Ask any chief financial officer today how he or she would describe his or her workload and the most likely word you will hear is “overwhelming”.
Fierce competition, rigid governmental regulations, high market volatility, and growing business complexity are few of the many things that CFOs must contend with day to day.
CFOs of today are expected to basically deal with anything and everything. They are not only expected to provide valuable insights to other decision makers within the organization, they are also expected to manage the operational and financial risks of the organization in the most efficient way.
Simply put – because CFO functions have now become a crucial connection between finance and the rest of the business, their tasks are not only overwhelmingly many, they are also non-standard and almost always urgent in nature.
All CFOs want to be strategic CFOs or top performing CFOs because their line of work demands them to be so. However, it is not always easy to be a strategically oriented CFO or a top performing CFO especially when the expectations are so unclear and the tasks too many.
Since 1999, the Performance Canvas team has been in conversations with many CFOs. Each has his or her own set of strategies and reasons but over the years, we have learned that these CFOs have more or less the same challenges that they need to struggle through and they are as follows:
- They are not armed enough to analyze and confront business risks head on
Many CFOs and their finance departments today still have really high margin of errors for their forecasts.
- There is increasing pressure for them to contribute significantly to the company´s overall strategy
CFOs today are now seen as the CEO´s partner in steering the company forward and upward which is why CFOs have to perform several tasks that enable him or her to contribute significantly during strategy formulation meetings.
- There is lack of critical business insights
A common problem encountered by most CFOs today is the fact that data are not quickly transformed to useful and concrete information. On top of that, despite having information to work with, most of these information are not detailed enough to truly be relevant and useful.
- Tasks such as closing of the books and reporting consumes much of their time
An average company spends too many months in reporting and closing in comparison to best-in-class organizations. Many finance departments still struggle with cutting down their cycle time to half of what they are used to.
- The company still struggles with data information gathering
Information gathering is crucial as it is necessary in order to generate timely and business critical insights. However, if you talk to analysts today you will find that all of them spend most of their time looking for data instead of analyzing data.
- Budgeting and forecasting are too inefficient
There is not a single CFO who would say their budgeting and forecasting process is perfect. More often, the results of these processes are unreliable and inaccurate because of the gaps in the process that need fixing.
- Lack of consistency in structures, system, and process hinders effective decision-making process
Many multinational companies struggle when it comes to internalization because this leads to wide gaps in structures, in systems used, in processes employed, and in the complexity of the fp&a. All these added together easily hinders effective management decisions.
How Technology can help address some of these FP&A Challenges
Addressing the modern day challenges of a strategic CFO is multi-faceted and tricky. It is not something that can be overdone overnight and certainly not one that can be accomplished by just one person.
Aside from looking at the value focus of the company, the process complexity, the organizational culture, and the people´s behavior and engagement, one must also look at the technology used to support the CFO in his or her tasks.
As all the other aforementioned factors require lengthy discussions on its own, let us focus on how technology can potentially help transform a CFO into a strategic CFO to be able to manage the FP&A challenges on a daily basis.
The simple act of re-engineering certain finance tasks through corporate performance management technology can drastically reduce costs and improve the overall effectivity of the CFO and his or her team.
With technology such as Performance Canvas, a CFO can automate higher volumes of data especially when it comes to consolidating financial statements. Through its self-service features, it becomes easier for the CFO and the entire team to analyze data in a deeper manner such as now being able to do product analytics.
One of the many advantages of a CPM software like Performance Canvas is that it can automate reporting, support unstructured data, support ad hoc reporting, perform unlimited scenario analysis, and it can automate controls.
Lastly, with Performance Canvas, legacy systems can finally now be connected in order to allow for better flow of information across the organization.
It is important to note that because Performance Canvas uses MS Excel as its front end, it becomes easier for the finance staff to accept and adopt the solution as there is no need to wean them off a tool they are already used to and familiar with.
With modern technology on the side of a CFO as he or she battles through these common challenges, moving from just being a good CFO to being a top performing CFO is within arm´s reach.
DSPanel offers cutting edge technology platform for business analytics, planning, and visualization. DSPanel designs, builds, and operates with the end users in mind. Performance Canvas was created by DSPanel to answer the unarticulated needs of the market not addressed by previous available solutions. With Performance Canvas, information is transformed into valuable business insights for the business executives to utilize in their decision-making process. DSPanel currently has over 2500 organizations deploying their solutions.