We all know the methods used to create favorable departmental budgets and forecasts: Managers ask for more than what’s required with the hope of agreeing on the budget they actually want; junior managers promise unprecedented results in exchange for executive support and an investment in their new ideas; and of course, the seasoned, senior managers warn of significant consequences to the company if their specific budget is cut.
This negotiation process is nothing new to the business world. It’s been going on for decades. This is not strategic management. But the best-run organizations have learned that there’s a much better way to do it — one that completely removes the politics and horse trading from the process: Using rolling forecasts with a strategic management tool.
Make no mistake: Decades-old spreadsheets are not built to handle the complexities of modern, fast-paced businesses. They’re great personal productivity tools, but can present major accuracy issues when shared across multiple users and locations.
So for all of you spreadsheet jockeys out there, here are three ways that Excel-based processes could be slowing you down, and what to do instead.
Companies often spend weeks or months developing an annual plan or budget, but by the time they’re finished, the market has changed and the budget has become obsolete. There’s a better way: rolling forecasts.
Instead of being once-a-year exercises, rolling forecasts happen on a regular cadence. Unlike budgets that may have hundreds or thousands of line items, they focus on key business drivers. And rather than focusing on the past, rolling forecasts act as early warning systems when you’ve drifted off course. Continue reading →
There’s a lot of talk these days about how to drive deeper engagement between finance and business teams. So here’s our tip of the week: Dashboards.
Dashboards open the door for a more collaborative environment in which easy-to-interpret data is more readily shared and can be accessed by anyone with permission to view the dashboard. This is an essential benefit, considering the challenges CFOs and their finance teams face now and in the near future.
Today’s CEOs expect their finance chiefs to be strategic deputies and growth champions. Over the past decade, CFO responsibilities have widened to include corporate portfolio management and oversight of capital allocation. At the same time, though, nearly half of CFOs surveyed in the Adaptive Insights CFO Indicator Q2 2016 report said their teams are already working up to 50 hours per week.
So how can busy CFOs maintain their reporting duties while also serving as agents of change in their organization? Here are six questions to keep top of mind as you strive to bring the most strategic value to your business.
By now, it’s clear that CFOs are expected to do far more than provide accurate reporting. When seeking out strategic advice, CEOs turn to their finance chiefs a whopping 72% of the time. But just as finance leaders must become trusted advisors, the amount of data they must manage is exploding. By 2020, digital data will hit 44 trillion gigabytes, which would fill a stack of iPads extending to the moon more than six times.
As the pace of change continues to accelerate, then, CFOs must act as pilots, according to a recent PwC white paper. That means stepping into the cockpit and guiding their businesses through turbulence, aided by cutting-edge dashboards that allow them to develop “what-if simulations” and make mid-course corrections when necessary.
These new, real-time dashboards allow not just the finance team, but a wide variety of stakeholders across the company, to update operational information and engage with data in far more impactful ways.
Remember “Who Moved My Cheese?” the classic business book that used some mice to exemplify the challenges and opportunities presented by change in the workplace?
Well, when it comes to FP&A in recent years, the cheese has not only moved. You could make a sound argument that it’s been eaten as well.
Put another way, CFOs and finance pros are dealing with a double-whammy spawned by swift and unprecedented change. For starters, the amount and complexity of data to be managed and analyzed has grown exponentially. Yet beyond that lies another seismic shift in the expectations of FP&A—the increasing demand to effectively collaborate with internal partners on an ongoing basis to improve planning and decision making, and, ultimately, drive better business results.
Key to that effort is moving away from static approaches to planning and toward an active planning model. Active planning involves generating broad and deep engagement of the planning process across the organization.
Here are five actions that can help you get started on the path to better collaboration.
You know it’s coming—that dreaded request for yet another corporate report. And it can sometimes feel like the team is simply going through the motions, methodically generating report after report, serving up numbers that the board, top management, business unit VPs, and others need to understand the health of the organization.
But the growing mountain of operational and financial data stored across disconnected systems is making it increasingly difficult to deliver actionable information to these stakeholders.
Our CFO Indicator Q4 2016 report explored the reporting process with over 400 global CFOs, seeking to understand the key reporting challenges that must be overcome if CFOs and their teams intend to elevate the value of the reporting function. Our results show that while most CFOs (85%) claim to have direct access to the data they need, many are spending too much time gathering that data, confirming its accuracy and consistency, and formatting reports so that they can be digested by those outside of finance. This leaves very little time for the value-added analysis that stakeholders need to inform strategic decision-making. Continue reading →
There’s no doubt about the goal of your annual budget: Provide a foundation for the upcoming fiscal year, and as the year progresses, track corporate performance against it.
No problem, right? The challenge is, traditional budgets are often unresponsive to market changes. That means targets are not consistently aligned to strategy, long-range plans don’t support overall objectives, and accountability is unclear.