by Chris Grundy, EPM Product Marketing, SAP
By now, every finance executive is hyper-aware of the bevy of business intelligence tools that help collect and analyze Big Data – but many are just not equipped to leverage them. First, they need to grasp fundamental planning points by rethinking the approach to data and finance’s role in the business.
In a recent SAP Game-Changers radiocast, Gary Cokins, founder of Analytics-Based Performance Management; Jon Essig, CPA with Optimal Solutions; and Rob Jenkins, global finance technology leader at SAP, offered advice on how to predict profitable performance in challenging times.
You can’t solve a problem you don’t understand
All panellists agree that there is a distinct resistance to change in the finance world – and this makes organizations ill-equipped to deal with emerging data challenges posed by innovative technology.
According to Cokins, “We need to close what I consider the wide gap between the CFO and the CMO, because the key is marketing has to answer the question: What types of customers do we basically retain, do we grow, do we win back, do we acquire? We are going to have to see that gap gets closed by finance and accounting function providing more and better information about customer profitability levels.”
Essig thinks there is a good chance at closing that gap, since tools are getting easier to use and require less expertise. The new workforce is also more comfortable interfacing with new technology.
Jenkins, however, still sees data interpretation as a big stretch in finance. “Getting to a fully absorbed profit view by product or by customer takes a lot more judgment and a lot more imagination and it really is worth the effort, but we don’t see a lot of firms doing that.” The fundamental issue is figuring out what to do with all the data to make it valuable and improve planning and forecasting.
Take the risk on technology
Essig believes that the next few years will bring the risk-averse finance sector further along in software investment. As tools become more available and cost-effective, “You no longer need the higher teams of the consultants and data scientists to come out and invest hugely in a project to benefit from these tools.”
According to Jenkins, you can achieve a near-forensic view of product and customer profitability with increased computing power that proves its merit in the form of improved decision making.
One implication of such a shift could mean the end of the dreaded annual budget. Instead, progressive economics and management accounting pave the way for rolling forecasts at more frequent intervals, providing a fresh perspective.
As a new era of tech-savvy CFOs is ushered in, technology will be seen as an enabler instead of a barrier. What do you think are the possibilities once this shift is completed? Listen to the full radiocast for more details.
This blog originally published on CFO Knowledge and has been republished with permission.