In a recent gathering of CFOs one brave individual shared their pain. It was a familiar theme I have seen played out many times.

The issue they faced was the relentless number of requests for a business forecast.  Over the years, with some investment of time, this CFO and his team had managed to crack some efficiencies into a comprehensive range of planning and forecasting Excel models.  A reputation had already been built of a consistent and robust budgeting and quarterly forecast process.  Increasingly the business was seeing finance as the provider and guider.

With a mission to find if there was a gap, – the CFO had reached out for feedback and now faced a new reality and conundrum.

Business was good, the possibilities for growth considerable but the risks of over exposure to a particular customer, market and product channel were becoming more acute. The business need was being reinterpreted. Good quality and timely financial data was not seen as the answer but part of the answer. Operations, sales and marketing departments all had useful inputs, indeed over time they had gone their own way and a variety of tools held and serviced departmental analysis. The reality was that only one integrated perspective could satisfy the ’need’.  An overall view was needed to plan business-wide.

The conundrum the CFO now faced was a question of how to join the dots given the investment in Excel. The task simply looked overwhelming.

How could Excel templates handle operational data and analysis? Sales needed to review past and current performance to populate, revise and set forecasts.  Self-service analysis was needed in the context of the ‘plan’. Data would need to drive calculations across sales and inventory.  Ideally the driver needed to be held over versions, scenarios and over time. Everything needed to hang together, linkages crossed operational plans and financial statements, more validation and checks and balances would have to be in place.

With existing technical hurdles, should data be held in spreadsheets? And how to get the data into those spreadsheets? Files would reach stretching point, duplication would prevail.

Alternatively the CFO would have to bring in technical skills to point analysis over a single new dataset.

Templates would need to be accessed by a wider non-financial audience. Could they handle the current presentation and style of the templates? And next year, sales and operations were going mobile, what then? What about the complications of managing the process, the staging of reviews, the security, and so on.

I feel like these moments are a tipping point for the CFO and the role they and the finance team take in the business. Lack of leadership, direction and ultimately a solution can pigeon hole it in terms of the perception that Finance is the steward and controller and the technical expert on accounting matters but not the business transformer. Budgets are about financial control.  Surely budgeting is corporate and planning is operational.  Finance can reuse what it can from the planning processes but the real problems are solved elsewhere!  The CEO’s best friend is who?

Tip the other way and it’s quite the reverse. By taking on the challenge of business transformation, the CFO and finance not only achieve the goal but provide the platform for genuine cross border relations. It’s a little like the more you trade with your neighbours the less likely you are to go to war.  The benefits are massive in terms of both efficiency and effectiveness.

But it won’t happen in Excel and indeed many departmental planning applications cater for a niche role and lack inherent business intelligence.

Budgeting and forecasting technology options
Budgeting and forecasting technology options

 

The key is finding a solution that can be seen as relevant to all parties, handle financial and non-financial sources, structures, measures and drivers seamlessly whilst managing the diversity of the roles and users on their terms. The CEO gets the dashboard with the answer his questions, The Sales Manager plans in widgets, the Event Manager plans in terms of attendance and capacity. The CFO and finance get the cake and … you know the rest. Oh and yes Finance need to own this capability ie, no development and within its current headcount.

Gartner have a name for this type of technology, strategic corporate performance management, SCPM: these applications “help to manage performance at the corporate level and create a foundation for a broader approach to performance management”.

Imagine the headline: CFO as business advisor, defining strategies, analysing, simulating, and aligning outcomes.

Now you know one of these CFOs when you meet one, the dialogue, the focus and the kudos seems to role with them. More than that the business is now focused, not on how to make its people and systems work but on the key questions such as what markets, products and services should the business focus on, investment and growth strategies, increasingly profitability, resource and funding decision support, cost control, etc.

Importantly this new CFO is collaborative and partnering, with broader management, sharing common performance systems and processes.

Transformation can be swift; from tipping point to kudos can be a matter of months, with the right partner and the right solution.

 

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