Can finance become a transformative force in the business?

The answer is yes: if it can mature in key areas, the finance organization can serve as a strategic advisor to the rest of the company. Businesses are always looking to improve efficiency, reduce costs, and increase performance – real gains that can be supported by improved financial processes and strategies. 

For today’s businesses, technology is integral to developing mature financial processes. Let’s take a look at how in-memory computing, specifically SAP HANA and other Big Data initiatives, can help financial organizations improve their maturity, wherever they stand now.

Evolution, in five steps

  • Level 1: At its most basic, technology can speed business processes like reporting, calculations, and quarterly closes. It can also expedite data movement between systems, or dramatically reduce the time needed to load or process data – saving time for the business as a whole.
  • Level 2: Technology can support better decision making by eliminating manual steps, increasing transparency across systems, and supporting new insights. Bringing together multiple perspectives, including data from multiple areas of the business, makes it possible to generate more complete and accurate insights, for better business decisions. 
  • Level 3: Improve your financial process execution and you affect the whole business. Many current financial processes were created based on outdated technology limitations, which no longer exist thanks to in-memory computing. For example, finance departments can run more scenarios in far less time. Even more striking is the ability to run cash flow or balance sheet statements at any time, not just once the books are closed. The result: You keep a much closer eye on day-to-day – even hour-to-hour –business. 
  • Level 4: Faster and better processes let finance departments focus on innovation – not just within finance but for the entire organization. Better information helps you optimize decisions; see patterns and trends; and suggest new products, services, or supply chain processes. As finance becomes more predictive about the business, it can transform how the organization reports on (and thinks about) operations, customers, and products.
  • Level 5: In finance-led business transformation, finance uses technology to act as a change agent for the entire company – to be not just execution experts but stewards of information. You can use your insights to drive discussion on changes to the business model or how to sell and market products. You can generate multiple scenarios for larger shifts: What would look it like to be more customer-centric, or to follow a low-cost provider strategy?
Areas of influence
As a finance organization reaches new levels of maturity, it becomes more influential in four main areas:
  • Enterprise risk and compliance management. More than half of all fraud cases are detected by accident.[1]  The key to risk and compliance maturity is the ability to proactively identify and eliminate risks and compliance threats. With better alert-based reporting and advanced analytics, you can become more proactive – analyze who is accessing your system, when, and how, or implement fraud and risk alerts triggered by key indicators. In-memory computing allows you to analyze extremely large volumes of data in midstream, identifying anomalies in or real time. For example, you can monitor vendors and payments to identify potential procurement fraud.
  • Accounting and financial close. Many organizations lack a good sense for performance until close, when the finance department reorganizes and reports the data. But with in-memory computing, you can run managerial reports – and keep track of trends – before, during, and after the financial close, for real-time performance updates. The speed and analytic power of in-memory computing and Big Data analytics can also improve accounting, close, disclosure, and intercompany reconciliation processes.
  • Treasury and cash management. In the past, cash flow statements were created only periodically, in part because it was difficult to pull in the large amount of data needed. In-memory computing enables real-time cash flow modeling, so you can understand your cash position in the moment. Zero-latency insight accounts for currency movements and signals if and when there’s a need for additional hedging. You can also evaluate performance over time, bringing in historical data and external indicators (such as assumptions around economic risks or currency exchange rates) to influence the forecast, or use complex algorithms to predict future cash flow. More accurate and flexible scenarios can change how your company spends cash, invests funds, and takes on risk.
  • Integrated business planning. If finance can generate a comprehensive vision of the business that incorporates past, present, and future performance, it can help lead the organization. With these valuable perspectives, finance moves from a reporter of data to a generator of key enterprise insights – one that can combine, derive, or predict outcomes using customer, product, strategy, and operational data. A flexible in-memory solution for integrated business planning supports such advanced analysis, bringing together multiple data elements in context – for example, combining data for a full P&L by product or customer. And with integrated business planning, finance can use complex, predictive analysis to expand its sphere of influence to other LoBs. For example, in-memory computing makes it possible to link trade promotion spending for a product line that includes a new,soon-to-be-released SKU, then to predict future overall performance.
The road to finance maturity – simplification
Many traditional financial process were developed decades ago, in a vastly differenttechnical landscape. New technologies such as in-memory computing can speed business, promote process maturity, and evolve the finance function into atransformative force for the entire enterprise. Finance goes beyond reporting on the bottom line to influencing it directly.

To learn more about how SAP HANA Services can help you mature financial process and transform finance into a strategic advisor to the organization, please visit us online.


[1]
Report to the Nations on Occupational Fraud and Abuse. Association of Certified Fraud Examiners (ACFE) 2012

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