As we get to grips with the ‘New Normal’ and make what we hope will be a strong recovery, we all need to ask what we have learned and what we can do better. It’s my belief that financial controllers can play their parts in helping organisations to emerge and progress by telling stories that inspire, demonstrate facts, illustrate their arguments and, ultimately, hasten the great bounce-back, writes Michael Lengenfelder, Head of FP&A Product Management, Unit4.
Finance leaders are many things. They are the trusted advisors and lieutenants to CEOs and the people who are held to account for fiscal probity. McKinsey notes that CFOs now need to take a key role in ‘capability building’ within organisations and one of the key skills they need to learn is ‘amplifying their voice.’ I believe developing this is one of the most important requirements for operating in the ‘New Normal’ and I would argue they need to go as far as to become narrators or even journalists.
See also: Ian McLaren, CFO of the UK’s biggest rail network, on open source apps, serving TBs of data daily, and not having a CIO.
CFOs and any financial leaders downstream from that role are still sometimes derided as bean counters who deal with the prosaic issues of budgeting and banking, but McKinsey is surely right in seeing the role as way bigger than that. That’s why CFOs are increasingly being given CEO jobs too and why there is a lot of discussion about whether they can become CEOs (and why almost as many would accept the promotion right now). This is because finance is the great enabler of business and the backbone of numeracy discipline without which nothing else is possible. If you are leading the finance team it offers tremendous oversight into other parts of organisations.
If you understand the financial imperatives and underpinnings you should be able to do more than accounting. The modern finance leader is called on to envision the future, see trends ahead of the curve, spy market opportunities and sniff out risks and anomalies. Now, put together those capabilities with the journalist’s nose for a story and ability to spell out complex, breaking events in words that most of us can understand. Suddenly, you have a very powerful figure indeed: one that is capable of arguing, persuading, weighing evidence and acting as an arbiter of the right and wrong things to do next.
Planning to get ahead
The enabler here is financial planning and analysis. In software, FP&A needs to be very tightly integrated with the heart monitor of business operations, the enterprise resource planning (ERP) system, so much so that you shouldn’t see the join where one meets the other. That’s already happening and, whatever we call them in the future, these complementary programs need to be working in concert. Together, the ERP and the FP&A module provide a complete picture of business operations and holistic data: the rock-solid, real-time source for the finance leaders’ storytelling, if you like.
It might seem boring but without that initial ERP/FP&A integration, it’s very hard to build a data platform that will act as a robust support mechanism for finance leaders to report on issues, provide commentary and, ultimately, recommend strategic actions.
The FP&A/ERP duet also needs some other considerations.
It should sit atop whatever the business prefers in terms of IT deployment. Increasingly, especially as the pandemic has been a catalyst, that means public cloud platforms. Today, it’s become hard to find the people to run and secure systems on premises. It is also tough to justify the budget and time needed for hardware procurement and deployment. So, a cloud option has to be part of the mix in consideration at least.
But deploying in the cloud shouldn’t mean that the system is set in stone. Even today, in a world that’s becoming increasingly cloud-centric, you need the ability to tweak and accommodate exceptions and special cases.
And finally, the system needs to have been written with explicit knowledge of sectors and their workflows in order to cover use cases and support classical operational needs.
And now for some good news…
The good news is that as we come out of the pandemic we have several winds blowing in our favour.
The next few years will provide the ultimate test of our ability to come back from the shocks of 2020 and the reverberations that still echo. But if we can use the combined FP&A/ERP platform as the tools to justify our case then we will be building on strong foundations and we will have a better chance of success. With seamless data integration and accurate reporting, everyone can share information and break down organisational silos, some of which may have been exacerbated via stay-at-home orders that left us less able to collaborate.
We also need to take full advantage of a golden age of technologies of which a partial list might include data/text mining and analytics, social media parsing, AI and Machine Learning, richer reporting and visualisation tools, real-time communications and the maturing of cloud and conferencing capabilities.
As businesses move forward to life beyond the pandemic, this scope for modelling, scenario planning and deeper, evidence-based, actionable insights will be essential to more agile and responsive decision making. Ultimately, it will place finance leaders in an even more trusted position when it comes to future strategy decisions. From there they will need to learn the craft of picking out critical elements, telling compelling stories, advocating and weighing risks as well as opportunities. The story of our futures is just beginning.