How Your Finance Org Can Help Win The Digital Race

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A warning light that comes on in your car only after it’s broken down on the side of the road with smoke coming out from under the hood is pretty worthless. What you need is a warning system constantly monitoring critical components throughout the engine, providing real-time information and proactively recommending courses of action.

That’s also the role finance needs to play for a company. A business whose finance department continues to focus on reports about the past—and takes weeks to gather and compile data that is no longer accurate by the time the report is presented—will be at a growing competitive disadvantage.

Oracle

Monitoring performance will always be important, but increasingly it will be done in real time through connected systems that enable finance to identify issues before they become problems and recommend entirely new strategies based on internal and external data and in-depth knowledge of the business.

High-Octane Fuel

Cloud-based financial systems will be a big part of what makes this new finance role possible. To help companies identify viable solutions for moving core finance processes to the cloud, Gartner recently published a new Magic Quadrant focused on cloud-based core financial management suites. Oracle Enterprise Resource Planning (ERP) Cloud was named a leader and is positioned the highest for ability to execute and furthest for completeness of vision.

The Gartner report was based on the authors’ interactions with more than 400 end-user clients on their core financial management application strategy in 2015 and 2016 as well as online survey responses from 135 vendor-supplied references in January 2017.

This graphic was published by Gartner, Inc. as part of a larger research document and should be evaluated in the context of the entire document. The Gartner document is available upon request from Oracle. Gartner does not endorse any vendor, product, or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner’s research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.

The advantages of the cloud are quickly becoming competitive necessities. Gartner predicts that by 2018, at least 25% of new core financial management suite deployments in large enterprises will be public cloud and by 2020, more than half of large enterprises with systems up for replacement will switch from traditional on-premises licenses to software-as-a-service or subscription licenses. Additionally, twice as many North America-based companies will be replacing their financial management solutions in 2020 compared to 2015, the report says.

“For finance in particular, the drive toward cloud goes beyond the need to replace aging, on-premises systems,” says Rondy Ng, Oracle senior vice president of Applications Development. “Finance teams are moving from a focus on efficiency—controlling costs, risks, and transactions—to being adaptive, analytical, and focused on agility and growth. Finance must be highly predictive, leading digital transformation and not just reacting to it.”

Analytics Paves the Way

The growing transition of companies from on-premises ERP systems to cloud-based systems reflects the need to be more agile, tapping advanced data analytics to recognize and address market opportunities and business threats. But it takes more than technology: finance departments need people adept at applying their judgment on large datasets of financial and nonfinancial information.

“We now spend as much time on nonfinancial KPIs as we do on financials,” says Loren Mahon, vice president of finance systems in Oracle’s CEO Office. “That’s why when we look at skill sets, we’re looking for individuals who have a broad perspective, perhaps some data science, data analysis, or data visualization background, as well as skills in communication, persuasion, and business partnering.”

Armed with a variety of backgrounds, an intimate knowledge of the business, and advanced analytic tools, Oracle’s finance team has played a key role in helping the company shift its focus to become one of the world’s leading cloud vendors.

This radical change from the company’s on-premises software business model required new, more agile approaches in almost every area of operations. “We had to think through some new ways to define the effectiveness of the business, and new metrics to measure the effectiveness,” Mahon says—and that work is ongoing. “We constantly look at customer utilization of specific features of the application, for example, to create whole new metrics that include nonfinancial KPIs,” she adds. “Our analysis has also given us insight into how to grow our customer base and how to be more effective in meeting our customers’ needs. And we also help the business identify where to focus so they can improve revenue growth.”

One critical factor enabling finance to have the insight necessary to guide the business is automation of a range of processes, which helps ensure consistent, accurate data and frees up time to focus on analysis rather than gathering and validating data across the company.

“The more your systems are integrated across the enterprise—for example, the ERP and HCM [human capital management] systems are connected, since there are so many dependencies—the more you enable automation of dataflow, workflow, and analytics, which will become more and more important as artificial intelligence capabilities are added,” says Mahon.

Additionally, if an employee has to go outside of an application to collaborate through chat or send an attachment, efficiency is lost, she points out.

“Finance is a very different job than it used to be, and it’s important we have tools right at our fingertips so we can perform the right analysis to identify opportunities to do things differently,” she says.

Margaret Harrist is director of content strategy and implementation at Oracle.

Gartner does not endorse any vendor, product, or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner’s research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.

 

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