(5 minute read)
There have already been plenty of books and articles written about the COVID-19 pandemic and how it is affecting business – what changed, what is coming next and what will never be the same. But here’s the thing: it’s not over yet.
While it might be nice to read about the impact after the dust has settled, most businesses don’t have the luxury of waiting to look back. They are dealing with the impact now, and they need to perform for their stakeholders, even as the current situation becomes more uncertain.
The reality is that the pandemic only showed us what was already happening – that finance teams must leverage data to predict the future, not just report about the past. But when the future looks more and more unclear, that becomes a tall order to fill. Smart companies are stepping up to the challenge using FP&A technology.
Modelling in an Uncertain Environment
Technology is changing so fast that many companies are having trouble just keeping up. Unable to implement and realize the business value from new solutions, some businesses have begun to fall behind the market leaders — and as those market leaders accelerate, the gap begins to widen.
In the past, there were more certainties that industries could rely on, so modelling was easier. Business leaders had a good understanding of the things that would have an impact on the business. That is no longer true.
In today’s environment, if you want to model 2021 or 2022, you can’t use historical data from 2020 as a baseline. Businesses must find ways to create multiple models based on increased uncertainty, and they need the ability to do it quickly, because things change fast in this environment.
What We Know … and What We Don’t
The impacts from the pandemic aren’t fully known yet, but there are a few things about which we can be reasonably certain. What happened with COVID is not like a downturn in the market that has a fairly even impact across businesses. The disruptions caused by the pandemic have had varying effects, depending on the company and industry.
Two dynamics are in play. One set of companies may be driving to deploy new technologies to keep up with the pace of change. Others are trying to develop new channels for their products, expand into new markets and deal with a disrupted supply chain.
What is universal is a need for smart FP&A technology to enable businesses to assess their situations. Businesses need the ability to run strategic models that take into account scenarios like a 15% decline in sales or months of almost no sales. Doing that efficiently requires creating a roadmap to places that never existed before.
Many companies are looking for partnerships to help them do this. They’re looking for ways to report and forecast more accurately, give more guidance to the street, give the street confidence, and leverage more technologies.
The More Things Change …
Historically, companies have looked in the rear-view mirror at their financial results and conducted very laborious, built-up, long budget processes. That will no longer work in the New Normal. There will still be a lot of uncertainty in 2021, so it will be imperative for companies to report consistently on the health of the business to stakeholders.
To do this, businesses will turn to predictive analytics, machine learning and rolling forecasts to mine data for insights. Since many lack the necessary expertise with in-house resources, they will need to work with partners that understand both the capabilities of the technology and the business realities at play.
itelligence and Workiva partner with customers to simplify the complexities. itelligence has experience with the underlying ERP (enterprise resource planning) systems, the consolidations business process and the tools SAP uses for consolidations. By combining our knowledge of the technology stack and data with an understanding of the reporting process with our partner Workiva, you get an end-to-end solution.
Businesses have an opportunity to kick-start a finance transformation that will benefit them in the long run. It’s an opportunity to move away from manual processes and error-prone copy-and-paste that are outdated and almost irresponsible given the current environment. Rather than resisting FP&A technology, this is a time for finance teams to embrace it to find peace of mind.
Automating and integrating your consolidations data into the Workiva product enables your business to prove the data accuracy and apply some controls that will speed up the process. Whether you are doing a month-end close process or making journal entries, the ability to import that data and see the results adds a lot of value.
Taking the First Step
Many businesses have put off modernization for too long, for a variety of reasons. It’s time to change that, since the health of the company is depending on the FP&A department’s ability to provide guidance to stakeholders. There is no value in waiting any longer.
If your finance team is used to looking in the rear-view mirror, it’s time to start looking forward. It’s time for professionals to ask themselves:
“How do I sift through all this information — the amount of information for every company is growing rapidly — and how do I use technology to serve up the things that I need to pay attention to, whether it’s revenue, or customer service, or what have you?
And once I see what those areas are, how do I use technology to guide me to what might happen?
Once I know what might happen, how do I take my business acumen to re-plan what that impact might be on my financials?”
This is a new dynamic for accounting and finance departments, who are used to sifting through reports based on what has happened. The changes are not going to happen overnight, but now is the time to start the journey.
Technology isn’t about replacing business expertise, it’s about enhancing it, helping professionals do their jobs better, making stronger reports, and seeing more clearly. It all comes down to giving good guidance and good forecasts.