Month: Jan 2017

Eight Factors Driving EPM Cloud Adoption Momentum

By Nilly Essaides

Cloud-based EPM solutions are set to become more mainstream, as companies replace legacy on-premises systems or leapfrog directly into cloud tools from spreadsheet environments. That’s according to the results of a Hackett Group late 2016 EPM in the Cloud study (see image below). Our study shows that counting current, ongoing, planned implementations, as well as exploration of cloud solutions, cloud adoption has the potential to rise significantly in the next 2-3 years.

Source: The Hackett Group, 2017

That’s great news for FP&A professionals. Cloud-based EPM solutions offer cost-effective, flexible and streamlined alternatives to legacy systems, while allowing more people to participate in the planning process. They can bridge technology islands and integrate multiple databases to create a single repository without requiring time consuming hard coding. Finally, they let FP&A staff offer the business more-advanced analysis quickly and user-friendly self-service tools to help management make smarter business decisions and reduce the data-to-insight cycle.

What’s driving the cloud adoption momentum?

The current push for the implementation of cloud-based EPM solutions reflects eight distinct developments:

 1.      The incoming 800-pound gorilla. Cloud solutions have been in an introductory phase for the past five to seven years; however, the use of offsite, hosted solutions began to gain real traction as Oracle jumped all in with its EPM in the cloud product in 2016. Oracle’s move gave the cloud market a final stamp of legitimacy, pushing adoption into high gear. Since then, the implementation pipeline at all EPM cloud vendors, such as Adaptive Insights, Anaplan and Host Analytics, has increased significantly.

2.      Reducing cost of ownership and implementation. Instead of paying a big upfront lump sum for ownership plus anywhere between $500,000 to $1 million on average to upgrade, with significant downtime and sometimes no improvement in functionality, companies can own the most recent version for much less and keep up with the latest features.

3.      Adapting to faster change and fiercer competition. The competitive environment is changing rapidly as digitalization and globalization are transforming business models. Finance needs to keep pace by generating real-time data-driven decision support so the business can rapidly adapt to changing market conditions. Waiting for new functionality or taking time off to upgrade is no longer acceptable.

4.      Taking control of IT resources: The move to the cloud is also about finance taking control of its own technology path. By adopting a cloud solution that’s easier to manage, finance can avoid having to call on IT for updating models or running queries, saving time and increasing its ability to respond to external change by updating analytics models and accessing new sources of information.

5.      Acquiring richer features: In cloud’s early days, companies had to choose between high-cost, full-featured, on-premises systems and low-cost, “lite” cloud versions. But that tradeoff is changing fast. Cloud vendors have enriched their products with end-to-end process support and are constantly adding new modules like predictive analytics, visualization and updated reporting capabilities

 6.      Offering an inclusive process: Today’s planning, forecasting and budgeting process reaches outside finance to include business unit and functional partners. The cloud allows a broader user base to participate at a much lower per-user cost and a more user-friendly interface. A more participatory process is faster and more agile. Because there are fewer iterations and no re-inputting of data, there are also fewer errors, and business units feel more accountable for the information they provide.

 7.     Providing a greater degree of comfort about security: Companies today are more comfortable that they can achieve a level of security with cloud solutions that equals that of on-premises alternatives. As more server rooms are shut down, the idea of storing data offsite is becoming mainstream. CFOs have seen their organizations put CRM and HR data in the cloud. They’re ready to move financial data there, as well.

 8.     Resolving system integration complexity: Many companies are transforming their EPM technology against the backdrop of a highly fractured system environment, one that includes multiple ERPs, multiple instances of the same ERP, pockets of spreadsheet usage, and disparate databases. Trying to link all these disparate systems with hard coding can be a nightmare. However, it can be done relatively cheaply and a lot faster using cloud applications that sit atop this system archipelago and pull data into a single repository.

Companies are increasingly turning to the cloud for their EPM solutions. They are cheaper to own, faster to implement and upgrade, and more collaborative in nature; they help FP&A support the business and management with better insight. The absolute numbers may not be high but current implementation, planned implementation and active exploration of cloud solutions point to a large surge in adoption in the next two to three years. As EPM moves to the cloud, its processes will become more agile and it will reduce cycle times and busy work and become a more valuable partner to the business.

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Source: Generation CFO LI Group

Smarter than a Finance Robot? HBR Article

I see lots of sweeping statements on the subject on RPA and Intelligent Automation,

  • “the accountant is dead”
  • “there will be no death of the accountant”
  • “we are not at risk, we’ve had accountants since civilization”
  • “we are at 95% risk of automation”
  • “we will always need to interpret accounts manually”
  • “RPA will lead to intelligent automation using AI, which will replace mid managers”
  • “technology is only changing basic finance roles that no one wants to do anyway”

I would say, think again and learn more about RPA, to make an informed opinion and decision on whether to start your innovation projects, and where to focus your effort and spend.

And here is a great article from Harvard Business Review to help you out.

It explains the shift in knowledge careers like Finance and Accounting, and strategies to deal with this change. Exams and experience alone are not enough, holistic thinking, a creative mindsets and tech specialists are critical too.

https://hbr.org/2015/06/beyond-automation

Source: Generation CFO LI Group

FP&A 2017 Challenge: Transforming the Service Delivery Model

By Nilly Essaides

The digitalization of the finance function, and growing demands from management and business partners, are forcing FP&A teams to change the way they deliver their services to internal customers. They can no longer operate in silos, have disparate planning processes, look only at financial data, and rely on numerous systems to execute their mandate.

They need to deliver better decision-making support to enable greater agility in a fast-changing business environment. In short, they need to transform the function to be able to serve its internal clients to bring quicker insight to the enterprise.

Here’s how:

Overhaul the FP&A Organization. Many companies still rely on a single team of professionals to perform all of the FP&A duties: report, analyze, perform the core activities of forecasting, budgeting and planning and get a special project or two done when needed. They combine activities at HQ with some responsibilities handled by the business units without clear lines of accountability, resulting in lengthy cycle times and lack of data integrity. A lot needs to change before the FP&A’s organizational structure can become a fully agile function that’s able to deliver business support where and when it’s needed, for example, FP&A needs to:

  • Move more activities into a GBS. Automate or put transactional and repetitive activities into Shared Service Centers (SSCs) or Global Business Services (GBS) to reduce cost and become more efficient.
  • Establish CoEs. Pull more sophisticated but shared skills like advanced analytics into Centers of Excellence (CoEs) to support multiple business partners across functions and business units. The CoEs can be the one-place shop for insight into solving common business questions.
  • Finally, embed finance consultant in BUs. Set up a strong layer of staff dedicated to working directly with the business. These finance professionals should have deep business knowledge and superb communication skills so that they can collaborate with functions and units to identify and solve complex business problems and drive enterprise performance.

2. Remake processes. You can’t expect a different result if you keep doing the same thing. To drive the business forward, FP&A needs to build strong working relationships with the business.

  • Become more collaborative. FP&A needs to open up the planning process to business unit staff so participants can contribute data directly rather than go back and forth through email and move through multiple iteration of forecasts, plans and budgets. This would increase data integrity and speed up cycle times, resulting in better information delivered faster to internal customers.
  • Assign direct responsibility. While the number of participants may increase, each process needs to have a clear owner so there are no conflicts about who is ultimately responsible to deliver the goods.
  • Switch to agile planning. FP&A needs to change its mindset – and that of management – toward using a rolling forecast versus a static budget. A static budget captures a one-time picture even before the fiscal year begins. The rolling forecast takes into changing market and internal conditions and what’s coming 12-18 months down the road, giving management a chance to change course and allocate resources based on what’s likely to happen.
  • Eliminate unnecessary reports. To come up with insight, FP&A needs to prioritize its reporting and get rid of unnecessary reports that no one reads anymore. Reports should contain insight and actionable information that can move the business forward.

3.   Embrace the right technology. FP&A needs to adopt and adapt to digital technologies. which are fundamentally altering their organizations’ business model to speed up cycle time, be able to run advanced analytics, leverage the cloud and big data and fundamentally upgrade their own service delivery model. To do so, it must:

  • Integrate disparate systems and create a single repository of enterprise data.
  • Adopt new technologies to become speed up the query-to-insight cycle for the business
  • Democratize planning solutions to expand the universe of participants in the forecasting and planning process so as to respond better to changing business needs and provide real time (and predictive) insight.
  • Sync operational and financial data to see financial and operational data in one spot and connect the dots between operational drivers and financial outcomes.

4.   Upgrade talent. To successfully deliver its services to internal customers, FP&A must retrain existing staff and redefine the competency model for new hires to create a talent development map that aligns with its new roles. In additional to foundation finance skills, Finance will have to hire and train staff to possess:

  • Business acumen. The FP&A executives of today must be comfortable outside the walls of their own department. They need to understand the business model and its link to strategy. They have to carry credibility with their business partners.
  • Interpersonal, educator and diplomacy skills. Finance executives need to work closely with business leaders and often create change through influence and consensus building. They need to learn to speak the business language and tell stories rather than present numbers. Their role is to raise financial awareness in the organization.
  • Intellectual curiosity and innovative thinking. FP&A is increasingly about asking the tough questions and providing an objective view to business partners. Without the need to constantly learn and find out more, finance won’t succeed in delivering on its mandate.
  • Comfort with technology and analytics tools. In many companies, finance is becoming the analytics hub of the organization. Successful professionals need to become familiar (even if not necessarily fluent) in new technology tools and concepts.

Three Tips for Getting Management Support

To initiate and complete a successful transformation project, FP&A will need management support. That’s not always an easy proposition because the ROI on transformation is hard to pin down. But there are ways to gradually get the buy-in:

1.   A phased approach. Start small, especially when it comes to technology implementations. It may be wise to start with smaller pilots and achieve early successes to build credibility. Start with a region or a country before going global.

2.   Showcase early successes. Write up and evangelize change by sharing early successes stories involving business improvement using new technologies to get senior management on board and business leaders asking senior management to back up more project.

3.   Have a talent roadmap. It’s not enough to embrace new technologies. You’ll need the right talent to leverage the new tools. To this end, senior finance executives need to reconfigure their competency models to fit the new org structure and technology capabilities. Don’t try and hire superheroes; rather, focus specialists who can fit well in one of finance’s new tiers and do that job well.

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Source: Generation CFO LI Group