Great example of how finance can be reimagined in the new digital economy. This article was originally published by Birgit Starmanns, SAP.
The end of the year is behind us – and for many finance departments, this means annual closing processes are underway. How will your business roll up financial information supplied by business units and create an aggregated view, complete with intercompany reconciliations, for closing the books and reporting results? And how can managerial views be accommodated to support real-time business decisions?
The way your finance department handles the financial close process can reveal the degree to which your business has matured technologically to support real-time business and decision-making across the enterprise.
There’s the traditional way, where employees have to offload the right transactional data stored in various enterprise ERP, CRM, and other software systems into dedicated analytical systems that run reports and queries. These systems run using a mix of base and summary tables that are complex to access and manage. It takes time to move data into them – and into the right tables. But this is needed to protect the performance of transactional systems that are typically running in real time, all the time, tracking and measuring every activity. And often logic is applied in that transition to analytical systems that distorts the original transactional information.
The problem is, by the time all this work is done, you can kiss the holy grail of “real-time reporting and insight” goodbye. According to IDC, finance employees generally spend 70% of their time just on preparing information used for reporting and analysis – so reports and insights are out of date before they are even shared with decision makers. The data in your analytics systems – and thus the results and reports they generate – is only as current as your latest data transfer.
Delayed and out-of-date information and insight are no small matter. Enterprises are increasingly dependent on real-time information, insight, and activities in order to compete in the digital economy. With digital business operations, companies are able to plan and analyze to make more strategic decisions, discover and respond optimally to events and trends, and model and predict outcomes so that actions can be taken proactively to improve those outcomes.
This means every role is an information role. As noted by IDC, from finance to operations, companies are actively redefining roles so that people are responsible for setting priorities, uncovering and assessing alternatives and their financial impact on the organisation, making decisions, and taking the optimised action. To perform these roles, people need ready access to real-time information and insight.
So when it comes to the financial close, what’s the alternative? How would you reimagine how your finance department accesses transactional data from across the enterprise and rolls it up to deliver views and reports? And what would this transformation mean to your department – and your business?
Imagine a real-time business where the close process can be done anytime and anywhere – using the latest data in your enterprise systems. Your financial data is at the core of an integrated enterprise application system (think of an integrated ERP system) with centralised data that always reflects the current state of operations. There’s no need to move data before analysing and modelling it because transactional and analytical processing happens in one system designed from the ground up to support real-time business and analysis.
With this kind of system, you can perform a “soft close” on demand for instant visibility into financial results even before the end of a year. Thus, executives can detect potential issues and take corrective action to optimise actual, future results. Armed with a single, unified view of business results, you can drive statutory and management reporting, which affects strategic decisions about people, products, channels, geographies, and customers. And because you have direct access to the latest data, you can plan, model, and predict the impact of contemplated decisions (for example, a merger or restructuring) and changes to assess their impact and efficacy for the business.
This kind of real-time, modern application suite is at the heart of a digital enterprise. According to IDC, the key requirements of this kind of modern application suite are:
Are you ready to reimagine your finance operations to support real-time financial reporting, analysis, and operations?
Neil ran his first SAP transformation programme in his early twenties. He spent the next 18 years working both client side and for various consultancies running numerous SAP programmes. After successfully completing over 15 full lifecycles he took a senior leadership/board position and his work moved onto creating the same success for others.