Financial trends shaping the future

Allan Saffy looks at how CFOs can help their organisations combat the rate of change.

We’ve all heard the term VUCA (volatility, uncertainty, complexity, and ambiguity) being continuously used across the business world – and, as the Harvard Business Review suggests, it’s become the byword for ‘crazy times’. As business leaders, we’ve always had to deal with change and uncertainty, but the rate of change and uncertainty has certainly escalated in recent years.

Consider that between 2008 to 2019, the biggest disruption to business was the banking crisis, while in the past two years alone, the South African business community has been rocked by Covid-19, the 2021 looting saga, and the effect of the Ukraine-Russia War.

We all accept and understand that these events are unexpected and drive uncertainty and disruption; however, what is challenging for organisations is to be able to deal with the frequency with which they are occurring. This has forced organisations to find a way to make meaningful decisions across their whole value chain a lot faster.

One question plaguing modern CFOs is what finance teams can do to help their organisations deal with this challenge. How do they help turn operational decisions into immediate visibility of the impact on profit, cash, and value (P-C-V)?

The speed and frequency with which finance teams can deliver the P-C-V view to the business will help validate good decisions and eradicate poor decisions across all operational functions in the business. This has resulted in the CFO and their team becoming increasingly more strategic and meaningful business partners to the entire organisation.

Through all of our finance transformation projects, as well as our global best practice trends research, we have unpacked five clear steps finance teams can take to help shift them to become this value-adding partner:

  • Optimise repetitive financial processes. The objective is to free up time to allow key financial professionals to leverage their expertise to deliver long-term value for the business. Here, the increasing trend is to utilise modern technology to unlock large-scale automation. With the aid of technology, finance teams are achieving this objective, by automating transactional processing, reconciliations, and reporting processes.
  • Dynamically integrate operational and financial planning. The global trend is to extend and integrate finance into operations. No longer are operational plans and financial plans being created as separate silos. Gartner says: “This emergence of xP&A (extended, Planning & Analytics) heralds a transformation of financial and operational planning by providing a single platform with the integration and support needed for finance and business teams to collaborate.” We are seeing this as a smart move that translates into measurable business improvements.
  • Faster, more frequent scenario planning. Being able to re-plan your business as and when required with a fast turnaround is critical when dealing with today’s rate of uncertainty and change. Scenario Modelling on an xP&A framework is tending to be the silver bullet that organisations are looking to. Again, the use of modern technology to help enable this is being highly considered by most forward-thinking finance teams. There is no better way of enabling a good business decision than providing future-relevant information at the right time to decision-makers. Inevitably, finance teams are quickly becoming the custodians of this dynamic.
  • Transform reporting. There is a faster adoption to effect real-time analytics and reporting across the entire business value chain, as this not only adds timely insights for decision-makers but ensures that there is a direct line of sight into the real-time pulse of the business. A critical success factor in achieving this outcome is to enable modern data platforms integrated with consolidation and analytics applications. Not only are the insights created from the data made readily accessible but financial consolidation functions, that enrich the data, are also automated.
  • Evolving finance professionals. Finance professionals are evolving away from the role of process control, collecting, crunching, and creating report-worthy data to being storytellers that are strategic partners to the operations and executives of the business. To do this they will be required to add to their skillset by becoming more connected to technology platforms to adequately present the future story revealed by current operational decisions. How insights are reported is going to fundamentally change and finance teams will become far more capable of producing storyboards and dashboards as and when needed.

Ultimately, CFOs and finance teams are the curators of value within the organisation. These roles are no longer crunchers of numbers but rather strategic enablers that allow organisations to tap into trends and technologies that can refine operations and improve overall business growth, even in uncertain times. Especially in uncertain times.