Along with the severe health and humanitarian crisis we are experiencing at the moment CFO’s and other corporate executives face enormous business challenges; supply chain interruptions, massive uncertainty, regulatory modifications, decreasing customer demand, and difficulty incorporating these into planning processes.
At some point, hopefully, these crises will end and everything will go back to normal, but when will that be, and who knows what the ‘new normal’ will be?
One thing we do know to give you business the best chance of recovering you need more than ad-hoc or piece-meal responses. Organisations that will recover the best and fastest have already started laying the groundwork and structure for their recoveries.
This pandemic has shown us just how fragile our business environment is and how quickly it can change. When life is easy, we can get lulled into a false sense of security. When companies are swimming in profits, they have funds to experiment with, and at times ‘waste’ on excesses, which they are now finding, were not really essential after all.
Some of our most popular sporting codes are now being exposed as very clear examples of this. The money from TV rights was there to spend, and so that is what they did. Apparently forgetting about the old adage of ‘saving for a rainy day’. Well that rainy day has come, and they appear to have nothing, or clearly not enough, saved for this ‘rainy day’.
In times like this business leaders need to get back to basics. If we look back through the most popular business publications over many years the key ‘basic’ is planning, planning and more planning.
At bi5 we’re big believers in the importance of budgeting and forecasting, however, we also believe that measuring performance, or Business Intelligence as it is more generally known, is equally important and should be included in any planning process. With today’s modern business intelligence technology, measuring has become all that much easier and affordable it is therefore a key ‘basic’ of any business.
These key functions are all driven by the finance department which is really at the top of the business tree. The Finance Department is where everything comes together. Where CFO’s and executives can tell, in real money terms, whether things are going well, not so well or not well at all or probably more importantly going to plan.
However, ironically in many instances, finance just doesn’t get the human or technology resources they deserve or need. They are already running very lean and from our discussions with CFO’s and Finance teams are going to be expected to do much more with less into the future. These scarce resources will also be working differently than they did in the past. Working remotely from home will become much more prevalent, meaning that staff will need to be supported by more collaborative systems to make them effective.
Perhaps that will all change as a result of this current pandemic and companies will realise these things can happen at any time and will have a dramatic impact. As a result, CFO’s will start to get the power and influence they deserve, to enable them to steer the business through difficult times.
Those companies in the best position will be the ones who have invested in systems. They will allow for the collection and integration of key data from, both financial and operational systems that are spread throughout the business.
The ability to quickly perform what-if analysis and model and test different scenarios to re-calibrate the business quickly will be essential.
The next step is being able to implement these scenarios and measure actuals against the plan in a timely manner. This is only possible if you have the necessary data and is only useful if that data is verified as correct and reliable.
It makes a lot of sense that Planning (budgeting and forecasting) and measuring (business intelligence) are integrated and should all be in the same system not spread over a plethora of spreadsheets and disjointed, non-aligned processes that are controlled and understood by only a handful of people.
The data collected by your organisation has a purpose and it is all connected in some way. However, the real value comes from integrating this data so you can see the overall impact of change on your business.
The Coronavirus pandemic has had an unprecedented impact on the world, and no one knows if the worst is has passed or is maybe yet to come. Companies must act today if they are to bounce back in the future.
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