5 essentials every CFO must consider today in order to shape the future
The evolution from the Wright brothers’ first successful flight in 1903 to transatlantic flights that connect the world in a ubiquitous way didn’t happen overnight. It took decades of research and planning and an ongoing commitment to take calculated risks and make decisions to explore the unknown for great reward.
Finance, in both its function and its transformation, is also driven by evolution. As businesses move forward amid continued disruption, evolution is not only a natural progression — it’s a necessity for survival. To this end, processes are evolving; best practices are being adopted and, in many cases, enabled by advancements in technology
For corporate finance teams, steady evolution driven by technology remains paramount to its future success: Each advance forward signifies an important shift from data collectors and reporters to business partners and strategic advisors.
As the CFO of a cloud planning company, I see first-hand how the corporate finance function needs to help guide the business through heightened volatility, uncertainty, and risk. For finance leaders specifically, here are five considerations that can help achieve and sustain success in an increasingly dynamic business environment.
1. Behind every great strategy is an even broader and deeper set of data
As markets grow more dynamic, how companies operate within these markets must be equally agile. Today’s CFOs need to be strategists; they need information from across the business to make timely decisions more than ever. Yet behind every great strategy is the data used to inform it. If finance teams aren’t equipped with a reliable, integrated view of operational, financial, HR, sales, and marketing data from across the organization then they will struggle to establish a single version of the truth.
To make better, faster decisions, leaders should be tapping into and gleaning insights from both internal and external data — such as demand, exchange rates, or commodity price volatility — and incorporate these into dynamic, enterprise-wide plans. A recent study commissioned by Anaplan revealed that 82 percent of aggressively growing companies favor this kind of continuous approach to planning and incorporate market data into their plans within days or weeks.
By seizing the opportunity to go beyond traditional planning approaches of the past, a Connected Planning approach enables real-time decision-making and provides the business with a clearer picture of how corporate objectives align with financial plans linked to operational tactics and market events.
When changes are made in one area of the business, any impacts, big or small, are immediately visible across the enterprise. This level of business agility is nearly impossible to achieve with traditional approaches. Leaders need to evaluate the full scope of information needed for effective business decisions in real or near real time.
2. Are your people, processes, and data interdependent — or independent?
Business planning environments are increasingly more continuous, intertwined, and interdependent, yet planners struggle with inefficiency. Nearly 75 percent of total respondents in our State of Connected Planning research reported that they take weeks or months to incorporate market changes into planning processes. To avoid the deadly wait for information, leaders should consider leveraging planning technology that connects people, processes, and data in a single, unified interface.
I experienced this business cohesiveness firsthand at Seagate Technology. We decided to implement a Connected Planning approach in 2014 with the Anaplan platform and used it initially for revenue forecasting. The implementation proved so successful that it went viral, surging from 100 internal users to thousands of users, and was easily adopted and implemented beyond finance throughout the business to become our holistic planning ecosystem. As a result, our overall spend was reduced, our agility increased, and managing change was faster and easier.
3. The right technology helps you see around corners
Keeping up the pace amid disruption and volatility can be challenging, especially using historical-looking point solutions or spreadsheets. The ability to use advanced analytics for predictive modeling assures that historical data can be used to make better decisions that shape the future. Technology with “what if” analysis and scenario-planning capabilities can help businesses gain real-time insight to better understand the implications of business decisions that span across functions.
Robust technology is imperative to operating with agility through periods of uncertainty. Consider the business uncertainty over the past 12 months: U.S. businesses debated the Jobs and Tax Act proposed by President Trump and whether it would go into effect December 31 or January 1, a single day of difference that would incur far-reaching business and tax implications.
Portions of the year also focused on tariffs and trade, and in response, businesses had to be increasingly agile adjusting their supply chains. Using tools without these predictive capabilities can leave decision-makers in the dark on what might happen in the future. Connected Planning methodologies, and the technology that supports them, can enable timely, reliable forward-looking decisions by replacing discrete, opaque, siloed, and offline toolsets.
4. Looking for hard-to-find business opportunities? There’s an algorithm for that
Machine-learning technology, along with predictive and advanced analytics, can reveal deep insights from external and internal data around business drivers and trends to inform and influence more insightful business decisions. Machine-learning methodologies applied within a financial planning platform, for example, can quickly analyze historical sales data, weather, and social media to discern their impact on customer demand.
This information can then be used to create more reliable forecasts, a more accurate financial outlook, and help inform better decision-making while still maintaining a holistic view of planning across the company.
5. Trading up: Move past silos to digital collaboration
According to state-of-planning research, 74 percent of companies plan more frequently now than they did five years ago, yet only 15 percent of businesses execute on all of their plans. For finance, teams have traditionally spent too much time collecting and validating data rather than business partnering and driving collaboration.
Here are three considerations that can help increase high-value collaboration:
- Build a team of teams. Talent is key to better business performance. Ensure that your business has well-defined individuals and a shared consciousness of the goals you need to meet.
- Make your routine routine. If you’re spending too much time, and experiencing friction points on items that should be automated, determine how to automate them for improved efficiency.
- Move analytics to action. Infuse analytics into your decision-making. Many business professionals are still reconciling spreadsheets. Adopting Connected Planning technology allows decision-makers to make credible, real-time, enterprise-wide decisions based on data and analytics. No more tedium.
Looking to the future, finance teams can continue to explore and uncover new opportunities through breakthrough analytics and automation, especially as efforts focus on finance-led, Connected Planning approaches. From a holistic vision to ongoing revision, today’s finance leaders are on an evolutionary journey of continuous learning and business empowerment.