One of the final sessions at Planful World 2017 in Nashville was a panel discussion focused on how to improve the performance of the Finance organization.
Moderated by Andre Lafayette, VP of Product Marketing at Planful, the panelists included two CFOs and three Finance experts from leading system integration firms:
- Ian Charles – CFO, Planful
- Stuart Miller – Treasurer and CFO, Workiva
- Amy Cochran – Managing Director, Accenture
- Peter Emerling – Management Consultant, RSM
- Temano Shurland – Sr. Manager Risk and Financial Advisory, Deloitte
Here’s what they had to say about improving Finance performance.
The Changing Role of the CFO
The role of CFO has become more strategic, a key partner to the CEO. The CFO and Finance are also becoming a business partner to the line-of-business leaders – HR, Marketing, Sales, and other departments. This includes helping to drive tracking of the right KPIs and supporting better decision-making across the enterprise. These groups are looking to the CFO and Finance for guidance on key business decisions.
To fulfill this role, Finance staff need to make sure they have a strong understanding of the business and must organize themselves to ensure alignment between Finance and operations. It’s also important for Finance to be efficient in doing its day-to-day role and having more time available to perform analysis and drive strategic insights for operating teams.
What Can Finance Organizations Do to Adapt to Change?
Disruption is everywhere. Finance must leverage technology to become more efficient in its role and to become more agile and competitive. This is a good time for Finance organizations to step back and look at all the regular tasks they perform and ask why they’re doing it. One example given was annual budgets. Are these really necessary? Many organizations are moving away from annual budgets and managing based on stale information. Instead, they’re shifting to rolling forecasts.
CFOs should look at Finance more holistically. They should look at day-to-day activities and try to automate as much of the trivial work as possible. In order to scale and be competitive, Finance needs to be more efficient and analytical. To do that, Finance organizations should make sure they’re taking full advantage of the technology available to them. This includes using existing systems and leveraging all available features that can enable efficiency. Finance must look for opportunities to automate menial tasks through robotic process automation (RPA) and free up Finance for more value-added activities.
Another area of opportunity is to better leverage the data that’s available. This means integrating and leveraging all internal systems. While doing this, it’s important not to get lost in managing too much data – it’s about using the right data. Finance must focus on selecting the right metrics and KPIs to drive the business.
Many managers may say they want dashboards. But these must provide timely and meaningful information. A dashboard with stale data is no help. Instead, managers should revisit metrics and KPIs on a regular basis, adjusting them as needed.
What Are the Key Ingredients to Success?
Enacting change in organizations is hard work. It often meets resistance. CFOs need to involve their teams, help them understand the big picture, the long-term vision. People get nervous when consultants show up to transform Finance. But Finance transformation is designed to help Finance do its daily jobs better and add more value to the business. It’s not about eliminating jobs – it’s about changing the nature of jobs and adding more value. People must get out of their comfort zones, be willing to question the norms, and look at opportunities to do things better.
Alignment of Finance and operations is also key to success. Finance needs to reach out and help other departments be more effective. The organization needs to be aligned culturally. People need to feel empowered to be leaders, drive change, and suggest ideas for improvement.
Adapting Budgeting, Planning, and Forecasting Processes
Long-range planning and target-setting are critical to effective planning. When it comes to budgeting, companies need to rethink why they’re doing it. They must embrace more dynamic techniques that align with the fast-changing marketplace. Rolling forecasts are becoming widely adopted as a way to be more agile. These can be updated quarterly, monthly, weekly, and sometimes daily.
Adopting rolling forecasts requires fast and efficient planning cycles. Data needs to be readily available, and collaboration between Finance and operations needs to be effective. New technologies such as cloud, mobile, and real-time data are enabling rapid planning.
Planning and forecasting based on internal data is great, but Finance organizations should also leverage external data. They should look at ways to better incorporate outside data into planning and forecasting. This could include economic, weather, and other external data – such as the data provided by the partnership that was announced this week between Planful and Prevedere.
Another powerful technique is benchmarking. Comparing the organization’s processes and metrics to industry averages and competitor practices is important. This can provide a useful guide in moving the Finance organization forward.
Examine and rethink everything you’re doing. One panelist mentioned a technique she referred to as “zero-based reporting.” This means looking at all the reporting that Finance generates and understanding whether this is really needed. Are people using the content you’re creating? Ask them, or stop doing it and see what happens. Look at who’s receiving information and what will help them be more effective.
Performance scorecarding can be helpful. Celebrate the groups that are doing well, but focus on the folks that are underperforming. Then work with them to improve.
Communicate up and down the chain when looking to enact change. In meetings, argue points with information to support your point of view – don’t rely on opinion. Building consensus takes a lot of work. Change agents must socialize ideas with many people, including key influencers or those impacted by proposed changes. Get buy-in from key stakeholders in advance. Be ready to address objections when they come up in meetings.
In order to help improve overall enterprise performance, the Finance organization must ensure that it is running efficiently, and is effective in running its own processes. During this discussion, the panelists offered many actionable tips and recommendations for improving performance in Finance.
To learn more check out the video of this session at Planful World 2017.