By Planview
The Role of Finance:
Number Crunchers or Change Agents?
In general, financial and strategic planning professionals are slow to adopt new financial technology tools, especially in the area of strategic or investment planning applications. Why would this be the case, considering the importance of this subject? Whether by choice, lack of knowledge of the alternatives, or because their organizations won’t allocate the funds needed for the modern, purpose-built tools to support these critical initiatives adequately, these professionals are operating at a disadvantage, and aren’t doing their companies any favors, either. They are allowing themselves to be shut out of many vital business decisions; instead of being valued decision makers, they are simply considered “numbers people.” As a financial professional who has worked with CIOs and technologists for the past 20 years, I consider this a travesty – one which the finance community can overcome.
A Disparity in Expectations
It’s interesting that we have such differing standards when it comes to technology. On one hand, we embrace innovations such as smart phones, tablets, automated general ledgers, and information warehouses; all have improved our productivity and provided value-added services to our internal clients and external shareholders. However, when it comes to planning processes and related technologies, we still predominately use manual spreadsheets or, in some cases, older, internally-developed solutions. On a recent CFO.com Webcast more than 75 percent of participants said they used spreadsheets as their primary tool for planning (we’ll get into why that’s not ideal in a minute). Less than 5 percent said they used purpose-built planning platforms. Why haven’t we demanded the same of our financial tools as we do personal and general business productivity solutions?
Four Reasons Why the Spreadsheet Still Rules – and Why it Shouldn’t:
1. By training, experience, and maybe even nature, we finance professionals tend to be conservative when it comes to embracing change. The old saying, “if it ain’t broke, don’t fix it” certainly applies. The thought of making changes and taking any type of risk without a complete, detailed analysis raises the hackles of most of us. We tend to believe it’s simply safer to stick with what we know. But when what we know is costing us time, accuracy, and potential, is it really worth it?
2. We love our spreadsheets. It’s software we can control at the desktop, it requires no IT support, and we are comfortable using it because it’s what we’ve always used (see reason 1). But there are just as many reasons not to be enamored of spreadsheets. For instance, they are difficult to consolidate, and once one leaves your desktop, you have little control over how the data is manipulated and by whom. They can only provide static numbers with no real-time business information or real analytics. With no version control built in, it’s easy to duplicate and save over versions, creating multiple versions in multiple states and places with no easy answers. Further, the risk of human error is elevated – and we finance people don’t like risk, remember?
3. Yes, implementation of new software and processes is time-consuming and it can be challenging. You have limited resources struggling to complete the day-to-day tasks, leaving little time to introduce and master new tools. Yet to invest a few hours now to learn a modern system that can save you countless hours later seems a small sacrifice for the obvious long-term benefits.Only about 30% to 40% of companies actually finalize the plan prior to the new fiscal year – a number borne out by leading analyst studies and my 30 years of experience. While this is frustrating and demoralizing for those laboring on the plan, imagine the difference for two organizations, one starting out a new fiscal year with a plan for strategic goals and how to achieve them, and one without. Clearly, the latter is starting from a strong competitive disadvantage.
4. When Finance competes for technology investment dollars, we generally come out at the bottom of the priority list compared to new product development, cost reduction efforts, and internal controls. The ROI on financial technology investments is more difficult to quantify and thus little capital is allocated to new financial systems investments. But if you know how to calculate productivity, risk, and benefit, and present them effectively, you may see your requests move up that priority list.
Three Steps to Overcoming Resistance to Change (Plus: do YOU let this Business Case Mistake get in Your Way?)
Change may be inevitable, but no one said it would be easy. You can either settle for the status quo and hope to earn a few trickle-down dollars, or you can lead your company to better strategic investment planning results and be a catalyst for change in your organization.
1. Best-in-class finance leaders drive operations and entire companies to embrace change as a continuous occurrence. They understand that to be successful as it relates to customers, market share, profitability, and share price, they must stay steps ahead of their competitors – which means continuous change. If you look at the companies at the top of any industry, you will likely find their leaders are viewed as creative and change agents. Companies like Amazon, IBM, UnitedHealthcare, and Ford all have leaders who are drivers of continuous change. Why not take the same approach if you are a CFO, FP&A manager, or someone responsible for your company’s investment planning process? If you step out of the role you think you have and start directing change in your strategic planning process and technology investments, you will soon be considered a valued leader.
2. To introduce change, learn what your technology options are and what they can do for you. Find out what they offer, how it compares to the spreadsheets or other internal programs you use, and everything involved in implementing a new technology platform for your investment planning. New tools and applications are constantly being introduced into the marketplace, and many are customizable to your specific industry and needs. There is plenty of information on the Web to educate yourself, and many technology companies are willing to share their expertise. Two outstanding resources of independent information are analyst firms Gartner (www.gartner.com) and Forrester Research (www.forrester.com). Take the leap of faith to move beyond spreadsheets. The rewards for you and your company will be worth the time and expense invested.
3. Don’t fall into the #1 business case trap: create a complete, compelling business case that illustrates the benefit of making strategic planning technology investments. I can’t stress this enough. Most business cases I see completely miss the mark; they are hardly compelling, even for someone rooting for them. Their authors make the mistake of comparing the cost of the investment with the reduction of finance personnel man hours required to complete strategic investment planning. This results in a modest ROI that no one will support. Don’t make this classic mistake. Instead, I suggest you use this three-pronged model:
a) Consider the investment in stages. First, identify the most critical requirements needed from a new application or process. Next, to hold down costs, select a solution that meets only those requirements. Many software companies sell application modules individually with various levels of solutions that are less expensive than the complete application with modules you may not use. Finally, once you have success with these modules, you can build on the foundation as needed.
b) Quantify the value lost by the lack of information to make quality decisions. Every organization is guilty of bad decisions. Most of these decisions were poor because the decision-makers lacked complete or accurate information. This is the primary reason why you need modern tools to evaluate strategic investment decisions. If you are considering $1 million, $10 million or $100 million of possible investments, doesn’t it make sense to invest thousands to increase your odds of making better decisions? This is how you sell the ROI.
c) Calculate the true cost savings across the company, not just in Finance. In most companies, finance departments partner with Operations for the investment planning process. Yet using old processes and obsolete technology results in wasteful man-hours by both teams. With enhanced technology and automated processes, you can illustrate how the entire company could generate savings, share information, and become more productive.
Research (www.forrester.com). Take the leap of faith to move beyond spreadsheets. The rewards for you and your company will be worth the time and expense invested.
Now What: Starting Change
So…how do you start? First, embrace the reality that Finance can be a powerful change agent.
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