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Businesses around the world face a period of economic uncertainty. Rapid disruptive changes, volatility in the markets, fast-evolving technology, savvy customers, increased competition, and shrinking margins all add up to an atmosphere where performance can be hindered.
For sustainable success, your business needs to be making financial, strategic, and operational decisions based on accurate data, and be agile enough to respond to the pace of change. Finance performance management can help you create a strategy to outpace your competitors.
In this increasingly complex business world, management needs a firm basis for decision-making
Managing business performance in today’s complex and rapidly changing business environment is crucial for any organization’s short-term and long-term success. At ACS, as part of our FP&A service offerings, finance performance management focuses on steering and management tasks supported by controlling functions to deliver tangible value in a rapidly changing environment.
Accelerating your mission-critical priorities, we help drive value, reduce costs, and provide assurance via supporting business and decision making.
Accelerating your mission-critical priorities, we help drive value, reduce costs, and provide assurance via supporting business and decision making.
There are several roadblocks attributing to delivering business insights, which are critical to decision-making
Do any of these apply to you?
Long financial planning and budgeting cycle times that delay decision making
Lack of rolling forecasting capabilities to respond more quickly to business needs
Financial drivers and metrics (KPIs) that don’t align with strategies
Long close cycles with a lack of trust in data, extensive reconciliation efforts, multiple user interfaces, and highly customized reporting efforts
Too much time spent on basic data collection tasks due to poor and inefficient reporting tools, manual processes, excessive use of spreadsheets
Enterprise Performance Management is a mechanism for bringing insight and agility to an organization’s management, by visualizing the right data, producing the right KPIs quickly, at the right time for the right decision makers, through:
Business Planning
Budgeting and Forecasting
Financial Modeling
Working Capital Management/Optimization
Cash Management & Forecasting
Assessment of MIS (Validation of reporting requirements, Data source analysis, Software selection & validation)
Development of the Organizational Strategy, and monitor corporate performance using KPIs
Customer Value Measurement
Development of Management Reporting tools and Processes
To support effective business partners and the overall decision-making process in a fast-moving environment, you must:
Align the data model with the strategy and business models
Establish mature reporting and analytics centers for more business transparency
Use advanced planning methodologies and new forecasting methods that take into account technical options
A new paradigm for planning and performance
To serve the needs of organisations in an era of rising stakeholder capitalism, a paradigm shift in planning and performance is needed. The attributes of an effective planning and performance management system are:
Agile and timely
Scenario based
Predictive
Planning and Performance Management should be :
Collaborative and supportive innovation
Data driven
Driven by effective business partnering
Integrated and multi-capital
Integrated and multi-capital
Technology enabled
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At ACS, we team up with growth seeking businesses with this broader view of finace performance management. The vision is of a collaborative finance team that looks at performance across an organization and embraces an integrated approach.
At the core of our sercive delivery is the finance business partner role. We team up with these individuals to enable them to represent the view of finance in many circumstances. Effective finance business partners are key to the role of the function in delivering the broader view of performance into the organization. They need to utilise data in creative ways to deliver those insights.
At the C-suite level the chief financial officer is the ultimate business partner. In planning, recording and evaluating performance there is a need to take a value centric perspective, no longer the chief financial officer – more the chief value officer. This is the new planning and performance management paradigm
Checklist for the CFO
TAKE A MORE HOLISTIC VIEW OF PLANNING AND PERFORMANCE
To remain relevant, finance teams must broaden their perspective of planning and performance management from pure financial lens to one that embraces non-financial performance and elements such as the organization’s purpose and environmental, social and governance issues.
DEVELOP AN INCLUSIVE CULTURE OF PLANNING AND PERFORMANCE
Planning and performance management cannot be a siloed activity. The understanding of demand and supply signals, and their implications on working capital are essential. For this to be effective, there needs to be a strong organizational culture of integrated planning. This must be led from the top in demonstrating planning teams working together on one integrated plan and taking decisions in a similar manner.
IDENTIFY NEW DATA SETS AND INSIGHTS
To facilitate the integrated nature of planning, finance teams need to look outside their traditional data sets. In such times of volatility utilising real-time, or near real-time, data which includes sources of customer behaviour and supply chain activity are essential. Any planning activity needs to look forward. It requires agility to be able to present a range of insights and scenarios that facilitate decision making.
DEVELOP A DEEP UNDERSTANDING OF THE ORGANIZATION
Any planning model must reflect the strategic levers of the organization. In developing their models finance teams need to ensure that they reflect the nature of performance and filter out the noise. Cash and working capital management are vital. Focusing on the drivers of these aspects will enable finance teams to drive survivability. It is important to identify the point at which more information will not change the outcome of a decision. That is the level of precision required.
RE-EXAMINE PROCESSES
There needs to be a recognition that the former ways of planning and performance may not match the challenges that organizations currently face. It is important to re-examine the planning and performance management processes to ensure that they can respond to the volatility currently faced.
BECOME AGILE IN APPROACH
In common across all the other actions is the need to ensure agility in the planning and performance management processes. Performance itself in volatile times is a collective activity and needs to be appraised and rewarded as such. Finance teams need to lead the way in providing insights that reflect this culture on a timely basis. Such an approach rewards innovation and creativity.
CONSIDER YOUR TECHNOLOGY STACK
There are an array of new Cloud-based planning and performance management tools available that will facilitate the real-time integration of financial and non-financial data into the process. Whilst spreadsheets may be the tool of choice for many finance professionals, they need to think broader to ensure that they have tools that can process and facilitate faster analysis of more complex scenarios.
