• Thu. Aug 11th, 2022



How The Right Technology Reveals Finance’s True Power In Midsize Businesses

By Randy Garrison, Vice President Global Line of Business Finance and Head of Value Advisory, SAP

The question of whether finance leaders could be co-equal partners with all other organizations has long been a topic of conversation for midsize companies. But all too often, a vital point of the debate is missing: finance is an untapped source of strategic insight needed to move the business forward profitably and intelligently.

When facing issues with governance, risk, and compliance, every function needs to work together with a common language – data. Most midsize companies are already acquiring the digital tools to capture and share data, knowledge, and insights across organizations – from IT to customer service. However, finance teams are not always included in these coordinated efforts.

In its report “The Great Connector,” IDC revealed that – while top performers are further along – barely over one-third of most midsize companies are making substantial investments in technologies that automate and digitalize finance and accounting processes (37%) and risk and compliance tasks (39%). Meanwhile, over half choose to concentrate their digital transformation efforts on enterprise management and operations.

Tying the business together with a common data language

When the same data is not communicated across all departments, every employee uses their version of the truth to get work done, close deals, and track performance and compliance. This shortcoming, which often hides behind the scenes in midsize companies, can create many conflicts on how leadership views business performance.

For example, a sales organization may want to celebrate a successful quarter of a record-breaking number of won deals. However, the finance leader may not share that same view once they compare how much each account costs to acquire, fulfill contract terms, and maintain the company’s position as a preferred vendor. Neither organization is wrong in this case; they are merely looking at different data to inform their business intelligence.

But imagine the possibilities if the finance organization had real-time visibility into the developing success of the sales team. The finance leader could have advised sales managers on the potential risks of new contracts and escalating costs from submitted expenses. Furthermore, disclosing this information through a shared dashboard or collaboration platform could have helped rein in unnecessary spending and increased the profitability of new and existing customers.

Delivering this kind of information is unquestionably in finance’s wheelhouse. Finance teams are always expected to consolidate data and distill it into a comprehensive report, whether generating financial statements, closing quarterly or annual books, processing accounts receivable and payable, and countless other tasks.

This capability can be tremendously valuable to the entire operation when the finance area correlates the outcomes of non-finance activities to their impact on the bottom line. Unfortunately, less than one-fifth of midsize companies have deployed the necessary solutions to scale the capability for business-wide use, according to Oxford Economics. These advanced technologies include artificial intelligence, machine learning, the Internet of Things, and predictive analytics.

When I take an in-depth look into midsize businesses that use intelligent technologies at scale, I often find one significant similarity: an Intelligent ERP that supports integrated planning and analytics tools.

These companies, such as furniture manufacturer and retailer Baya, automatically process massive volumes of prepayments, revenue deferrals, and depreciation calculations to recognize revenue on time and give employees more time to focus on strategic work. Plus, with access to full financials and resource planning tools, they can forecast sales accurately to reduce the need for one-off deliveries and slash storage and inventory costs. More importantly, products can be rationalized confidently to help ensure the availability of best-selling and profitable lines.

Evolving the business with a holistic view of the same truth

While investing more in the automation and digitalization of most functional processes, midsize businesses should reconsider their lack of desire to include the finance organizations in their plans. Adding finance leaders to the digital equation can bring every organization an edge of well-rounded, real-time intelligence when navigating any crisis, prioritizing investments, measuring performance, and assessing employee and customer needs.

Position your finance organization as an agent of transformation for your business. Download the Oxford Economics report, “The Great Connector,” to learn three critical recommendations for success.

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