Qlik Business Intelligence and Analytics

Are Today's CFOs Ready For The Challenges Of Tomorrow?

The role of the corporate Chief Financial Officer is one that's changed considerably in recent years. It wasn't long ago that the CFO was seen largely as a quantitative position - the job was all about crunching the numbers, figuring out where the company stood financially and using that information to advise other decision-makers on the way forward.

The CFO is no longer an advisor to the decision-makers - instead, he's one of them.

Things are different now in that the CFO is no longer an advisor to the decision-makers - instead, he's one of them. As we're now well and truly into 2017, CFOs will quickly discover that a new set of skills are required, while embracing innovative processes and technologies could be the key to paving the way forward.

What the data says about the CFO's role

Not long ago, the CFO's main responsibility was to be a data scientist. This individual would crack open BI applications, pore over numbers and unlock key insights about what it takes to run a successful business. To a certain extent, this is still the case, as analysing data obviously still matters. But, according to global research from McKinsey and Company, being a CFO is now broader than that.

At a majority of companies today CFOs are being asked to do numerous other things besides manage finances. On average now, five functions other than finance now report to the CFO, which brings additional responsibilities such as evaluating risk, ensuring regulatory compliance and even in some cases managing cybersecurity and digitisation. This suggests just how diversified the list of demands are on the CFO.

Instead CFOs must build skills in other areas of the business, play a more active role in leadership and rethink their usual approaches to overcoming external pressures and uncovering new investment opportunities. According to McKinsey outside of traditional finance related roles, the CFO spent the majority of their time on strategic leadership (46%), organisational transformation (45%) and performance management (35%). Looking ahead the preference seems to be spending even more time within these domains.

The bottom line is that providing leadership, encouraging innovation and shaping the future strategies of the organisation are core responsibilities of the CFO.

CPM solutions can support innovation and growth

Of concern in McKinsey's research is that roughly two in three CFOs say their companies do not yet have the capabilities for agile decision making, scenario planning, and decentralised decision making they'll need to be competitive moving forward.

Likewise, many say their companies use basic financial controls in their decision making—but few report the use of more advanced practices. When asked about their capital-allocation processes, most CFOs agree that their companies set capital-expenditure budgets at the project level, use comparable metrics across business units, and track the results of specific projects. These practices support the foundation of a strong capital-allocation process. Fewer CFOs, though, report using tactics that would foster further learning or innovation. Just 30 percent of CFOs say their companies formally review investments made three to five years ago, and one-quarter say they're using new methods to identify funding opportunities.

If new technologies are adding to the evolution of the CFOs role, they also have the potential to make it easier for finance leaders to understand current business complexities. Business ntelligence software (BI) can help CFOs benefit from Big Data while Corporate Performance Management (CPM) software can digitise financial processes. Modern CPM software in the cloud can improve speed to decisions, with the ability to quickly make changes and adapt to business scenarios. Automating repeatable manual tasks, easily integrating sales, operations and financial data within enterprise budgeting, forecasting, financial consolidation and financial reporting. Too often these processes can be bogged down by the use of Excel or overly complex solutions.

Digitising The Customer Experience To Create A Better Enterprise

The goal of any enterprise is to stay attuned to what customers want and position yourself well to deliver it. If you're constantly aware of consumer demand, you can adjust your business model on the fly and continuously give people the products and services they're looking for. This will ensure that the revenues keep flowing.

These days, one of the best way to achieve that goal is through digitisation. Replacing analog processes with digital ones. This means digitising back-office workflows and resource planning and in modernising existing IT architectures. Companies tend to focus on internal cost and process efficiencies here, but the real growth is around innovation in sales and the customer experience.

Increasingly, we're starting to see organisations realign their strategies to make digitisation in these areas a greater priority and it's paying off.

The new secret to customer engagement

There's a wealth of data out there reflecting who consumers are and what they want, but much of it is disjointed, disorganised and poorly defined. One of the keys to success in 2017 is having analysts or effective business intelligence tools that understand how to clean up data and make it accessible so everyone in the office can learn from it.

The rise in digital channels has also resulted in the number of consumer touchpoints growing in volume and complexity. With the emergence of cross-device platforms, including desktop, tablet and mobile, the need to understand the customer journey and develop the user experience on these devices is important.

The challenge for the digital marketer and user experience professional is to measure these touch points – and to understand that the complexity around multi-channel user experiences is dynamic and constantly changing. Organisations need to embed customer journeys into their operating models by identifying the journeys in which the organisation excels, and building cross-functional processes to redesign and support the customer journeys on digital platforms.

The ultimate goal is to redesign your customer experience in such a way that engaging with your brand will enrich people's lives. This is a complicated long-term process, but it's hard to deny that data is at the centre of it. Our recent article around Amazon Go and their smart use of digital, Internet of Things (IoT) and mobile technology is revolutionising the way consumers shop for groceries in the USA, where customers no longer have to wait in line again, they simply use an app, enter the store, take the products they want and leave. No lines, no checkout!

Why data analysis matters now more than ever

Lack of integration between functions across an enterprise can lead to multiple customer handoffs, long turn around times for quotes, missed delivery dates and a proliferation of unnecessary technologies. Those that lead in digitisation do it differently. They use automated decision support processes and intuitive business intelligence tools to link finance, accounting, ERP systems with customer, sales and order data to create a 360 degree view of the customer across the business. This provides transparency into the sales pipeline among other operations to assist with resource and delivery planning. McKinsey's research shows that only 15% of B2B companies believe they have a complete view of their customers, versus 20% of consumer companies. So there's obviously much work to be done in better using BI.

Top performing companies are using advanced analytics to improve their insights and deploy tools that help marketing and sales understand what offers, content and services will hit the right notes with key segments. Employing rapid prototyping for BI application development is also important to transform speed to market, it also teaches the right innovation behaviours across the enterprise.

A digital approach leads directly to profit

If organisations are focusing on digitising sales and customer experience it stands to reason that this should lead to improved customer engagement and better sales close rates. However, it's actually more concrete than that, customer experiences delivered online can turn dissatisfaction or indifference into delight which creates long-term brand fans. This will result in an increase of advocates who are both vocal online and offline and who have been proven to produce up to 8 times their own lifetime value in a B2B context. The ROI in a B2C context is even greater. While McKinsey found in October 2016 that B2B digital leaders on average drive five times more revenue growth than their peers. Sustained revenue growth is the reward for such firms that can master the digital customer journey.

In light of this it makes sense that enterprises moving forward will increasingly realign strategies to make digitisation a greater priority, while jointly empowering all staff in better use of data and advanced analytics. Adopting an end-to-end analytics solution, such as Qlik's business intelligence platform, is a great step toward making this possible.

5 Hallmarks Of The 'Intelligent Enterprise' In 2017

A key hallmark of an intelligent enterprise is a management approach that makes smart use of technology and service approaches to challenge and improve business performance. The boundary between IT and the business as a whole is blurring: CIOs are now creating value by delivering IT capabilities that align with business priorities, while CFOs are embracing innovation and technology that delivers improved performance management and enterprise agility.

Crafting an intelligent enterprise in 2017 won't be easy. It will require leadership, time, effort, money and perhaps an entirely new philosophical approach to doing business. What key strategic priorities will drive this movement? That's the key question.

1. Improving agility and growth

As organisations must withstand heightened business risk and volatility, improving enterprise agility continues to be a top priority. Large enterprises encounter challenges with maintaining profitability because they cannot effectively access and utilise data for either long-term planning or short-term decisions. However, through more intelligent scenario planning and profitability analysis, top performers operate with the confidence needed to make decisions that will grow the business.

In 2017, CIOs of even the most conservative and traditional B2B firms - ones filled with legacy systems and entrenched staff - will need to dive headfirst into the age of the customer and make operational changes that drive speed. CIOs will embrace Agile methodologies for faster delivery of the vast majority of their new projects.

2. Striving for better financial performance

At the end of the day, one of the most important goals for most enterprises is to make money. That means CEOs and CFOs strive to set budgetary goals and continually hit them, year after year.

There's no doubt that having budgeting and forecasting software has helped in this regard, but the intelligent enterprise still has more work to do on this front. The hope is that finance teams can lend a hand, working with the C-suite to develop agile business models and corporate performance management (CPM) technologies that support continued, strong financial performance. Removing the many manual, error-prone complex tasks within strategic planning, close and financial reporting processes will be critical.

Research from Hackett Group revealed that there's a 26 per cent gap between the perceived importance of articulating value and the actual ability of the finance team to do so. A key goal for 2017 is to close that gap.

3. Looking to empower the customer

Customer empowerment will demand a great deal of focus this year and the years that follow. Organisations must be prepared to prioritise, build up and support such initiatives with digital and analytics solutions if they intend to remain competitive.

Consumers want to have the power to control their brand experience though numerous high-tech channels. Therefore, one of the major trends in business intelligence in 2017 will be the quest for customer empowerment. The intelligent enterprise will look for ways to hand the customer the reins and let them lead.

A key goal in 2017 will be to empower the customer.

4. Supporting continuous innovation across the enterprise

Great business leaders are those who never feel fully satisfied. No matter how successful they become, they're always looking for ways to keep innovating and continue reaching new heights. Therefore, the intelligent enterprise should look to adopt new systems this year that support continuous innovation. The following trends will encourage CIO's and CFO's to drive continuous innovation.

Fewer staff and the need to stay productive with tighter budgets will give rise to cloud and agile technologies
Information requests demand more frequent and forward looking analysis, forecasting and performance adjustments
CEOs expect CIOs to be leaders of innovation in analytics, business efficiency and the digital environment

5. Using advanced analytics to make better decisions

Varied data sources, the abundance of data and the expanding links between enterprises, customers and other stakeholders create new opportunities to generate business value from data and analytics. The intelligent enterprise is already looking ahead to this reality and is planning to capitalise on it. That's why solutions like Qlik business intelligence software, which helps companies answer deeper questions using more information, are so invaluable. In an interconnected world, it will be crucial to have BI solutions that are fast-acting and highly collaborative, while better integrating financial, sales and operational data for better performance management and foresight.

To delve deeper into each of these areas, download our free ebook "5 Tips For The 2017 Intelligent Enterprise".

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How CFOs Can Build A More Innovative Foundation For Growth

Inside the intelligent enterprise, there's a solid understanding that achieving success is about more than just maintaining the status quo. Even if your company is staying productive and consistently making money, that doesn't mean it's time to rest on your laurels - there should always be a focus on innovation.

To have an innovative business, one ingredient is absolutely crucial, and that's sound leadership.

It's impossible to push the envelope and achieve bigger things if your organisation doesn't have someone in charge who's willing to envision big ideas and carry them out. More often than not, it works best when this individual is your CFO.

This was a topic we recently discussed with Dr Ken Hudson, a keynote speaker at our recent Finance Summit. We sat down with Ken to find the answer to a fundamental question in business: How can CFOs build a more innovative foundation for growth?

CFOs bring leadership to corporate culture

In large part, the success or failure of any organisation is shaped by its culture. What beliefs and values do people subscribe to? What long-term goals are they hoping to accomplish together? Figuring these things out is a vital part of Corporate Performance Management - and Hudson believes it's the CFO's job along with all leaders, to guide this process if they want the organisation to be innovative.

"It's vital that the CFO gets involved with innovation and creativity," he said. "Not only because they control the budget, but two, they have particular skills in setting goals, keeping people accountable and deciding on metrics."

The best corporate leaders are those who not only care about maintaining the corporate culture, but push to make it more creative. They value innovation and serve as role models, showing others how to be innovative as well.

Thinking differently can spark innovation

CFOs are often installed in roles as problem solvers. It's their job to look at the key questions vexing the organisations, analyse them from all angles and come up with the answers, whether by deploying technology or relying on gut instinct.

Either way, Hudson says, it's important that CFO’s try to think differently and look beyond the usual ways of doing business.

"If you always look at the problem in the same way and you always define the problem in the same way, you'll always get the same results," Hudson explained. "Leaders get frustrated because they go, 'Look, we're always getting the same ideas and the same solutions.' So what CFOs have to do is encourage diverse perspectives and be open to new ideas themselves. They have to encourage wild ideas."

There are usually a few different ways to tackle a problem in business. There's the usual way, the truly different way and the altogether radical way. The radical way isn't always right, but by at least considering it, CFOs can open themselves up to new ideas that might help.

Learn to live at the "edge of chaos"

You'll never get anywhere if you only tackle business performance management in rigid ways. On the other hand, it's also good to have a healthy fear of chaos. According to Hudson, the real solution is to live somewhere in the middle.

"The 'edge of chaos' is a fantastic idea from complexity theory," he said. "It means that creativity lives in this dynamic zone between order and randomness. Paradoxically, if you have too much randomness, you can't be creative, but if you're too structured and you're too ordered, you can't be creative either. So the CFO has to find this dynamic balance where they encourage people, they set limits, but they give people freedom within limits."

Structure is a good thing, but too much of it can be problematic. Being an innovative CFO, like many other things in business, is about finding a reasonable balance.

To learn more you can view the 3 min Q&A video with Dr Ken Hudson below.

Financial Planning and Analysis: A Function in Transition

This is typically a busy time of year for FP&A professionals with planning and budgeting underway moving into 2017 for many organisations or about to begin. In the course of running a business, it's essential to have a solid process in place for handling financial planning and analysis (FP&A). Doing so will enable your company's stakeholders to make smart, forward-thinking decisions about the future of the business that are well informed.

It's essential to have a solid process in place for handling financial planning and analysis (FP&A).

Staying on top of FP&A is a challenging endeavour because the field is always in flux. This notion is supported by the Association for Financial Professionals (AFP),which recently came out with its 2016 FP&A Benchmarking survey. The conclusion? Times are changing.

Nilly Essaides, Director and Practice Lead for FP&A at the AFP, said in an interview with Host Analytics that analysing and forecasting a business is a significantly different process than it was just a few years ago, as high-tech innovation is driving rapid change.

"Overall, we found that FP&A is a function in transition," Essaides said. "It's moving from where it is to where it wants to be, and the key to this transition is investment in technology, better access to data and the adoption of more advanced analytics."

There are plenty of interesting numbers from the research that support this idea.

Technology can accelerate FP&A productivity

The AFP survey found that over half of companies still rely on Excel to develop budgets, forecasts and plans, it also shows however, that when companies invest more in technology they achieve significant gains in process efficiency. This being perhaps the most important finding from the research - the fact that investing in technology like enterprise performance management (EPM) systems that automate the budget cycle is proven to deliver productivity gains. Essaides emphasised that when companies put money into FP&A technology, they generally see those dollars and cents come back to them in the form of reduced grunt work and shorter cycles in forecasting work. This frees up FP&A personnel to spend time focusing on improving other areas of the business.

AFP found that when companies invest less than 10 per cent of their total budgets in this type of technology, they end up spending 384 total FTE days processing and collecting data. When that investment is in the 10 to 19 per cent range, that time is slashed by more than half. In addition, when system investment is in the 10 to 19 per cent range, this also translated into shorter cycle times delivering the budget 18% quicker.

Looking forward with better forecasting & access to data

FP&A is becoming a forward-looking operation. What began as a function that reported merely on past events is now transforming into one that focuses on why those events occurred as well as what is likely to happen next. FP&A is working hand in hand with business units to create realistic business plans. Consequently, it must stay tuned in to the organisation's overall strategic objectives, assess risks and identify growth opportunities. FP&A is evolving into the analytics hub at an increasing number of companies—becoming the "brains" of the organisation.

It's difficult to make any predictions about the future of your organisation when you don't have clear, comprehensive and accurate information about the world around you. This is another key finding from the AFP research - the idea that, in the near future, companies will prioritise having better access to data that will help them make their budgets and forecasts more advanced.

Currently, approximately one-third of AFP's survey respondents say they have ready access to the information they need both inside and outside their organisations for running predictive models. This figure is expected to grow in the years ahead, and companies will get more creative about the data sources they use, including pulling in numbers from non-financial systems to run their models. FP&A are using techniques like driver-based modeling at nearly 60 per cent of companies, rolling forecasting is almost a half of the respondents and zero-based budgeting at 39 per cent of organisations.

Improving the accuracy of forecasts is being closely monitored by organisations reporting a variance of plus or minus 5 per cent. This is in the wake of many public forecast errors like Walgreen's last year where the CFO was fired and the stock price took a sharp dive. What matters is not the variance so much but being able to identify its root cause so it can be fixed at the source.

Real-time financial planning needs the cloud

Essaides says that previous research shows CFOs are planning to sharply increase the amount of technology dollars they plan tospend on cloud-based software applications. "The demand for cheaper, faster to implement and collaborative tools is likely to speed up the adoption of SaaS solutions as FP&A seeks to move away from Excel, adopt predictive analytics capabilities and gain better access to real time, and bigger data."

According to Essaides, "Old ERP and CPM solutions were built around functional silos. Reengineering them to cut across departmental barriers is nearly impossible. The only way FP&A can collect and analyse enterprise data in real time is through cloud applications."

Fortunately, new dedicated financial-planning software is becoming available at a lower cost. Many of today's cloud-based solutions offer "self-service" options that empower FP&A to run its own queries rather than require IT involvement. They also allow FP&A to put powerful analytics into the hands of business partners, resulting in timelier and richer conversations. Indeed, over half of the survey respondents deem future access to integrated, internal and external data and real-time analytics as a key competitive differentiator. FP&A already "feeds" on multiple sources of data—from both within and outside an organisation—to identify trends and provide management with insight and foresight. With nearly half of organisations relying on rolling forecasting to continuously refresh their outlook, FP&A is moving to the helm of the ship, helping management navigate the company away from rocks and toward better financial performance.

Excel spreadsheets will never go away. But without dedicated budgeting and forecasting software that pulls data into a single repository, it will get harder and harder for FP&A to execute on its mandate of streamlining its core processes, and elevating its role by performing more advanced analytics and acting as an adviser to the business and senior management.