New technology that transforms financial strategy, management, and information collection has business information traveling faster than ever. It’s a trend that has helped to position corporate finance teams to better assist the CEO and Board of Directors set corporate strategies.
But there’s one thing every finance executive should know if they want to take advantage of the opportunity to become a strategic authority within their company: The level of leadership and influence finance can provide is directly associated with how quickly the team can produce valuable financial metrics to influence business decisions. Those teams depend on having the right type of financial analysis software.
It’s about accelerating the three-stage information loop within your organization to get updated, valuable insights in front of your organizational decision-makers faster than the competition.
So how can you maximize this new opportunity to gain a competitive advantage?
Below are two specific steps your finance team can take to help accelerate that internal information loop, according to former PeopleSoft CFO and current Adaptive Insights Advisor Ron Codd.
1. Establish Relevant Metrics to Measure Progress: Measuring the right metrics leads to clearer goals and a better understanding of higher-level objectives. Both external and internal measurements are required if you really want to keep track of all relevant data. If the data is too sparse, you risk losing valuable insight. If you use too much data it becomes cumbersome to synthesize and analyze. Measure the most important internal and external metrics, and set goals and forecasts based on your performance against those metrics.
2. Embrace Tools to Take Prompt and Decisive Action: The tools you use will heavily impact how successful you are at finding and measuring the right data. The key is striking a balance between speed & agility, and rigor & analysis. Rushed decision-making is just bad for business. The focus should be on implementing tools that allow for prompt and decisive action. That means quickly gathering your most important financial data so that business leaders have time to conduct analysis that will help them make the right decision. The ability to take prompt and decisive action is a main reason why so many of today’s organizations are embracing modern FP&A technology.
Think of it as a cycle. First, create goals and objectives to use as measurements of overall corporate success. Then assess the risks of these objectives through data analysis. And finally, analyze and report on corporate performance to better track and measure success against the most impactful metrics throughout the year.