the cloud takes intelligent fp&a to new heights · 3 i the cloud takes intelligent fp&a to...
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THE�CLOUD�TAKES�INTELLIGENT FP&A TO NEW�HEIGHTSINTELLIGENT FP&A YIELDS NEW VALUE FOR FINANCE LEADERS AND THE ENTERPRISE
2 I THE CLOUD TAKES INTELLIGENT FP&A TO NEW HEIGHTS
FOR MANY COMPANIES, the problem of planning,
budgeting, and forecasting is more complex
than ever, driven by shifts in markets, technology,
organizational behavior, and commerce itself.
Managers now wrestle with massive amounts of
business-activity data from within and outside their
companies. In an environment of moving targets,
they execute business plans in pursuit of near-term
performance targets while also working toward
longer-term strategic objectives buried in the out-
years of company forecasts. The professional life of
today’s managers is more 24/7 than 9-to-5, and as
a result managers depend on access to timely and
accurate information, to analytical power, and to
one another to succeed.
This crisis in business planning flows in part from
trends in global commerce. As they develop and
produce their offerings, companies have come
to rely on complex supply chains of vendors and
strategic partners to provide inputs and services at
exactly the right time and place. Markets are rich
with information on sources, availability, and prices.
Customer data is similarly information-rich. As a
result, business planners are called to use all that data
to forecast and report the performance of multiple
delivery channels to markets that are always in flux.
The good news is this: A new generation of
business planning technology offers the promise
of higher-quality business plans, more robust
analytical capabilities, closer collaboration, faster
decision-making—and ultimately, better business
performance. To fulfill this promise, many companies
implement dynamic planning, budgeting, and
forecasting systems with a view toward empowering
managers to do their best work together. In addition,
they take full advantage of next-gen technology
by deploying it in the cloud, where vast amounts
of data, analytical power, and collaborative
functionality come together in a secure, scalable,
and readily accessible environment.
For a detailed discussion of the use of next-gen FP&A technology, see SAP’s briefing, “DYNAMIC PLANNING—CRISIS AND OPPORTUNITY FOR THE FINANCE FUNCTION”
3 I THE CLOUD TAKES INTELLIGENT FP&A TO NEW HEIGHTS
NEW TOOLS BRING NEW PRODUCTIVITY TO THE FINANCE TEAM
AS COMPANIES EMBRACED TECHNOLOGY over
the past 30 years, the role of the CFO and the
corporate finance function has shifted dramatically.
No longer focused simply on historical performance
reporting, the CFO’s mandate increasingly requires
real-time, contemporaneous reporting of financial
and operating results, and in the years ahead,
the scale and scope of finance’s responsibility
for performance is likely to expand further. “The
modern Office of the CFO now includes both the
accounting and finance functions, and it’s well
into a transition from reporting what happened
days, weeks, or months ago to reporting what
is happening now,” Says Jeff Hattendorf, Chief
Operating Officer and Principal Consultant at
Macrospect, an Elite SAP partner. “In the near
future, this transition will encompass predicting
what will happen.”
Accordingly, finance teams now seek to take full
advantage of tools that distill vast volumes of data into
valuable information for use by managers in making
operating decisions, by C-suite executives in setting
strategy, and by investors and analysts, who insist on
timely and accurate data to support their buy, hold,
and sell decisions. Intelligent, cloud-based finance
solutions are an essential tool for companies to take
control over their data and derive valuable insight
from it. These tools typically draw on companies’
on-premises systems as well as external data sources.
Using in-memory technologies and other analytics,
they simplify the process of converting vast volumes
of financial and operating data into information to
support a new level of business decision-making.
This expanded capability to make well-informed
decisions isn’t an incremental improvement—a “nice
to have” refinement of managerial oversight. It’s
increasingly a central part of a company’s ability
to generate value and a source of competitive
advantage. Indeed, “Organizations that are able to
embrace change and build capacity and capability
within their companies are going to be the winners
in our new more unpredictable world,” says Brian
Kalish, the former Executive Director at AFP and the
Founder and Principal of Kalish Consulting. Intelligent
FP&A applications allow corporate finance teams to
prepare plans, budgets, and forecasts more quickly
than ever. Perhaps more important, however, is their
ability to deliver the return warranted from their
massive IT investments in recent years.
“�ORGANIZATIONS�THAT�ARE�ABLE�TO�EMBRACE�CHANGE� AND�BUILD�CAPACITY�AND� CAPABILITY�WITHIN�THEIR� COMPANIES�ARE GOING TO BE THE WINNERS IN OUR NEW MORE UNPREDICTABLE WORLD.”�
—BRIAN KALISH, THE FORMER EXECUTIVE DIRECTOR AT AFP AND THE FOUNDER AND PRINCIPAL
OF KALISH CONSULTING
4 I THE CLOUD TAKES INTELLIGENT FP&A TO NEW HEIGHTS
The exponential growth in data from digital enterprise
is coupled with widespread adoption of mobile
technology by employees. In addition, companies have
higher expectations for employees’ engagement with
their professional lives. As a result, managers in finance
and lines of business are increasingly called to make
well-informed decisions regardless of their location
or the time of day. “Thanks to the widespread use of
mobile computing, people work wherever they happen
to be—at the office, at home, at the grocery store,
on a plane or train, or elsewhere,” says Hattendorf.
Doing so requires access to timely and accurate
information from more or less any location, and as a
result, companies equip their teams with the tools they
need to be effective. “We live in a 24/7/365 globally
connected economy,” says Kalish, “and we want to
have people, processes, tools, and technologies to
really thrive in the twenty-first century.”
The aspiration of Kalish and others requires more
than remote access to companies’ current systems.
To enable high-velocity decision-making, companies
need to provide continual access not to data but to
meaningful, well-structured, thoughtfully explained
knowledge to support human decision-making by
professional staff. “It’s not about generating data and
reports for the sake of generating data and reports,”
says Kalish. “It’s about acquiring data, converting data
into information, transforming that information into
knowledge, and then using that knowledge to make
better, faster, smarter business decisions.” And by
building such capabilities, he says, companies realize
improvements in the quality of their decision-making
and the productivity of their teams: “The advances
we’re making in technology permit us to move low-
value activities off the desk of FP&A professionals
and to free them to focus on the analysis, decision
support, and business partnering and advising.”
“WE�LIVE�IN�A�24/7/365�GLOBALLY�CONNECTED�ECONOMY,”�SAYS�KALISH,�“AND WE WANT TO HAVE PEOPLE, PROCESSES, TOOLS, AND TECHNOLOGIES TO REALLY THRIVE IN THE TWENTY-FIRST CENTURY.”
5 I THE CLOUD TAKES INTELLIGENT FP&A TO NEW HEIGHTS
UNLEASHING THE POWER OF COLLABORATION
THIS MANDATE TO FOCUS ON HIGHER-VALUE
activities requires finance teams to work more
closely with their peers in line-of-business and other
functional roles. Finance should use its technical
expertise and organizational independence to ensure
a company uses Intelligent FP&A as a solution—
not as another a contributor—to the problem of
widely distributed managerial decision-making. Eric
Smit, SAP’s Vice President of Analytics, Americas,
and part of the firm’s Global Center of Excellence,
says that finance is uniquely qualified to lead the
conceptual decision-making and governance of
company data and to serve as a “master data
fiduciary” that oversees the use of operating and
financial data. “Finance can lead the effort to
master organizational data to ensure quality and
consistency. Finance can be the hub to lead the
definition of a customer, product, supplier, process,
employee, contractor, inventory item, fixed asset,
and legal entity. The finance team can also facilitate
agreement on data controls and access protocols.”
By doing so, companies retain authoritative
control over the meaning of information as it is
analyzed and used by managers throughout the
organization, without compromising users’ ability
to work freely with meaningful data.
A cloud-based collaborative intelligent FP&A solution
allows companies to overcome the organizational
silos of information and decision-making. “By putting
everyone on the same cloud-based system, you are
pulling finance and the lines of business together. It
really helps create a single ‘environment of us’ rather
than an environment of ‘us and them,’” says Kalish.
And as a result, he adds, “you’re able to streamline
business practices and efficiencies because there is
no translation between the system you are looking at
and the system I am looking at.”
The results of such a shared system and single
version of business information allow closer, more
productive collaboration between line-of-business
and finance leaders. The financial planning and
analysis process involves many stakeholders, each
of whom has expertise and discretion over business
operations, including daily decisions that affect
revenue, expenses, and capital investments. And by
involving these business owners in the budgeting
and forecasting process, companies are more likely
to maximize ownership of the forecast and results.
This greater ownership flows from a single system of
business information, and from tools that encourage
managers to work effectively together. Says SAP’s
Smit, “the cloud technology that enables this
collaboration teamwork includes a shared corporate
calendar, chat features, and advanced analytics tools
for model optimization—all of which is packaged in
one easy-to-use application.”
6 I THE CLOUD TAKES INTELLIGENT FP&A TO NEW HEIGHTS
SECURITY AS A SHARED RESPONSIBILITY
COMPANIES, INVESTORS, AND REGULATORS are
concerned about data security, and rightly so. As
technology permeates commercial activity and the
volume of data grows, so too does the risk of data
breaches, hacking, and theft of intellectual property.
Cloud-based systems are likely to be more secure,
not less, than on-premises systems, say sources
interviewed for this briefing. “Putting everyone
on the same team on the same system raises the
consciousness of the importance of security because
now it becomes everyone’s responsibility,” says Kalish.
While data security was IT’s problem in the past,
cloud-based systems raise the bar for security, largely
because the cloud permits a higher and more uniform
degree of technical security, auditability, and access
control. “By definition,” adds Kalish, “you’re minimizing
individual points of vulnerability and weakness.”
Companies need to balance the need for data
security with the need to allow the access and
collaboration required for brisk decision-making.
Technical solutions go a long way toward ensuring
systems are immune to unauthorized access, and,
says Smit, “large cloud vendors are experts in
maintaining compliance with regulatory standards
along with frequent updates to software and
systems.” The human dimension of data security
is often equally important, and, “FP&A users in
the cloud should adopt role-based access control
and train users on social engineering, and clearly
communicate policies to all stakeholders,” adds Smit
7 I THE CLOUD TAKES INTELLIGENT FP&A TO NEW HEIGHTS
FROM CONSIDERATION TO ACTION
THE CASE FOR INTELLIGENT FP&A seems
compelling. By adopting the next generation
of business-planning technology, companies
are able to harness the power of their financial
and operating data with advanced technology.
Artificial intelligence and massively powerful
in-memory processes allow Intelligent FP&A
applications to deliver insights beyond those
available through conventional technology and
human analysis. Eric Smit at SAP argues the right
technology can deliver business insight faster
for a broader range of decision-makers: “Finance
can use machine learning to explore historical
data patterns and make predictions. Advanced
analytics tools are now easy to use and allow for
rapid scenario modeling to hone the precision
of the forecast. Non-statistically-savvy financial
analysts can model complex relationships with
a few clicks and find empirical relationships that
would be difficult to uncover manually.”
What’s more, a well-governed FP&A system in the
cloud encourages collaboration between finance
and line-of-business managers, and allows them
to conduct their professional lives efficiently
in a 24/7 business environment. And by taking
advantage of the power and security of the cloud,
companies are able to improve and accelerate
their decision-making while balancing security
with user access and functionality.
Companies that are ready to move to Intelligent
FP&A often find that a hybrid solution of
cloud and on-premises technology is the best
near-term solution. Most companies with
modern IT systems are able to adopt these
solutions quickly, says Jeff Hattendorf, thanks
to vendors’ work to enable “easier integration
of modern, on-premises systems with cloud-
based solutions.” He recommends companies
with older systems weigh the costs/benefits of
integrating older systems with more modern
solutions against more ambitious and perhaps
disruptive migration of legacy systems (and
data) to modern solutions.
In addition to technology strategy, companies
need to make hard decisions about business-
planning processes as they deploy Intelligent
FP&A. “When adopting Intelligent FP&A solutions,
companies must determine the value of company-
specific planning processes—their ‘secret
sauce’—versus more generic processes,” says
Hattendorf. “Is the value of a process specific to
the company actually higher than the ability to
plan more broadly and frequently? The answer
for most companies is a blend of the two. Sales
and operational planning are often part of the
“secret sauce” that helps the company stay ahead
in the marketplace. Overhead and other expense
planning is often less strategic and more readily
adapted to standard planning processes.”
Finally, when evaluating the cost of Intelligent
FP&A, companies typically evaluate the total
cost of ownership by assessing the infrastructure
savings realized from eliminating cost from
on-premises hardware and hosting activities,
along with technology licenses and labor costs
associated with a broader group of business
users. However, Brian Kalish concludes, “I’m
not aware of anyone who is out there saying
you should put new enterprise applications
on-premises. You’ve got to be scalable from a
security standpoint. The cloud is safer. It offers
universal upgrades. And it’s accessible whether
you’re in Vietnam or Vienna.”
“ FINANCE CAN LEAD THE EFFORT
�TO MASTER ORGANIZATIONAL DATA�TO�ENSURE�QUALITY�AND CONSISTENCY.”���—ERIC SMIT, SAP’S VICE PRESIDENT OF ANALYTICS,
AMERICAS, AND PART OF THE FIRM’S GLOBAL CENTER OF EXCELLENCE
8 I THE CLOUD TAKES INTELLIGENT FP&A TO NEW HEIGHTS
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