Long Live the Business Strategist!

Ismail El Kadiri, Senior Consultant – Information Insights at Logicalis, considers three classic 
business challenges as viewed from the perspective of the chief financial officer.

In a time of continuing economic uncertainty, business units look for support to become more agile and to use limited resources wisely. The office of finance is taking centre stage in driving strategic planning and implementation within the organisation.

1. Planning for the future in a changing world

Business plans are no longer set in stone. By the time an annual budget has been signed off, the goal posts will have changed, and the assumptions on which it was based will be irrelevant.

Annual budgeting is well on the way to obsolescence, and is being replaced by ‘continuous planning’; that is, the process of reforecasting a given time period on a regular basis or on an ad hoc basis in response to significant events.

A survey* conducted for IBM shows the importance of continuous planning to business agility:

  • 73% of respondents reported a move to a culture of continuous planning.
  • Significantly, organisations strongly agreeing they are actively engaged in this trend were almost four times more likely to be able to respond quickly to market change.
  • Organisations that have moved to continuous planning are almost twice as likely (1.7x) to be able to forecast earnings between +/- 0-5%.

The current tough commercial climate makes it imperative that CFOs are be able to model different scenarios for the business units, enabling them to ask and get the answers to ‘what if’ questions. Equipped with meaningful financial data, the business can explore its options to avoid emerging risks and capitalise on new opportunities.

If CFOs spend less time gathering and collating data and spend more time analysing and using it, they can not only enable the business day to day, but add measurable value in critical decision-making. The number cruncher of yore is no more. Long live the business strategist!

2. Predictable budgeting by turning capex into opex

It can be difficult to keep at the cutting-edge of technology when, almost daily, exciting new applications for business intelligence, networking, mobility…are released onto the market. At the same time, developments such as big data constantly stoke an almost insatiable demand for computing power and storage.

This can produce a huge, unplanned hit on IT budgets as business critical software needs upgrading or refreshing, which in extremes can mean money has to be reallocated from other projects.

Many CFOs are taking the pressure off hard-pressed budgets (and their colleagues in the IT department) by recommending a cloud-based software-as-a-service approach to IT provision.

In addition to all its other merits, such as breaking down organisation siloes and providing always-on access to relevant business data, cloud computing replaces out-of-the-blue capital expenditure with a manageable operating expense.

For a predictable monthly or annual fee, everyone has access to the same current version of the software. It’s the supplier’s responsibility to update and upgrade the software, freeing internal IT teams from a routine task.

3. Reporting with speed and accuracy

Today’s markets move quickly. Exchange rates fluctuate. New competitors burst onto the scene. Structures and business dynamics change rapidly.

As the world seems to turn ever faster on its axis, CFOs need to be able to provide accurate reporting and forecasting, and provide ready answers to questions from the business.

Simply looking backwards, with historical reporting, is no longer sufficient in volatile markets. The end of the month, quarter or year is far too late to take remedial action if actuals come adrift from budgets. However, finance departments still relying on inflexible and hard-to-maintain spreadsheets will struggle to create and maintain a single up-to-date version of the truth.

In the survey mentioned earlier, organisations that have moved to continuous planning are 1.5 times more likely to be able to reforecast within a week than those that haven’t.

In summary, today’s business climate is faster and less forgiving, with no margin for error. CFOs cannot afford to be stuck in the past with outmoded practices generating information that has long passed its sell-by date, using processes that have outlived their usefulness.

To find out how continuous planning offers a more dynamic, flexible approach, read an extract of the report published by FSN Publishing Limited, which is based on the IBM survey.

Download now