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Future of Finance: Seizing the opportunity in technological advancements

Nov. 16 2020 by Bas Steltenpool , Senior Manager - PwC / Jamal Ryan, Manager | Risk Assurance - PwC

Performance Management

The role of the CFO has drastically changed due to the rapid pace of advancing technology. CFOs must be capable of making timely and effective strategic decisions to steer their organizations through uncertain market environments. Access to real-time data, faster analytical possibilities, and the ability to report, process and store data in the cloud have become paramount in enabling effective decision making. Further, the CFO and the finance organization’s roles are constantly evolving from a scorekeeper to that of a forward-looking strategic advisor. CFOs must regularly ask themselves whether their financial systems landscape, as well as their digital skills are capable enough to enable them to improve business performanceUltimately, a mature reporting and analytics capability is a necessity for finance functions to be fit for the future. 

Common CFO challenges posed by outdated technology and skills 

Enterprise Resource Planning (ERP), Corporate Performance Management (CPM), and Business Intelligence (BI), and other point solutions have made leaps and bounds in the last decades providing CFO's novel opportunities to address many of their technological challenges typically posed by legacy financial systems.  

Such challenges typically faced by CFOs include:

  • High cost – Multiple interfaces, customized reports, mapping tables, and reconciliation processes must be built and maintained.  
  • Manually intensive and time-consuming – Inefficient manual process steps required to run interfaces, investigate errors, reconcile data to source systems, etc. 
  • Master data management challenges – Managing master data across multiple systems becomes reactive (driven by error detection) rather than proactive. 

  • No "single source of the truth" – Business users receive data from different sources that do not always reconcile; focus shifts to determining who has "the right numbers" instead of value-added analysis. This also makes data lose its authenticity and reliability for effective decision making.  

  • Lack of Analytical abilities – Legacy systems typically lack analytical capabilities found in modern tools, such as BI, interactive dashboarding, and insight exploration. 

  • Limited Integrated Reporting – Many legacy systems are not capable of or lack the inclusion of all financial and non-financial data in a single place for efficient and effective decision making. 

  • Lack of workforce capability – Maintenance and management of legacy financial systems typically require extensive IT involvement, further expanding a divide between finance and IT skillsets. 

Advances in performance management technology 

Enterprise financial systems come in many various forms and serve a range of functionalities, including order to cash, procure to pay, treasury, etc. Such functions are typically served by ERP solutions, however when it comes to managing performance through reporting and analytics, CPM tools are paramount in enabling CFOs to steer their businesses effectively. 

Advancements in technology have seen new offerings from software vendors which, when implemented effectively, can help CFO's address the problems listed above. In particular in the CPM space, where demand for vendor offerings of unified solutions for financial close, budgeting, and planning are growing rapidly. Such offerings like CCH Tagetik, coupled with BI and data visualization capabilities, as well as tax provisioning, IFRS, and other regulatory reporting functionality, have embraced the single platform approachCCH Tagetik is an example solution which has challenged many best-of-breed products to meet the needs of modern reporting and analytics requirements. Modern CPM also empowers the office of the CFO to maintain and manage their solution independently of extensive IT involvement, providing finance the opportunity to develop and build upon skills that cross over both the finance and technology domains. Further, the ability to deploy such solutions on the Cloud has also made CPM systems much more accessible, not only for enterprises but for small and medium-sized businesses due to the total cost of ownership (TCO) benefits.  

Considerations 

Of course, CFO's must consider all the costs when determining the need to implement new systems to enable their finance function to run more efficiently and effectively, including the financial implications of implementation, redesign, data migration, consulting, upskilling costs, etc. However, these costs must be balanced and weighed against the many process improvements and efficiencies that can be gained by adopting a single platform product, and how those benefits will serve to improve the performance of the organization in the long term. 

Learn how a leading solution could accelerate your finance evolution. Download the Gartner Magic Quadrant for Cloud Financial Planning & Analysis and Cloud Financial Close Solutions here.

Modernization Of Finance

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