According to Darwin’s (1809-1882) theory of evolution “It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change.”
Digital transformation in FP&A departments turns disruptive. Irrespective of company size or industry, Finance departments are looking for technology to help them out of their Excel mess and streamline systems and processes. Early adopter companies move from ‘Human Intelligence’ driven forecasts to AI only forecasting. Big Data, Predictive Analytics, Cloud Computing, Deep Learning is what Consultants enforce – but how can Digital Transformation help FP&A experts?
From our experience, finance departments have access to more than enough relevant data. Their typical challenge is to connect all sources in a timely and efficient manner – and improve data quality. Often it takes that long to prepare and quality assure data, that information is outdated even before relevant analysis and decision-making can start.
Whereas it’s amazing what Excel cracks can get out of their tools, apparently nobody can overcome several inherent technical and processual limits with spreadsheets. CPM (‘Corporate Performance Management’) software was designed to help finance departments run their budgeting/forecasting/reporting/analysis processes smoothly, connecting all relevant departments/users and data from various sources. Still, most CPM systems are like powerful (but empty) spreadsheets without the appropriate business content. Pre-defined, but still easy to tweak S&OP (Sales and Operations) and IBP (Integrated Business Planning) solutions are game changers in digital transformation support for finance: Speed up budgeting via top down target setting, forecast demand with neural networks, manage supply with weekly rolling forecasts, balance supply and demand and keep Marketing and Sales in the loop. Drill down to opportunities in your CRM system for detailed analysis and leverage strong ‘what if’ scenario simulation options – to finally connect all expert know how in your company and end up with aligned forecasts for P/L, Balance Sheet and Cash Flow. You might even want to challenge your estimates with Monte Carlo simulations, to calculate how likely you will achieve your targets.
We are very confident that Finance departments and their FP&A experts will not be replaced by AI in near future – but they need to adapt to change.
That’s why we suggest to embrace finance transformation rather than fight against it:
1) abandon the illusion, that finance departments or whole companies can be run via spreadsheets – and
2) look for the support of ‘Digital Transformation in Finance’ experts.
Improve your knowledge and get helpful advice and tips for business. Just contact one of our team members on LinkedIn or ask for a 1:1 product demo.
smartPM.solutions: Advanced Performance Management – Digital Transformation Support – AI-based Forecasts