The imperative to transform the finance department to function in a more strategic, forward-looking and action-oriented fashion has been a consistent theme of practitioners, consultants and business journalists for two decades. In all that time, however, most finance and accounting departments have not changed much. In our benchmark research on the Office of Finance, nine out of 10 participants said that it’s important or very important for finance departments to take a strategic role in running their company. The research also shows a significant gap between this objective and how well most departments perform. A large majority (83%) said they perform the core finance functions of accounting, fiscal control, transaction management, financial reporting and internal auditing, but only 41 percent said they play an active role in their company’s management. Even fewer (25%) have implemented a high degree of automation in their core finance functions and actively promote process and analytical excellence.
Topics: Analytics, Big Data, Budgeting, Business Analytics, Business Collaboration, Business Performance, CEO, CFO, CIO, close, Cloud Computing, Continuous Accounting, Continuous Planning, CPQ, end-to-end, Financial Performance, Financial Performance Management, FPM, Governance, GRC, Human Capital, In-memory, Mobile Technology, Planning, Predictive Analytics, Risk, Social Media, Tax, Tax-Datawarehouse, Uncategorized, Office of Finance
Last year Ventana Research released our Office of Finance benchmark research. One of the objectives of the project was to assess organizations’ progress in achieving “finance transformation.” This term denotes shifting the focus of CFOs and finance departments from transaction processing toward more strategic, higher-value functions. In the research nine out of 10 participants said that it’s important or very important for the department to take a more strategic role. This objective is both longstanding and elusive. It has been part of the conversation in financial management circles since the 1990s and has been a primary focus of my research practice since its inception 12 years ago. Yet our recent research shows that most finance organizations struggle with the basics and few companies are even close to achieving this desired transformation.
Topics: Analytics, Big Data, Budgeting, Business Performance, CEO, CFO, CIO, close, CPQ, end-to-end, Financial Performance, Financial Performance Management, FPM, Governance, GRC, In-memory, Planning, Predictive Analytics, Risk, Tax, Tax-Datawarehouse, Office of Finance
When applying information technology to drive better business performance, companies and the systems integrators that assist them often underestimate the importance of organizing data management around processes. For example, companies that do not execute their quote-to-cash cycle as an end-to-end process often experience a related set of issues in their sales, marketing, operations, accounting and finance functions that stem from entering the same data into multiple systems. The inability to automate passing of data from one functional group to the next forces people to spend time re-entering data and leads to fragmented and disconnected data stores. The absence of a single authoritative data source also creates conflicts about whose numbers are “right.” Even when the actual figures recorded are identical, discrepancies can crop up because of issues in synchronization and data definition. Lacking an authoritative source, organizations may need to check for and resolve errors and inconsistencies between systems to ensure, for example, that what customers purchased was what they received and were billed for. The negative impact of this lack of automation is multiplied when transactions are complex or involve contracts for recurring services.
Topics: Analytics, Big Data, Business Performance, close, closing, computing, CRM, Data, Data Management, end-to-end, ERP, finance, FPM, Information Applications, Information Management, Management, Mobile, Operational Performance, Operations, Sales Performance, Supply Chain Performance, Office of Finance, Cloud Computing
Midsize businesses “pay” for their use of entry-level accounting systems by not having the essential information they need readily available and by using up valuable time that could be better spent generating business, finding issues or responding to opportunities sooner or simply enhancing the efficiency of the organization. Nevertheless, the transition from an entry-level accounting package such as QuickBooks to an on-premises system can be daunting for companies whose entry-level software no longer addresses their needs. Usually, the shortcomings start off as minor annoyances for companies that have between 100 and 500 employees and grow over time, and usually the pain grows with the number of employees and the volume and complexity of the underlying business. As business volumes expand and complexity grows, entry-level accounting systems are increasingly less able to support the underlying business. Yet finance executives usually don’t want to migrate to a new system until their old software threatens the orderly management of the business or becomes an overwhelming burden on finance operations. I know this firsthand, since not all that long ago I worked at a company where the CFO thought his biggest IT challenge was finding spare parts for the ancient Burroughs mainframe on which our financial system ran.
Topics: accounting software, Business Performance, business process execution, Business Process Management, CFO, Cloud Computing, end-to-end, ERP, finance, finance cloud, Financial Performance, financial systems, FPM, Sales Performance, Office of Finance, Customer Experience
SAP is planning to acquire e-commerce company Ariba in a transaction worth about US$4.3 billion expected to close in the third quarter of this year. Ariba provides cloud-based collaborative business commerce through a Web-based trading community that enables companies to find, connect and collaborate with a global network of partners. Its Commerce Cloud is a platform that businesses can use to buy and sell goods. Currently, Ariba counts more than 700,000 companies worldwide attached to this network. The purchase follows SAP's acquisition of cloud-based HR software vendor SuccessFactors for $3.4 billion. In the past SAP had been reluctant to make large acquisitions, but these two large purchases and the naming of Lars Dalgaard, former SuccessFactors CEO, to the SAP executive board indicate the strategic imperative SAP puts on quickly gaining a solid cloud presence. The acquisition also complements its 2011 acquisition of Crossgate, an electronic data interchange (EDI) service provider, which enables companies to exchange documents with customers, suppliers, supply chain partners, financial institutions and government entities, streamlining transactions and cutting administrative costs.