Most enterprises like the idea of being "data-driven". But how can they be sure their business-critical information is good enough to steer them to success?
Today, organisations increasingly recognise the importance of data to their survival and growth. Countless finance teams spend vast amounts of time sending out, receiving, and collating spreadsheets. So much of their effort is devoted to managing data manually. But the awkward truth is that far less time is spent realising its true value.
When your financial planning and analysis (FP&A) becomes data-driven using automation and an intuitive platform with the right tools, then there's a fundamental shift. The data flows freely, it's trustworthy, and it starts to work for you. In fact, it can lead to a transformation, especially with decision-making around your organisation's finances and business strategy. But how can you reach this point?
An excellent place to start is to consider your data. Business decisions need to be based on the correct information. But many organisations struggle to get accurate data. A recent FP&A Trends Survey reported that 40 per cent of finance professionals say the data they use is 'low' or 'poor' quality. This can have devastating consequences when it comes to crucial business decisions.
The data you need to succeed isn't simply about transactions. It should relate to operations across the business. In addition to the general ledger, it should include enterprise resource planning (ERP) and human capital management (HCM) data, as well as any other business-critical information in data warehouses.
A single version of the truth: the importance of having the right FP&A platform
It's essential to have connectivity to accurate data sources and to be able to access everything quickly and easily in an understandable format. The cloud can help you to bring relevant business data sets together. In addition, there are readily available APIs to create integration points; you can automate processing, increase reliability, and deploy artificial intelligence. With more and more vendors offering connected solutions, you can take advantage of out of the box, certified integration between your GL or ERP to its FP&A solution.
Ultimately, with the right FP&A platform, you can create a single version of the truth that's consistent, predictable, and reliable. Once your data is centralised, easy to access and explore, you can measure performance — and see what's happening across your organisation.
Through self-service tools and rich graphical reporting, it's possible to spot the best and worst-performing areas of your business, as well as pinpointing bottlenecks. You can slice and dice information, uncover outliers, and locate hidden variances. Then, drill down and find whatever you need — from your top-level dashboard, all the way to a single line in an invoice.
Aligning with strategic objectives: the end of silos
Once your FP&A is connected and therefore data-driven, it's also much easier to figure out how to align your company's operational plans with its strategic objectives.
If everything is centralised, you can set goals easily against predictable outcomes, based on past performance as well as your own opinions and changes happening in the world around you. For example, you could set targets across regions or business areas based on historical performance as well as any marketplace nuances you decide to add.
With each change you make, you can also see the direct implications ripple out across other functions. You can then answer crucial questions, such as: "Do we have the right resources in the right places doing the right things? Do we need to increase headcount?"
In other words, you're thinking about the whole organisation instead of finance in isolation.
With data-driven FP&A, you've got the time and the tools to make scenario planning faster and easier. You can create best-case and worst-case models in a few clicks. The big gain here is agility — with actionable insights enabling better decision making across an enterprise. In time, you'll be able to start asking the solution for its own opinion, based on real-life data that leverages patterns and behaviours. Then, you can use this to augment your own insights as you build a consensus within your team about the best way forward.
Seeing the potential: focusing on higher-value activities
Today, moving away from simply collating and managing data — to capitalising on its true value — has begun. And there's huge potential. For example, McKinsey study found that around 90 per cent of FP&A activities were either fully, highly, or somewhat automatable using existing technologies.
As a result, finance teams can concentrate on higher-value activities. Instead of spending so much of their time battling with unwieldy systems, processes, and technologies — just to get their hands on the data — they've now got the tools to make the data work for them. And this elevates their role and importance to organisations.
The right FP&A platform will prove to be highly flexible. You don't need to automate everything at once. It will let you start in a simple way with the low-hanging fruit, maybe as part of your digital transformation program, or perhaps addressing a pressing need for accurate data within finance before incorporating other areas of the organisation to edge towards complete connectivity.
Data-driven FP&A is here to stay. As your organisation, strategy, and people alter, your platform will keep pace with events and help you to see the road ahead. You'll get an accurate picture of what's happening around you — and you'll have a more precise idea of your best next move.