Much has been written about how changing tides, rapid disruption, and global trends impact the customer-facing side of business today. You can open any business publication of your choice and hear stories of how technology has completely changed how they think about their offering and their messaging to the market. And this is all well and good.
But it’s rare for this rhetoric to expand inwards into the actual operations within these companies. External innovation is forced because it has real implications for short-term profitability and competitiveness. Internal innovation is less tangible and its effects are more long-term in nature – which means that it often falls to the bottom of the priority list. With so much else going on, it’s much easier to stick to the status quo and do things as they’ve always been done.
Spreadsheet-centric finance departments
In finance departments, this often aligns with what some might call the ‘spreadsheet era’. Powerful spreadsheet functionality has epitomized the finance function of the past decade or two and it’s delivered exceptional productivity gains – allowing for complete creative freedom in how financial modelling and reporting is completed.
What’s scary though is that spreadsheets represent the last key inflection point for the finance department and its birth was a very long time ago. Accountants and other professionals who have grown up in the Excel generation see spreadsheets as the only way to accomplish their goals – and the momentum generated during this period means that very few have sought better alternatives.
This is despite the well-documented challenges with spreadsheets that we all know so well – data integrity, version control, human error, and hundreds more. It’s really worth going back to first principles here and examining whether the innovation we’ve seen externally can be replicated within organisations to change the way we do things.
A new operating model for finance
The entire FP&A endeavour is an attempt to transform how we think about financial and operational reporting for the modern era. Pushing away from spreadsheets, the movement uses functional database technology to create systems that are dynamic, purpose-built, and that leverage all we’ve learned from big data. This is an opportunity for finance departments to take this and run with it – disrupting how they currently operate and building towards a future where they play a fully proactive role in accomplishing business success.
Modern FP&A tools can still accomplish the backward-looking reporting that is paramount for performance measurement, regulatory reporting, and to keep stakeholders in the loop – but they can do so much more. When you begin to look deeper, finance departments can take their value proposition to new heights and radically reshape how they interact with the rest of the organization.
A recent report from the Business Partnering Institute lays out some of these key principles for a finance operation model of the future:
- The finance department recognizes the variety of factors that influence the outcome of every strategic decision.
- They develop effective financial and non-financial KPIs that drive the right value-adding activities.
- They have the skills to gather and structure valuable data from new sources, not just from internal activity.
- They ensure that data sources incorporate all aspects of the Balanced Scorecard approach.
- They use technology to quantify soft metrics, with predictive analytics to drive future strategies.
- They are skilled in data structuring and standardization to ensure effective automation.
This is an optimistic picture of the future with gives the finance department a broader outlook for what falls within their mandate and thus what they can contribute. Having seen what our clients can accomplish with Apliqo we’ve seen this first hand. Talented people who have always had more to offer can leverage FP&A software to augment their skills and free up time to truly focus on what matters.
This is the future of finance and it’s time that we take this transition seriously. Finance departments of the future are not only reporting on what’s happened. They’re at the vanguard of pushing their organization to new heights. And we can’t wait to see it happen.