How Finance can contribute to faster company-wide efficiencies
A recent study by IBM of more than 1,900 CFOs found that companies with integrated, enterprise-wide standard financial processes and data definitions enjoyed a compound annual growth rate some ten times that of non-integrated companies.
So what are the issues?
Given the overwhelming evidence in support of integrated financial processes, it is verging on scandalous that just 20% of companies have properly integrated systems in place. But it’s hardly surprising when we consider that, across the board, it is estimated that Finance still spends 50% of its time on transaction processing (Source: IBM 2010):
This is not to argue that transaction processing is an inessential activity. The CFO’s core role after all is to ensure that efficient processes are in place – including everything from cash management to regulatory compliance. But all too often Finance can find itself mired in the ad hoc needs of other departments and day-to-day tactical demands.
Our perspective
The new challenge for the CFO is to move Finance on to a strategic level to provide enterprise-wide advice, insight and analysis. With the right tools and input, it is possible for Finance to make a significant contribution to generating profitable growth. The CFO survey for IBM identified the following areas as key to providing greater value for the business:
- Supporting the CEO to create shareholder value (68%)
- Measuring and monitoring business performance (65%)
- Managing governance/controls/risks (54%)
Today’s top performing CFOs are all involved to a greater or lesser degree in activities based on streamlined business intelligence, risk mitigation, planning, forecasting and improved performance management. In the process they have developed the integrated financial systems (and, vitally, have freed-up the time and resources) necessary to elevate their role to an increasingly strategic level.
A problem for many financial departments is that they struggle to consolidate data. But with specialist input and guidance it is possible to integrate financial planning and operational data to provide consistent and accurate reporting across the business, together with tailored structures to analyse customers, suppliers, partners, products and internal departments.
Results
In a single integrated environment, transactions can be posted just once instead of being duplicated in multiple systems. Reporting is only as accurate as underlying data in the system; streamlining data distribution in this way can result in a dramatic reduction in the incidence of errors.
Financial streamlining also enables companies to cut costs and enhance efficiency by enabling departments and individual employees to manage numerous transactions independently. For example, with the right processes in place, employees are able to manage their own expenses while vendors can track their own payables online.
As well as liberating vital resources to enhance productivity, a single integrated system provides a consistent and auditable environment for the purposes of regulatory compliance, as well as providing stronger financial controls and advanced insights into underlying processes, patterns and data. The right system will also provide the inbuilt flexibility to change as the business changes, such as when accommodating new acquisitions and divestitures.
GEOJAN – performance management and business intelligence
Aligning people with performance
Tel: 020 3287 7620