In 2023, CFOs Need a Crystal Ball

December 12, 2022

The last few years have permanently changed the face of finance, and there’s no going back. Next year will see pressure continue to rise as organizations prepare for a market in flux. Finance must embed data processes that can help navigate the business through uncertain times.

In the wake of these changes, the finance function has transitioned to a more forward-looking approach. Moving away from the traditional number crunching towards deeper analysis and planning support. Tangibly, this means more planning, more accurate and deeper forecasting, and more strategic decision-making based on real-time reporting.

In fact, recent insightsoftware research found that in 2022, 41% of finance team leaders consider “strategic decision-making” to be a priority, compared to 29% in 2021.

As organizations rushed to enable a remote workforce, the pace of the digitization wave dramatically increased. Now, CFOs have access to more data than they know what to do with, accompanied by more demands from across the business for real-time insights. But is it fair that these extra responsibilities fall to finance? Well, yes and no.

On the one hand, finance has been fighting for a seat at the decision-making table for decades. We’re just now starting to see the fruits of our labor as modern businesses recognize the value of the department’s organization-wide vision to hold the business together through numbers.

On the other hand, many CFOs have been thrust into this position without proper consideration to whether existing resources, tools, and processes are robust enough to build long-term value from this massive amount of newly available data.

If you are in this position, or might be next year, there are a few key priorities to focus on:

Know Your Blind Spots

Modern finance functions don’t exist in a bubble. As CFO, your primary value lies in financial awareness that stretches across the entire business. You cannot afford to have blind spots if you hope to accurately guide the business through sudden changes to the market.

To this end, collaboration is key, and your middle managers are essential. One person alone doesn’t have time to know the ins and outs of every department. Seek out your key data stakeholders, often the more engaged middle managers within each department – those who work with the data on a daily basis. Set up regular meetings to understand their data and finance needs.

By listening and valuing their opinion you will uncover potential blind spots. You will also slowly start to see more buy in from these people into your data processes from eliminating silos and interacting. If you keep an open-door mindset, you won’t even have to seek this information. Staff will proactively approach you with questions about possible opportunities or threats, knowing that you will listen and provide valuable answers.

Connect Your Data

In today’s environment, all but the most advanced organizations work with data stored in disconnected software systems and databases, with little or no integration. That may include enterprise resource planning (ERP) software, specialized billing or customer management applications, Excel spreadsheets, and external systems. System-driven reports can often be inconsistent across those various software packages, and no single system can provide a complete picture of the business.

Modern CFOs must have a crystal-clear view of wholistic business data and as such, require a tool that provides a single source of financial and operational truth. This tool must be able to pull real-time data directly from multiple sources and enable collaboration directly within the report. Thankfully, many such tools exist today.

Real-Time Access and Automation

If your organization relies on disconnected systems and manual extraction processes, then you’re dramatically reducing your ability to respond quickly to market events. How can you hope to build stakeholder trust if you are constantly working with outdated data in a static spreadsheet? Or building analysis that only speaks for a portion of your organization?

The more time your finance team spends on copying and pasting data into a static spreadsheet, the less time they have for value-added analysis. Simply put, without proper time for analysis, the Office of Finance is ill-prepared to deliver the kind of actionable insights that organizations now need and expect from their CFO.

To achieve and maintain a competitive advantage, organizations must equip their finance teams with automated tools that reduce manual processes and enable near real-time data access. Automation will highlight discrepancies, and drill-down capabilities allow your team to rectify issues before they become wider business problems. Save your team countless hours of manual data entry work, which can be spent on strategic analysis that will confer a competitive advantage.

“But my team loves Excel, I can’t take it away from them”. We hear you. It’s hard for finance professionals to move away from Excel. Software companies know that your staff wants to stay in Excel and have created tools that mirror its look and feel or exist as native Excel add-ons. Give your team real-time data access within a familiar interface to leverage existing Excel skills and provide the deep insights your executives crave.

Enable Self-Service

If you’re using spreadsheet-based manual processes, then you’re about as far from self-service as you could be. Stubborn adherence to Excel represents an assumption that all your stakeholders have the skills to interact with data in that format. Spoiler alert: they don’t.

The truth is that self-service has no fixed definition and will mean different things to every organization. But at the heart of it, self-service is finance’s ability to operate autonomously from IT.

One of the most significant findings from our recent research across multiple industries was that 80% of finance leaders feel over-reliant on their IT department. CFOs must seek a tool that allows them to analyze and manipulate data without the need for IT involvement.

To achieve self-service, understand how your end users’ data needs vary across skill and job levels. One set of users might only need basic dashboard interactivity to consume information. A second set might require higher-level reporting to filter, sort, and group data about teams, departments, or locations. And a third set might need a deeper level of data access and insights to drive your organization. Whatever their needs are, provide your end users with tailored self-service capabilities for a more productive, engaging, and satisfying data experience.

This does not mean choosing the simplest solution. You want a tool that is intuitive on the surface but offers deeper functionality once you’ve mastered the basics. You certainly don’t want to overwhelm users with too much complexity in a self-service environment. But that doesn’t mean the tool itself can’t have sophisticated functionality that requires training. A scalable tool can help solve future needs when your self-service users mature and demand more.

Develop A Clear Plan

Overcoming any of the above challenges is impossible with the full support of your organization. Let’s face it, it can be hard for finance to get funding, especially in the current economic climate when purse strings are tight. You’re up against sales, who bring in the money, you’re just spending it.

Automation and deeper insights don’t happen overnight, the change process and re-tooling can be expensive in terms of both money and time. If you want the company to buy in, then you must be able to clearly communicate your data plan and demonstrate the long-term value. To this end, we have two suggestions:

• Start small. Big, grandiose ideas for your data are great, but before you get ahead of yourself, test your assumptions by creating value with a smaller project. Work with another business unit to solve their data issues in a manner that creates value for other departments. Then you will be able to demonstrate the efficacy of your proposed plan to leadership and the board. Start with low-hanging fruit, get a win, then build momentum from there.
• Aim for widespread value. Often the biggest impact you can have starts with proper management of master data. Cleaning and aligning master data will positively affect all departments. If results are more reliable and transparent, it will boost data culture and hold staff more accountable. This sort of long-term value is easy to communicate and demonstrate.

The journey to financial agility need not be a long one. However, it does require foresight, as well as dedicated attention and an investment in resources. The results will be worthwhile, as they will help your organization adapt quickly and navigate through turbulent waters.

If you want to hear more, check out our webinar where a panel of experts discuss the evolving role of finance and how teams can prepare for change next year.

Our budgeting and planning solutions help growing organizations scale their planning processes by simplifying and automating manual workflows to drive faster cadences, more effective collaboration, and drive smarter decisions from more accurate data.

Visit our website for more information on how our tools can boost your agility, or to organize a demo.