 18 months.

The evolutionary approach occurs when an organization agrees with most of the 12 Beyond Budgeting Principles but is concerned about how fast the organization can change and adapt. This still requires strong executive leadership but takes a more measured development approach, which can begin with a pilot or experimenting with some of the concepts. Key examples include Unilever, American Express, and M.D. Anderson Cancer Center. These implementations typically take 24 to 60 months.

In some cases, an organization can spend a considerable amount of time evaluating the move to Beyond Budgeting (as would be seen in the evolutionary path) but then encounter a trigger event that accelerates its adoption. HOLT CAT is an example of this approach. They considered moving to Beyond Budgeting for many years, then swiftly took action in response to the severe market downturn at the end of 2008, which dramatically shrank their 2009 sales pipeline.

CFO Paul Hensley led the efforts, which resulted in far better than expected revenues and margins in 2009 and 2010.By time 2011 had rolled around, some of his operating managers were asking when they would get their budgets back. After discussing the question with the COO, management decided they would never return to budgets – the simple reason was to look at how much better the organization performed without them.

John: Do you have any other examples of companies that have taken the leap to “beyond budgeting”?

Steve: They are many other implementation examples. The current Beyond Budgeting Executive-in-Residence, Nevine White, served as Vice President of Financial Planning & Analysis at tw telecom when they evaluated Beyond Budgeting and chose to eliminate budgets in 2004. Nevine continued to lead the FP&A function at this publically held company for over a decade. Nevine was able to reposition her team to the front lines to better support operational decision-making.

Another notable success is Statoil.  Their implementation journey and related success is documented in Implementing Beyond Budgeting by Bjarte Bogsnes. These cases and many more can be found in the member archives of the Beyond Budgeting Round Table.

John: This is great stuff, Steve.  Where can readers go for more information?

Steve: For more information, see the www.BBRTNA.org , or check out the following books:

Future Ready: How to Master Business Forecasting by Steve Morlidge and Steve Player (Chichester, UK: Wiley, 2010)

Implementing Beyond Budgeting by Bjarte Bogsnes (Hoboken, NJ: John Wiley & Sons, 2009)

The Leader’s Dilemma: How to Build an Empowered and Adaptive Organization Without Losing Control by Jeremy Hope, Franz Röösli, and Peter Bunce (Chichester, UK: Wiley, 2011)

If you would like to hear more from Steve Player, here’s a link to a recent video interview. Also, here’s a link to Steve’s presentation from the Planful Future of Finance Tour.

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Why Finance Departments Fail to Become Strategic

Why Finance Departments Fail to Become Strategic

Most Finance departments want to play a more strategic role in their organizations.  And in many organizations, upper management wants the Finance department to step up and lead in terms of strategy.


But this role for Finance isn’t becoming reality in most businesses. The key to becoming a strategic leader is “Finance Transformation”. What is it? Why aren’t Finance departments embracing it? More importantly, what can be done about it?

What is Finance Transformation?

Finance transformation

The Finance department must learn to move beyond simply processing transactions and delve into planning and forecasting.

Finance transformation is the ability of the finance department to be a strategic driver and player within the organization. It involves shifting the focus of the Finance department from simply processing transactions and creating budgets to more strategic activities that deliver a high level of value to their businesses. It involves looking ahead, being predictive, and developing prescriptive solutions.

What Hinders Finance Transformation? (Hint: You Don’t Have the Right Technology for Effective EPM)

If most organizations want Finance to be a strategic leader, and most Finance departments desire to fill this role, why isn’t it happening? According to Robert D. Kugel, the senior vice president and research director of business research for Ventana Research, the reality is that there is a disconnect between what Finance departments believe they are doing and what the rest of the company perceives that they are doing. Most Finance departments are too busy fighting fires — in other words, keeping up with transactions, creating reports, developing budgets, etc. — that they can’t get on top of strategic planning.

The Finance department as a whole is woefully slow to adopt new technologies, such as enterprise performance management (EPM) software. Historically, this industry tends to stick to what they’ve always been familiar with, which means that they resist more powerful tools to replace spreadsheets and have been among the slowest functions to adopt the cloud. The cloud can be important to achieving true Finance transformation, because it offers extremely affordable solutions, and the security concerns of years ago are no longer issues today. The cloud has proven to be a safe, reliable, and affordable solution for finance.

What Can Finance Departments Do to Foster Finance Transformation?

Finance transformation

With the right tools, Finance has the time, data, and power to engage in true Finance transformation.

If your Finance department wants to be a strategic leader in your business, but just can’t seem to get there, what steps can you take to get them there?

  • Learn to move away from manual, laborious, time-consuming processes like spreadsheets. Adopt the automation afforded by EPM software.
  • Clean up the data. Data integrity is essential for leveraging data analytics, which is an important part of predictive analytics and prescriptive issue management.
  • Get the right software tools. Many of the best tools are cloud-based, so the department needs to realize that the cloud is a safe, effective, reliable, affordable, and easy-to-manage solution for many of finance’s needs.

After taking these steps, you’ll find that your Finance department is more agile and able to adapt to changing circumstances. With the new software, tools, and automated processes, financial close times will decrease dramatically. The department will get more done with fewer workers. Most importantly, Finance can truly be a strategic leader for the organization because they will be armed with the data and other tools necessary for predictive and prescriptive planning.

To learn more about this topic, listen to a replay of a recent webinar featuring Rob Kugel titled: Why Finance Departments Fail to Become Strategic.

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3 Benefits of Planning Your Workforce with a Modern FP&A Platform

3 Benefits of Planning Your Workforce with a Modern FP&A Platform

Massive change has expanded the importance of Finance and HR’s roles within organizations. Planning for the workforce of tomorrow requires visibility into everything from organization-wide workforce costs to department-level compensation costs. Ensuring modern, efficient processes are incorporated means that HR and Finance need to work collaboratively. Some of the tools used in this process include FP&A platforms— these can play a huge role in effective workforce planning. 

Why FP&A Technology for Workforce Planning?

FP&A is charged with analyzing your business, modeling potential options, and helping the business budget and plan for the short- and long-term future. It’s up to FP&A to ensure financial health while meeting strategic business goals. Obviously, they need data from every part of the organization to build these plans, and they need to collaborate closely with every team to guide decisions and understand cost tradeoffs. So, it just makes sense to work within the same solution rather than disconnected systems or complex spreadsheets.

Since the HR team handles the employee lifecycle, from recruitment to retention, both teams require insights from one another to make effective workforce decisions for the business. To do so, FP&A technology has provided immense opportunities to improve the work these two teams have focused on, within scattered spreadsheets for years. With FP&A technology that supports workforce planning, you are able to:

1. Build Standardized Processes

Time and time again, the pressure to meet the countless financial planning and reporting requirements and regulations causes teams to feel destressed and frantic. In order to build confidence and have control over how information is brought in and delivered, a modern FP&A SaaS platform allows you to draw in data from any system. Plan your workforce knowing that you can:

  • Eliminate errors resulting from manually intensive processes with standardized compensation calculations
  • Automate the integration of HR, operational, and financial data from any HCM, CRM, or ERP to see the most accurate picture of your business
  • Categorize data with pre-established financial intelligence and logic, saving you countless hours
2.   Plan Dynamically

With constant changes in your business, having the proper workforce planning processes enable you to effectively analyze, plan and make decisions at the speed at which change occurs. The right platform enables high-frequency, data-driven decision-making. This will ultimately help your business by:

  • Creating workforce planning scenarios, connected to hiring plans and financial models
  • Tailoring workforce recommendations across all lines of business to ensure compensation and hiring is aligned with future business growth
  • Customizing compensation attributes to handle the complexity of taxes, benefits, deductions, etc
3.   Gain Insightful Reporting and Analysis

For effective workforce planning, an FP&A platform helps your teams leverage a single source of truth to better understand how to set clear objectives for strategic analysis. Stakeholders are tuned into the latest status of the business’ financial and people performance allowing a clear direction forward. Your business can:

  • Gain visibility into how compensation aligns with employee turnover, workforce costs, and revenue growth
  • Test hypotheses that map to business goals, like analyzing churn indicators to improve retention
  • Equip teams with self-service access to relevant insights and plans in the format they are used to consuming information – a presentation deck, dashboard, or report

SmartyPants Vitamins is one of many companies benefitting from our FP&A platform. The company’s senior finance manager said that they aimed to simplify health without sacrificing quality. Due to its rapid sales, they had a similar objective to simplify the sales and trade spend forecast process, at no expense to quality and business downtime. With Planful, the company found a quick, effective solution that enabled them to kick-start their financial and workforce planning processes within 20 days.

Your workforce is mostly both the largest single cost and your greatest strength. There are a lot of challenges that come with trying to make your Finance and HR teams strategize and plan as one. We are able to help you bring people together in your organization so that you can manage talent gaps and help leaders in the decision-making process. If you wish to adopt a fast, scalable solution to plan your workforce and business growth, we are here to help.

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Realizing ROI with Enterprise Performance Management

Enterprise Performance Management (EPM) is a process designed to help organizations link strategy to plans and execution. The main objective is to maximize performance and increase shareholder value.

A recent CFO.com webinar highlights current developments in EPM technology, the role CFOs should play in evaluating EPM solutions, and tips and recommendations for implementing EPM solutions.

CFO Playbook on Performance Management

Planful recently sponsored a webinar on CFO.com titled “The CFO Playbook on Performance Management: Realizing ROI with EPM Improvements.”  Featured speakers include Karen Schreiber, Principal, The Hackett Group, and Matt Schwenderman, Principal, Deloitte Consulting LLP. Mary Beth Findlay of CFO Publishing moderated. Here’s a summary of the key points they covered in the webinar.

What is EPM, and why is it important?

Both panelists agreed that EPM is a process supported by tools and designed to help organizations link strategy to plans and execution.  The key processes in EPM include goal-setting, modeling, planning, reporting, and analysis.  The main objective is to help organizations maximize performance in terms of revenue and operating margins, and increase shareholder value.

What are recent developments in EPM and EPM tools?

Here, the panelists commented that EPM should include the entire organization, but usually starts in Finance. Key to achieving this is integration across EPM processes, as well as with source systems.  The use of in-memory databases allows for the processing and modeling of larger data sets. Data visualization tools help non-Finance users more easily consume the data. And Cloud/SaaS platforms are helping to drive broader adoption of EPM across the enterprise.

The panelists also talked about how master data management is also an important development in EPM.  These tools enable better change management processes and governance of master data used across EPM, as well as ERP, systems.

What advantages do EPM applications offer over spreadsheets?

The panelists highlighted how integrated EPM solutions speed key business processes, such as budgeting, planning, and financial reporting.  In calculating results, EPM solutions are much more efficient and accurate than spreadsheets. The panelists also mentioned that the data governance and data modeling tools found in EPM suites make it easier to manage EPM across a large enterprise.  While having one version of the truth is helpful, having common definitions of data across the organization is more important.

What role should the CFO play in the evaluation and implementation of EPM systems? How do you ensure that the EPM system can meet your needs?

On this topic, the panelists recommended that the CFO be the sponsor and advocate for EPM across the organization. Best practice is to focus on the business requirements, then select the technology that best supports those business requirements. According to the panelists, buyers should also evaluate the ability of the vendor to be a good long-term business partner.

The panelists recommended that you get a good sense of the long-term vision of the vendors you’re evaluating. Make sure you understand their R&D spending focus and plans. Speak with reference customers – from both a business and technical perspective. As a buyer, you need to understand the scope and purpose of the project while ensuring the solution chosen aligns to your current and future business needs.

What are some of the challenges and recommendations in implementing EPM solutions?

Some tips here included putting your best staff on the project. Throughout the project, develop a true partnership between Finance and IT. Start with desired results, and then build out the system to achieve that goal. Build a process to govern the data. Matt Schwenderman recommended that you “break some glass, do something innovative.”

Karen Schreiber called out data integration as the biggest challenge. The data coming into EPM applications must be clean and consistent. She also recommended that implementation teams demonstrate how the design supports the user requirements. Challenge the status quo – keep asking “why, why, why?”

Mistakes to avoid include starting with technology, which is the wrong approach. Not having the right data available can also be a problem.  Not getting the users engaged can slow the process. Another common mistake is re-implementing existing tools. Companies need to re-examine the business process, then identify the information that’s really needed and missing. Change management processes also shouldn’t be overlooked. Inadequate staffing can also impact your chance for success.

How can CFOs build a business case for an EPM project?

Here, the panelists cited research that demonstrates how companies with better analytics perform better than their peers.  In building the business case, the panelists recommended that buyers quantify efficiencies and expected process improvements, as well as missed opportunities.

Final takeaways and advice for buyers

In their final comments, the panelists highlighted that EPM is a mindset and process that can create competitive advantage.  If done right, it can increase business agility and insights.  The key is to align the technology to the goals and needs of the business.

To learn more about this topic, listen to a replay of this webinar. And to get additional tips on evaluating EPM solutions, download our free white paper.

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How Finance Can Be a Better Business Partner

How Finance Can Be a Better Business Partner

I’ve been involved in the EPM market for almost 20 years now, and it seems like we’ve been talking about the “changing role of the CFO” or the “transformation of Finance” for just about the entire time.

CFOs and Finance departments have certainly made progress in shifting their focus from simple “bean counting” and back-office support to being a strategic partner to the CFO and the executive team. But there’s still room for the CFO and Finance to become better business partners to the various lines of business they support.

This is a topic that Planful’ CEO Dave Kellogg has been focusing on in his talks at the recent Future of Finance Tour events. I had a chance to sit down with Dave and get his perspectives on this topic.  Here’s what he had to say.

John: Dave, how well do you think the CFO is doing as a partner to the business?

Dave: From what I’ve seen, the CFO and Finance have made great strides in becoming more strategic and having a seat at the table in driving the strategic direction of companies. The CFO has become a key partner for the CEO, acting as a sounding board and objective voice of reason in strategic decision-making. But I think there’s room for improvement in terms of the CFO’s interaction and support for the various lines of business in a company – sales, marketing, services, customer operations, etc.

John: Do you have any good examples of role models who serve as business partners to the CEO and the business?

Dave: Sure. Actually, there are two examples I like to talk about. One is Lt. Commander Data from Star Trek – The Next Generation. Lt. Commander Data is a good example of that unemotional number cruncher who can provide key metrics and information to the captain of the Enterprise. He’s logical, quantitative, data-driven, and rational, which is great. But he doesn’t provide a lot of value-added input to the captain.

Kirk and Mr. SpockA better example is Mr. Spock from the original Star Trek series. Spock shares a lot of similar traits with Commander Data – he’s logical, data-driven, loyal, and trustworthy.  But he’s more strategic and forward-looking as an executive. He’s a better sounding board for the captain and more of a right-hand person who provides value-added advice. This is the type of role the CFO should play for the CFO and line of business executives.

John: That’s great, Dave. I was a fan of the original Star Trek series growing up, didn’t really get on board with the next generation. So what steps can CFOs and Finance take to become better business partners to the business?

Dave: Yes, I was more tuned into the original series as well, loved Spock!  I have 5 steps that I like to talk about, steps CFOs and Finance organizations can take to become better business partners.

  1. Free yourself from the drudgery of Finance

  2. Live in the future

  3. Leverage big data

  4. Build more Finance agility

  5. Learn to think like a board member

John: Great, let’s explore these in more detail. Finance inherently has to perform a lot of tasks that qualify as “drudgery.” How do you suggest Finance frees itself from some of these tasks?

Dave: Yes, I get it. Accounting and Finance do have a number of mundane tasks they need to perform –but there’s opportunity here. The main thing is to substitute capital for labor, wherever possible. That means using systems and automation rather than spreadsheets and manual processes for key tasks, such as closing the books, reporting the results, and collecting budgets and forecasts.

Substituting cheap labor for expensive labor by outsourcing and offshoring more mundane tasks can also help. Think about Accounts Payable, Accounts Receivable, Payroll processing, and other tasks.  And Finance executives need to lose the “pay it forward” mentality. Just because you did things manually when you were coming up the ranks, doesn’t mean your staff should struggle with the same tasks today.  We can do better.

John: Makes sense. I sure spent a lot of time doing drudgery work when I was in Finance back in the day. I wish we had all the modern software tools available back then. Let’s talk about your second step, “Live in the future.”  What do you mean by that?

Dave: Well, as you know, John, a lot of Finance is about the past. Most of their time is spent on accounting for the past and reporting on the results.  Finance teams need to change their focus, look more at possibilities, not facts. Some of the key techniques they can leverage here include things such as Financial Modeling to perform “what-if” analysis on the impact of various business decisions. Driver-based planning is also a great way to add more flexibility and agility to the planning and forecasting process.  And benchmarking is a helpful way to analyze how your company is performing against peers and competitors.

John: Got it. If Finance departments can automate more of the mundane tasks, they can free up more time to focus on forward-looking forecasting and analysis. Let’s talk about your third step – “Leverage big data.” There’s a lot of buzz in the industry about big data. How do you think Finance can leverage it?

Dave: One of my favorite topics. You know, nothing distracts management from focusing on the future like missing a quarter, from a revenue or profits standpoint. Big data can actually help Finance predict future results, if used effectively. The opportunity is to integrate and harness big data from the operating functions in the business. Then within that data, find leading indicators that can provide predictive value.

Some examples include Sales pipeline data, Marketing lead funnel, website traffic, and social media sentiment. With this data, you can create your own forecasts and validate against the forecasts submitted by line managers to improve accuracy and defeat system gaming. Finance needs to use this data and forecasts to offer a second opinion, not just a summarization of what managers submit.

John: Very cool. I guess Finance needs to be looking at hiring more data scientists to help them sift through all of this data. Let’s move on to step 4 – “Build more agility.” What do you recommend here?

Dave: Actually, John, you covered this well in a blog article you wrote earlier this year. Reducing reliance on Excel, streamlining the close, dynamic planning, leveraging the cloud – these are pretty basic things that Finance can act on to quickly improve their agility.

John: Thanks, Dave. That article and those steps have been well-received. OK, let’s move on to your final step – “Learn to think like a board member.”  What’s your advice here?

Dave: The point here is that too many Finance executives get lost in the details and lose the big picture. My advice is that, while it’s important to understand the details, to be an effective business partner, the CFO and other Finance executives need to lose the details and zoom out to the big picture. Focus on the key business trends, de-personalize the actors, and focus on the financial outcomes.  Think more strategically, especially about how your company is performing and acting versus competitors.  Like Mr. Spock, offer an opinion, not just a bunch of data points.

John:  Good stuff, Dave.  These are great points that are clearly actionable for Finance executives.  Do you have any examples of Finance executives and companies doing this well today?

Dave: Yes, we have a number of customers whose Finance executives are already doing a great job of being better business partners. For example, Jim Perry at iCIMS moved his Finance department off Excel, adopted our cloud-based EPM applications, and was able to shorten the close process from 4 days to 4 hours. He’s also created a comprehensive strategic and financial planning process that links Finance and Operations. To improve forecasting, iCIMS is leveraging data from financial, HR, and CRM systems – as well as data from Google Analytics about its web traffic.

Another good example is Matt LaVay at Ellie Mae. Matt has pushed EPM beyond Finance with Planful, linking financial planning with sales planning. Ellie Mae has pushed these planning processes down into the ranks of the business, giving everyone an ownership role. This encourages buy-in and decentralizes the process so that it works well within individual cost centers.

John: Great examples. I think that wraps things up. Thanks for your time, Dave.

Dave: My pleasure, John.

To hear more from Dave Kellogg, watch this video interview. If you would like to learn more about how Finance can become a better business partner, please visit our white paper library, customer videos, and webinar replays.

Watch the video

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