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Financial planning and analysis - Influencing corporate performance with stellar processes, people, and technology

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Perspective from research sponsor Grant Thornton LLP How better data is enabling CFO success With more and more finance resources dedicated to regulatory compliance activities, CFOs run the risk of falling behind or settling for just running in place. Either choice means that the finance function limits its ability to perform high-value, forward-looking analysis. Instead, CFOs are relying on the basic historical reporting activities required for statutory and other financial statement preparation. We believe there are better, more accurate avenues available. CFOs now have the opportunity to gather and use relevant financial and operational data for planning and forecasting, and much more easily determine the metrics that drive the business.

To solidify their place as a value driver, CFOs need to understand the levers that drive the business and then make strategic, forward-looking decisions based on accurate business intelligence. Limited resources drive the need for tools and processes to allow them to focus on this higher-value mission. Through enterprise performance management (EPM), CFOs can become a strategic enabler and use data to deliver accurate insight and help steer the business.

EPM’s domain includes business strategy, planning and forecasting, supply chain, and financial management. It includes the combination of process and technology that promotes strategic analysis for the business and insight into where the company is headed. Changes that enable CFOs to achieve this result are difficult to attain all at once, but instead are the result of a stepwise progression up the EPM maturity curve. To do this efficiently, the finance function must use an integrated plan that addresses:

  • Process through business process reengineering
  • People through organization design
  • Technology through architecture optimization

From a technology perspective, reliable data and data rationalization are key steps. It is important to collect data from people who are closest to the activities and key business processes — this provides material data, which will be much more effective for planning and will lower the risk of a bad match between needs and strategies. In addition, once a plan is in place, variance analysis will help a CFO accentuate positive trends and steer away from negative trends. An enterprise-wide solution enables the organizational shift from decisions based on historical data to forward-looking analysis. It’s all about providing transparency throughout the organization.

With a data management strategy in place, CFOs can then focus on deploying enterprise EPM software that allows them to collect, aggregate, and synthesize information from many disparate sources. To get it right, CFOs must also optimize their supporting processes related to planning, budgeting, forecasting, or ad-hoc analysis. EPM technology alone will not provide the total solution; rather, it is a platform that must be tailored to support individual enterprise business process requirements.

To fully take advantage of the power of EPM, CFOs should move away from an annual budgeting process. Many survey respondents (62 percent) still found some value in the process, but acknowledged that it’s not perfect. In our experience, a continuous budgeting environment is a key piece to this forward-looking perspective.

START NOW In this report, we’ve contributed Grant Thornton’s thoughts on some important concepts that can help the finance function break out of the over-emphasis on managing historical data and can help them add real forecasting and strategic planning value. We recommend that CFOs:

  • Gather and leverage integrated financial and operational data
  • Develop a comprehensive plan that addresses process, people, and technology
  • Select an enterprise-class EPM software deployment strategy (on-premise, cloud, or hybrid)
  • Make the planning process transparent throughout the organization
  • Move from the annual budgeting process to continuous planning and forecasting

If your aim is to optimize finance function operations and use data to develop growth strategies, then working with these key concepts has the power to help companies of all sizes. Now is the time to get started or kick your existing program into high gear.

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