- Point of view
Data-powered enterprise performance management
How finance is transforming strategic decision-making with faster, more predictive insights
Against a backdrop of increasing competition, economic uncertainty, and constant technological and regulatory change, enterprise performance management (EPM) puts finance at the heart of strategic decision making for a business.
Previously hamstrung by static reporting and reactive analyses, the finance function is now a value-adding provider of data-driven insights and is fast becoming a strategic business partner.
Forward-looking CFOs deliver value by empowering key business decisions – everything from product releases to M&A deals – with real-time insights on customer needs, competitors, and operations based on the latest and most accurate data.
Transforming finance into a more proactive function is a top priority for the CFO. Finance leaders who take a data-driven, digital approach to planning, analyzing, measuring, and reporting on performance will become better business partners.
We believe an integrated, holistic approach to EPM involving process, people, data, and technology is key, but your organization must focus on a number of transformation areas first.
CFOs can no longer afford to solely report on the past; they also need to make better predictions about future performance and profitability to:
Business leaders evaluate the finance function's effectiveness based on its speed, depth of insight, and analysis provided. However, few finance teams are fully prepared to surface supporting insights fast. They're often frustrated by their inability to capture process, people, digital, and data efficiencies, failing to create value for stakeholders.
While some organizations have embraced digital technologies for performance management, they have allowed EPM to remain fragmented across the business. They are weighed down with legacy systems and labor-intensive processes; huge, disparate volumes of unstructured data; and a lack of collaboration across the enterprise. Businesses are struggling to manage overwhelming volumes of dark data and are unable to uncover the untapped insights they hold. Also, a large number of decisions in organizations are not based on the company's data, as trust in its quality is low.
To drive value through EPM, you have to get data under control and synchronize various components of the financial value chain, such as defining KPIs, strategic and operational planning, consolidations, reporting, forecasting, and actions/rewards. With this, your finance teams can gain real-time visibility into the business' most important metrics and enhanced accuracy, agility, and foresight; the team can then operate more instinctively and generate insights at speed.
To make future-focused decisions, managers have to sift through tons of data to find what is relevant to their individual responsibilities. Integrated EPM models can eliminate the noise from too much data, help finance teams focus on the data that matters, and build competitive advantage.
With access to meaningful data, finance can propel the business and ensure it stays competitive in 2020 and beyond.
Finance leaders can only build greater predictive capabilities into EPM with a sound, scalable infrastructure. To create an effective EPM strategy and provide value-added business insight and analysis, you should focus finance transformation on the following four areas:
As companies grow, add locations, and create new product lines, they might fail to standardize or unify processes. Isolated business units then do things their own way, resulting in inefficiencies from nonstandardized ways of working, duplication of effort, multiple report formats and reconciliations, long planning cycles, and limited drill-down/up capabilities.
By operating as a connected ecosystem without functional silos, and re-engineering processes, finance teams can achieve greater precision in their outputs and apply lessons learned further upstream – helping teams identify where to streamline forecasting or planning processes.
The right finance technology stack takes the benefits of process excellence further, enabling operations to run at greater speed and scale. You get integrated systems with end-to-end visibility into workflows and KPIs and greater control of data flows for quick, smart analyses.
Cloud-based EPM solutions help improve processes and deal with the challenges from master data and hierarchy management, consolidation and reporting time, integration of disparate systems, and more. Digital technologies let users decide how they want to access data and what action to take with the insights.
As digital tools, such as AI, robotics, and machine learning, enable predictive insights and free up people to work on more value-adding tasks, it becomes easier to align your technology footprint to your processes. And providing they offer a quality user experience, people are more likely to adopt these new solutions.
One of Australia's largest banks standardized reporting processes across five lines of business and created a virtual business intelligence platform that integrated data from multiple sources for improved analytics and faster insights. The firm is now fast to respond to the market with all the information it needs right at hand.
Point-in-time reporting also helped the business raise productivity by 18%, reduced the number of management reports for one business line by 79%, and decreased the time spent gathering and integrating data by 47% – bringing it in line with best-in-class standards.
3. Data and analytics
It takes good internal and external data, however, to earn useful insights from integrated systems.
Enterprises understand that finance data is a powerful asset. But many have more data than they know what to do with. Even with streamlined processes and workflows, they need help cleaning, storing, and modeling their data for action. For your EPM strategy to work, apply proper governance and management strategies to datasets, then use robust analytics to power prescriptive insights that are a step ahead of the predictive model and include prescribed actions and possible outcomes of each action.
Finance teams can crunch massive volumes of information using digital tools and use algorithms to predict performance based on prior patterns for more precise forecasts from the top down. Don't rely on a bottom-up model that works from dated assumptions at the start of each planning cycle.
4. Operating model
As digital tools increase in accuracy and effectiveness, finance teams will see their day-to-day resourcing needs change. Skill sets among staff will evolve, becoming more relevant for a digital-first finance operating model.
You will need to find new avenues to create value using new talent models, such as a hybrid workforce of people and machines, on-demand staffing, or digitally enabled managed services.
With evolving expectations, skills, and digital technologies, the role of the finance function has become central to the organization's growth strategy.
Finance's data is key to understanding what customers want and where growth opportunities lie. An integrated, holistic approach to EPM will help you use your business' data to empower enterprise growth.
Cloud-based technologies, AI, and machine learning make sophisticated data analysis possible, and process excellence makes it scalable. Focusing on best practices and restructuring your EPM technology stack helps transform finance with deeper insights, better accuracy, and fewer gaps in the business' view of financial performance and market opportunity today and for the future.