Congratulations, CFO! Your days as a bean counter are over.
I hope this fact arrives as welcome news. Because the era when CFOs primarily oversaw transactions is past. And the dark days of Excel Hell – where a company’s entire past, present and future are held hostage in a stack of 150 spreadsheets – those are numbered, too.
So are the days left for big and bulky, premise-based enterprise performance management (EPM) solutions that were conceived before the cloud, before mobile, and before the age of big data.
As a new infographic on the evolution of EPM illustrates, there’s change in the air. The influence of CFOs is on the rise. Once viewed as a gate-keeping function that was consulted about major strategic decisions only after those decisions had been all but made, Finance has taken a more prominent place in the enterprise. Take just one area: IT operations. A Gartner study recently found that CFOs are involved in 84 percent of all IT decisions.
I work with Finance executives all day long, and I can tell you their growing influence isn’t confined to IT decisions. The most competitive companies are positioning themselves for growth – a Gartner study found it’s the No. 1 priority for CFOs – so the implications for Finance here are huge. To grow aggressively yet wisely, companies need foresight and vision, and a modern approach to modeling the future. They’re not going to find it in people who wrangle spreadsheets for a living.
New Tools for a New Era
For more CFOs to ascend to their rightful spot at the strategy table, they frankly need better tools than what they’ve had. Even expensive EPM solutions implemented just a couple of years ago can’t keep up with the real-time pace of business today. The Hackett Group found the average company spends four months budgeting. Four months. You can immediately see the problem with this. By the time your plan is set, you’re working with information that’s already several months old. And four months after your plan is set, how confident will you be that your most important decisions are based on information that reflects today’s competitive landscape – not the landscape you faced eight months ago?
Lack of real-time insight is a big area where legacy EPM platforms are failing to give CFOs what they need to succeed. Working with a legacy EPM system and outdated data is like basing what you’ll wear today on the weather forecast from yesterday’s paper. You’ll always have the nagging suspicion that you may be making the wrong call. (And many times, that fear is warranted, especially if you don’t pack an umbrella.)
It’s just as crucial to provide context around data to extract the most value from it. Any EPM solution can tell you which sales reps generate the most revenue. But it’s something else to pinpoint the precise sales situations where those reps generate the most profit – down to the customer’s vertical market and the specific products and services they bought. That kind of context helps a company place resources where they’ll do the most good, and the vast majority of EPM solutions are simply too inflexible and limited to make these insights readily available.
Another chronic EPM fail surrounds collaboration. Most EPM platforms are so complex, rigid and difficult to use that only a handful of Finance personnel ever deals with them. This cloisters planning and analysis within Finance. And because line of business managers don’t interact with the EPM system, they end up storing expense and revenue data in email, departmental spreadsheets, even their own heads. So budgeting and forecasting becomes nothing but an endless series of email exchanges punctuated by Excel editing sessions.
CFOs are telling me these limitations are deal breakers. They insist that to realize the full strategic potential of today’s Finance organization, they need platforms built for the cloud and designed to take in real-time data from virtually any source. They need solutions that replace annual planning with budgets that are always current. They need enterprise analytics applications designed with almost consumer levels of usability so any stakeholder can interact with them, even from mobile devices. Inshort, they need an EPM platform built for today’s CFO – not yesterday’s bean counter.
Editor’s note: This is a guest post by Christian Gheorghe, Founder and CEO of Tidemark, a cloud-based business analytics tool. The post went through Pando’s usual editorial process.
[Image courtesy Silvia Dinatale]