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The hidden cost of doing nothing in corporate performance management

Jul. 24 2020 by Rob Konferowicz, Principal Product Experience - CCH Tagetik North America

Performance Management

It makes sense to be methodical about a major business decision. For us in finance, it’s our nature to be cautious and weigh the pros and cons. 

Yet there’s a key factor often overlooked in that analysis—the risk of inaction. 

This holds true for all sorts of business decisions, including considering a new financial planning solution. If you’re not getting the results you want, failing to take action won’t change that. In fact, with the fevered pace of innovation, it will likely compound your challenges and leave you behind in the finance transformation race.

Here are the five key risks you take when you choose inaction:

1. Falling behind the competition: You’re not the only one feeling the urgency to change. Your peers face similar circumstances, and many of them are pulling the trigger to upgrade their finance capabilities. 

The report on the finance cloud market by the research firm, MarketsandMarkets, has predicted that the finance cloud market will grow by 24% to $29.47 billion by 2021. Meanwhile, Gartner projects that through 2020, 80% of large organizations and 25% of midsized companies will move to cloud-based finance platforms.

Relying on outdated technology puts your company at a competitive disadvantage that could send a negative ripple effect right through to your company’s bottom line. 

2. Sinking deeper into technical debt: The hidden cost of failing to invest in a better solution is sometimes called technical debt. Yes, upgrading your finance solution requires investment. But over time, upgrading technology is considerably more cost and time efficient than devising Band-aids and manual work-arounds for your current system. 

Outdated and inefficient finance platforms exact a high price. They stifle innovation while your team and business partners waste time on tedious tasks, relying heavily on IT, yet still not delivering a high-quality insights and analysis. 

Instead of sinking deeper into technical debt, consider the potential savings that can be generated by the speed, capabilities and power of a new financial planning solution.  

3. Stuck in first gear: Speed matters in today’s business environment. Executives and business line leaders need ready access to relevant data and analysis to make better business decisions or seize fleeting opportunities. If you lack the capabilities to automate routine tasks, you’re paying a price. 

Research from the McKinsey Global Institute concluded that 40 percent of routine finance activities (for instance, cash disbursement, revenue management, and general accounting and operations) can be fully automated, while another 17 percent can be mostly automated.

Leveraging that automation allows your team to deliver better data and faster insights.

4. Deterring top talent: The tight labor market puts job seekers in the driver’s seat. Outdated legacy systems not only deter new talent from your organization, but also hurts retention as employees grow frustrated by technology that forces them to spend countless hours on low-value tasks.  

But having state-of-the-art technology that’s both powerful and easy to use, helps position you as a destination for top talent. 

A recent survey from Accenture offers up some keen insights into the role that technology plays in attracting and keeping talent. According to the survey, 47% of Gen Xers and 42% of millennials say they would leave their current job not only for more money, but also for a “more innovative environment.”  

The reality is that your team is experiencing state-of-the-art marketing technology in their everyday lives as they interact with their favorite brands, companies, and organizations. If they have to work with cumbersome and time-consuming technology, they’re not going to stick around.

5. Accuracy and security risks: Excel spreadsheets may feel comfortable and familiar. Yet they are also prone to errors, particularly if you have to cut and paste data or face ongoing challenges with version control. Everyone has heard the horror stories of the seemingly small error on a spreadsheet that led to big financial headaches or reputation risks.

Beyond that, there are growing security and compliance risks associated with legacy systems. 

According to TechCrunch, “every major data breach over the last two years—whether it was Anthem, Sony JPMorgan or Target—all involved on-premise data centers as opposed to the cloud.” This offers a clear example of how inaction poses more risk than embracing change. 

Yes, key business decisions require homework. Yet when you’re doing the risk-reward assessment, make sure that you fully assess the risks of inaction. Maintaining the status quo could be the worst decision you never made. 

Want to learn more? Check out our new e-book 5 Warning Signs it’s Time to Replace Your Legacy EPM Solution.

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