Economic disruptions are forcing organizations to rethink the way they plan. Gone are the days of Excel and manual forecasting because much like the dystopian film “The Day After Tomorrow,” leaders have no idea what the next day will hold.
Disruptions, whether geopolitical, pandemic, legislative, or workforce-related, never seem to end. While we may wish to return to pre-pandemic life, when things were more predictable, the reality is no one knows if we’ll get back to that more predictable world.
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So, to plan for the day after tomorrow, organizations need to consider fine-tuning the financial brain of their organization, increasing agility in planning and reporting, preparing for new regulatory requirements, and ensuring everyone in the organization is on the same page.
Below are three key Data Management tips to consider.
Fine-Tune Your Financial Brain
No matter what’s happening in the world, the money flowing through an enterprise affects every part of the organization, not just the finance team. Finance teams play a crucial role in helping organizations optimize cash flow by navigating volatile markets and economic challenges. In fact, a recent survey of finance leaders found that 66% of CFOs are preparing for inflation trends to continue into 2023, while 78% expect COVID-related supply chain disruptions to last into 2023 and beyond. So, things will likely remain a bit chaotic for a while.
Driving corporate growth amid volatility and disruption takes a lot of strategic and critical thinking, which finance professionals need time to do. Much like your own brain, if you don’t give your financial brain care and nutrients, you won’t be able to think straight.
Equip finance teams with the technologies and resources needed to keep the team, your organization’s financial brain, active, agile, and focused. They need solutions that can turn sales, operations, and performance data into actionable, financially intelligent information that helps companies pivot and predict.
If your finance department still leverages Excel and email for forecasting and analysis, you’re leaving optimization opportunities on the table. In the modern day, we have access to advanced analytics, artificial intelligence (AI), and machine learning (ML) technologies, that help organizations leverage the vast amounts of data they are generating to drive intelligent forecasts and plans.
Go Beyond Regulatory Compliance
There’s been an increased buzz around environmental, social, and governance (ESG) reporting in recent years. Corporate sustainability and climate change efforts are transitioning to mandatory across the globe, and even the U.S. is defining mandatory disclosure guidelines for public companies.
In addition, the IFRS Foundation, which oversees accounting standards in over 140 nations, recently announced the International Sustainability Standards Board (ISSB), which is expected to release reporting protocols on ESG disclosures in 2022.
While organizations are already reporting on ESG and sustainability, the data collection and reporting is often handled by sustainability teams, facilities, or human resources. But finance teams need to start paying attention because as this becomes mandatory, it will require the same level of governance, control, accuracy, and auditability as financial reporting.
As with any new data collection or management process, spreadsheets and email are the initial tools of choice. But if control and accuracy are required for ESG reporting, you will run into the same shortcomings faced when these tools are used for financial reporting.
Therefore, a growing number of organizations are extending the capabilities of corporate performance management (CPM) platforms to also handle ESG reporting, planning, and analysis. They are thinking beyond the compliance aspect to consider the goal setting, planning, monitoring, and analysis that are required to meet stakeholder expectations. Aligning ESG reporting and planning with the financial reporting and planning process can yield several benefits, including:
- Eliminating duplicate collection, consolidation, and reporting processes
- Improving the accuracy of ESG and sustainability reporting
- Establishing controls and audit trails over ESG and sustainability metrics
Provide One Source of Truth
As technologies, markets, and regulations change, ensure everyone in the organization is aligned on goals, plans, and resource allocations so that everyone is working with one source of truth. How do you accomplish this? Effective data quality management.
Data inconsistencies cost organizations time and money. Aside from the immediate impact on revenue, poor data quality over time poses a risk from decision-making based on inaccurate data and lack of confidence. Why? Because data inconsistencies confuse people, erode trust, cause angst, and lead employees to seek “answers” in data silos – leading to multiple “truths.”
Poor data quality leads to more than just poor decisions in finance. It also causes organizations to waste resources, miss opportunities, and spend time reconciling data – time that could be spent analyzing information and other value-added activities. And all of this translates into increased costs. According to Gartner, on average, poor data quality costs an organization $12.8 million annually. This doesn’t even consider the downstream implications of poor decision-making.
Data inconsistencies impact demand planning, especially amid supply chain shortages. It impacts workforce planning, as organizations ensure they hire for the right skills at the right time, and sales planning, as silos cause teams to spend more time reconciling data instead of driving revenue.
To fix this, consider cloud-based planning solutions that support extended planning and analysis (xP&A). According to Gartner, xP&A is the evolution of planning, combining financial and operational planning on a single composable platform. With xP&A, business planning and forecasting are integrated across the organization and supercharged with AI. The days of “dealing with” data inconsistencies are no longer an option with xP&A.
Disruptions happen when you least expect them. This makes running a business difficult, but there are steps to take and technologies to leverage that help plan for what’s on the horizon. Prepare for the unplannable by fine-tuning your financial brain, increasing agility, preparing for regulatory requirements, and ensuring everyone in the organization leverages one truth.