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The #1 corporate finance lesson from COVID-19: Automation can’t wait

Feb. 11 2021 by Leslie Cant, Product Marketing Director - CCH Tagetik

Performance Management

The impacts of COVID-19 on the finance function spread to every aspect of corporate performance management (CPM.). No process was spared. No result unaffected.  

On a human-level, many of us couldn't even perform the very basics of our jobs. Especially hamstrung were those with immoveable on-premises processes in place. On an organizational-level, the pandemic impacted — and continues to impact — functions critical to a company's survival like budgeting, planning, and forecastingEven real-time isn’t fast enough to keep our plans on pace with change 

The preeminent publication on thought leadership and research for the finance function, FSN, released a report on the toll the pandemic had on CPM processes. As FSN wrote,  

Rapid and unexpected business changes have exposed, very visibly (perhaps for the first time) every shortcoming in finance processes and systems – lack of physical access, inefficient procedures, financial pressure and more.

 

Indeed, the succession of shutdowns, business interruptions, workplace upheaval, forced pivots, and work from home orders exposed gaping inefficiencies in our daily processes.  

In this post, we’ll explore the results from FSN’s report The Future of Automation in the Finance Function to determine how deeply these processes fractured and bridge the gap going forward. 

The 3 Greatest Shortcomings in Finance Processes — Exposed 

First, let’s explore the fracture. You may or may not be surprised to learn that the finance function was struck most hard-handedly in the following areas:

1. Automation project delays:  

The digital transformation of finance has been underway for years but the vast majority of businesses still aren’t aboard. While some companies have been on the automation train for a while now, others we’re just leaving the station. Still more were merely mapping out their journeys.  

While you might think those in the middle might have ramped up their existing automation efforts, in the midst of a crisis, this was not the case. A system overhaul became unthinkable, passed over for fires in need of immediate tending. Even though automation has the ability to mop up much of the COVID mess, for many, automation projects were the first thing to go.  

A real shame. These automation projects could have spared finance teams, at minimum, a late night at the home office; at a maximum, automation might have provided room for critical insights that could have staved off worst-case scenarios or incited strategic actions.  

As FSN writes, “COVID has put the brakes on many business plans, but finance automation shouldn’t be shelved as an easy cost saving, because the advantages of an efficient and effective finance function is essential for post-COVID recovery. 

This is an unfortunate case of short-term loss for long-term loss; the short-term loss of costs will result in long-term loss of efficiency and ability.

2. Shrunken headcount: 

It came as no surprise to learn that headcounts shrunk as organizations battened down the hatches to deal with the uncertainty of the pandemic’s storm 

FSN reported that almost 40% of survey respondents expected reduced headcount, a decline that would ironically only heighten the need for the process efficiency.  

This is the first time since 2018 that organizations anticipate employing fewer people to undertake finance roles, even as automation projects that would have enabled this reduction are being delayed.

 

It’s here we see COVID’s impacts hit a stride on a hedonic treadmill: automation projects are cancelled to preserve costs, which means more work for finance teams. At the same time, those overburdened finance teams are being reduced while more responsibilities pile up on their desks — and this, of course, is only further complicated by the fact that our desks are now located at our homesThis leads us to our next point ...

3. Working from home:  

For many of us, the almost overnight decentralization of the workplace cast many processes out to sea. We’re lucky here at CCH Tagetik. While many of our global offices were already set up to work from home, our IT team showed incredible, almost unimaginable forethoughtAfter noting shipping disruptions on orders from China in January of 2020our IT department pre-emptively prepared for the chance our organization would have to rapidly transition to work-from-home. Their extraordinary prudence paid off.  

For many, perhaps even you, this was not the case. If your ordinary office tasks were up-ended, you weren’t alone. As FSN reported, 

Over 46% of companies cited that location-based processes became a major challenge. Over-reliance on paper documents meant 41% of companies were disrupted during COVID. Likewise, 36% of companies were held back due to limited access to on-premises systems.

 

If your organization had already digitized and automated its processes before the pandemic hit, you were part of the lucky minority. If you weren’t, you’re probably felt the gap very acutely at first, and with some band-aids, quick thinking, and innovative IT team magic, might have solved interim issues.  

The #1 Corporate Finance Lesson from COVID-19 

In the finance function, we’ve learned some hard lessons over the last year. Chief among them?  

The automation of finance can’t wait. 

 

As the pandemic was busy upending life, business, and the economy as we know it, the great irony for finance is this: the very thing essential to survival — cloud-based automation — was put on the backburner. 

Of course, delays in process automation were understandable during thrust of the pandemic’s first wave. But now the risks are known — and they’re still looming. If you were behind the digital revolution before, there’s a large chance you’re even further behind now. If a second global event occurs, could your organization withstand another blow? These are painful realities we have to face. Because if the pandemic has taught us anything, it’s that anything is possible.  

A digital transformation doesn’t mean substituting your expertise and knowledge with technology. Instead, it enables you to get the right information, when you need it, where you need it, faster than beforeThe best time to transform your processes would have been a year ago, the second-best time is now.So, what’s holding you back? 

Want to learn more about how you can use automation to prepare your finance function for a more resilient future? Read FSN’s report, The Future of Automation in the Finance FunctionGlobal Survey 2020.

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