As we put 2016 in the rearview mirror and enter 2017, it’s clear that the world is becoming more unpredictable all the time.
Just think of the recent changes we’ve seen, such as Great Britain’s planned exit from the European Union (Brexit), and the surprising election of Donald Trump for President of the US. These changes will have lasting impacts on the global economy, tax rates, interest rates, and the price of oil and other commodities.
The world has also become riskier. Think about the recent news about hackers, the rise of ISIS and global terrorism, the increasing nuclear threat, the usual supply chain risks and fluctuating consumer demand. The business landscape and the world of Finance are not immune, in good times or bad, to these changes and risks.
Top Finance Executive Concerns in 2017
Are things going to get better or worse? Your guess is as good as mine. But in a recent CFO Leadership Council survey of Finance executives about their biggest planning challenges in 2017, these were the top responses:
- Managing costs and profits – 80%
- Attracting and retaining talent – 72%
- Forecasting under economic uncertainty – 52%
- Retaining customers – 40%
- Navigating new regulations – 22%
When asked what the top priorities of Finance will be in the future, these were the top responses:
- Driving change and adapting to change – 80%
- Promoting efficiency – 72%
- Driving growth – 70%
- Enabling innovation – 42%
- Talent management – 37%
The Evolving Role of Finance
Clearly, the role of the CFO and Finance has changed and continues to evolve. The CFO and Finance are no longer viewed as simply back-office bean-counters or scorekeepers. Finance is becoming more strategic, moving from backward-looking to forward-looking. From reporting to forecasting. From accounting to helping the CEO and other executives consider the possibilities. From controlling costs to driving growth and helping the organization adapt to change.
Going along with the evolving role of Finance is the evolution of enterprise performance management (EPM) software solutions. If we look back at EPM prior to 2007, the main focus was on automating processes such as budgeting and financial consolidation.
For each process, the first generation vendors offered disconnected point solutions, which were deployed on-premises, required a lot of IT support, and were costly to maintain and upgrade. Reporting and analytics for line management were mostly an afterthought, and EPM 1.0 was mostly confined to Finance.
Fast-forward to today, and EPM solutions have evolved along with the worlds of Finance and Business. EPM software can still automate financial processes – but it’s more focused on driving strategic value for the business, on linking strategies to plans and execution. Customers are looking for unified platforms that can support a broader set of processes: budgeting, planning, forecasting, consolidation and reporting, as well as financial and operational modeling.
There’s increasing demand for cloud-based solutions that allow Finance to take control, deploy the solution quickly, and receive automatic, low-cost upgrades. And integrated reporting & analytics are becoming essential to driving broader adoption – not just in Finance, but across the enterprise so that Finance can be a better business partner to line of business managers.
The benefits of EPM to organizations are increasing as EPM solutions evolve. This can be summarized in what we call the “three A’s” – automate, accelerate, and align:
- EPM solutions help automate key Finance processes – such as budgeting, planning, and reporting – to eliminate errors and increase Finance productivity, as well as staff morale.
- EPM solutions help accelerate these processes, so you can shift more time to value-added analysis and faster decision-making.
- EPM solutions help increase alignment across the organization – making Finance a better business partner by connecting better with operations, aligning financial and operational plans, and helping the lines of business become more successful in achieving their goals.
EPM Needed in Good Times and Bad
Now let’s tie the use of EPM solutions to today’s uncertain and volatile business environment. EPM solutions have proven their worth to companies in times of growth and in times of decline. In good times and bad, fair and foul weather.
Our CEO, Dave Kellogg spoke about this in his keynote address at Host Analytics World 2016. When the economy, your industry, and your business are growing and expanding – EPM solutions can help you identify and evaluate new business opportunities and ensure resources are allocated to the right opportunities. Typical use cases here include:
- Trended budgets
- Driver-based, rolling forecasts
- Modeling growth opportunities (e.g., new markets, new products, new customers)
- Planning workforce expansion
- Planning capital expenditure (CapEx) expansion
- Decentralized planning
On the flip side – when times get rough, the economy or industry is in a downturn, and your business is shrinking – EPM solutions can also help and may be even more important. Relying on spreadsheets and email to support critical financial processes during critical times can lead to errors and increased risk. These critical processes may include reforecasting revenue, controlling costs, more tightly managing headcount, and daily/weekly cash flow forecasting. Typical uses cases for EPM solutions here include:
- Zero-based budgeting
- Frequent reforecasts
- Revenue and expense/capacity modeling
- Modeling and planning workforce reductions
- Controlling Capital Expenditures (CapEX) and Operating Expenditures (OpEx)
- Centralized planning
As Franklin D. Roosevelt once said, “A smooth sea never made a skilled sailor.” Many companies who have managed well through downturns, survived and thrived when their markets returned to growth. And it was often up to the CFO and the Finance organization to take the lead in navigating these organizations through rough seas.
Host Analytics has worked with over 650 CFOs and Finance organizations to implement cloud-based EPM solutions that help them navigate both fair and foul weather. They were able to reduce reliance on spreadsheets and manual processes or replace legacy applications with a scalable, flexible, cloud-based platform that can be deployed rapidly, is Finance-owned, and offers a low cost of ownership. Check out our customer case studies and videos to hear for yourself.
To learn more about how EPM solutions are helping organizations navigate change, watch Host Analytics CEO Dave Kellogg’s keynote address at our 2016 user conference.
Best of luck in navigating the changes ahead in 2017. Let us know how we can help!