Key Findings and Strategies for Finance in a Post-COVID World
Introduction
The COVID-19 pandemic quickly exposed flaws in old ways of working and forced organizations around the globe to quickly adapt processes and technologies to ensure business continuity through lengthy lockdowns.
Inevitably, some fared better than others. Now that the dust has settled, we can evaluate what worked and what didn’t and think about where the business community, and in particular the finance function, goes from here. To understand what the “new normal” looks like, we commissioned a survey of 1,320 finance and business leaders of private sector enterprises with more than 1,000 employees across North America, Europe, and Asia Pacific (APAC). In this article, we will look at some of the survey’s key findings.
A look into the present complexities
The business disruption wrought by the pandemic was unprecedented in its scale and reach. Few organizations were able to carry on business as usual. On the contrary, the vast majority (90 percent) of respondents to our survey said that finance and business processes have become more challenging and complex over the past two years.
This increased complexity has major ramifications for organizations, including increased operational costs, difficulty delivering insights to guide strategic decisions, increased risk exposure, lack of visibility into performance drivers, and more.
Hence, it is essential for organizations to replace the outdated corporate performance management (CPM) processes that are holding finance teams back, including legacy software, points of manual intervention, and spreadsheet-based processes. Leaders should determine what tools and technologies can be used to streamline these processes considering increased complexity.
A balancing act for finance
Finance executives have had to play a vital role in helping their organizations navigate two years of uncertainty. In doing so, many have found themselves caught between opposing objectives. Three-quarters of the leaders we surveyed said they have had trouble achieving balance in the following areas:
- Growth initiatives vs. financial control and risk management
- Responding to market changes vs. proactive innovation
- Investment in financial vs. operational processes
- Legacy vs. new technology
- Reskilling existing employees vs. recruiting new hires
To make matters worse, manual tasks are eating up finance leaders’ time and pulling their focus away from high-value activities like strategic planning. Manual finance tasks ranked among the top three job frustrations cited by survey respondents, alongside technical problems and data integration and disconnection between financial and operational processes.
Despite the fact that finance leaders’ responsibilities have grown to encompass everything from strategic guidance to cost containment, ethics advisory, new reporting requirements, and operational planning, many are still stuck with ineffective tools and thus unable to work efficiently. As much as 95 percent of respondents were frustrated with their financial processes.
To ensure that they can cope with future disruptions and thrive in a constantly changing business landscape, finance teams will need to centralize data and leverage artificial intelligence (AI) and automation in CPM processes. This will enable them to overcome challenges like technical problems, manual tools, and department silos.
Facing disruption head-on Our survey found that finance and operational leaders are nearly unanimous in what they believe to be the most pressing concerns over the next 2-3 years. They are:
- Economic disruption
- Workforce disruption
- Technology disruption (AI, machine learning)
- Industry / supply chain disruption
- Regulatory disruption
- Competitive disruption, new competitors
- M&A disruption
These concerns reflect the fact that disruptions are inevitable and can come in a variety of forms. Given the multiplicity of threats facing them today, organizations need to be able to proactively plan for disruptive events. When asked, in comparison to two years ago, how important it is for finance to anticipate disruption and provide insights to steer the business, 95 percent said it’s more important now.
Although no one can predict exactly what the next disruptive event will be, it is possible for finance teams to prepare for disruption at large. To do so, they will need to build agility with CPM tools like process automation, extended planning and analysis, predictive analytics, real-time forecasting, and scenario analysis. These capabilities allow you to respond to sudden changes with much greater speed and effectiveness.
Tackling financial and operational misalignment
When disruption hits, seemingly minor inefficiencies in processes can have major consequences. For example, a delay in creating a predictive forecast could significantly delay a critical production decision. This is why it’s important for finance and operational leaders to be aligned and agile across different business functions. Unfortunately, nearly half of the survey respondents indicated financial and operational disconnects between:
- Systems, technology, and tools
- Financial and operational processes
- Data inconsistencies
- Data sharing
That’s not to say these leaders don’t see the value of financial and operational alignment. In fact, most respondents agreed that various operational areas would benefit significantly from integration with financial planning. Most respondents (63 percent) said that supply chain planning would benefit from such integration. Benefits would also be seen in sales performance, HR / workforce, marketing, and IT planning, according to around half of respondents.
Benefits would include improved decision-making, more accurate forecasting, better insight into revenue and operations, and more.
So, what is standing in the way of financial and operational alignment? One of the biggest barriers is disparate tools and planning systems, with 39 percent of respondents citing this as a problem. Other barriers include inconsistencies between financial and operational data, process ownership and cross-functional KPI alignment, and concerns about data management skills.
Fortunately, CPM enterprise software can help organizations overcome these challenges. These platforms connect different departments, teams, and business units with a single source for data transformation, a platform for planning, reporting, and analytics execution, and a communication hub for performance management. In short, CPM platforms ensure company-wide alignment, thus enabling better decision-making.
As we move forward, embracing change, adopting advanced technologies, and fostering alignment between finance and operational functions are key to navigating the complexities of today’s business landscape. Organizations that proactively invest in CPM processes, leverage data-driven insights, and remain agile in the face of disruptions will be well-positioned to thrive and succeed in the future.
Conclusion
In the face of unprecedented challenges and complexities, the finance function is at a critical crossroads. To navigate the complexities of today’s business landscape and position your organization for success, it is imperative to embrace change, adopt advanced technologies, and foster alignment between finance and operational functions. Download our Global CPM Trend Report to get more helpful insights that illuminate the path forward for finance leaders.
