I am not an expert in IT nor do I know a lot about ERP systems. But I am a user - specifically a user in the area of financial planning and analytics. As mentioned in my last blog post , one of the challenges for FP&A in the world of Big data is the adaption of current ERP systems to the dynamically changing data / information. This blog post tackles this issue from the point of a user.
Many companies today have already invested in a very expensive ERP system as a back bone of the financial systems. These have been adapted and modified to the needs to the company and industry. But the ERP systems in the current state do not adapt well to the ever changing world of data and information. The Aberdeen study notes that " Many organizations find that by the time they come up with a plan they are happy with , the plan is no longer feasible due to events that occurred while the plan was being composed. They also find that they are ineffective at evaluating current trends to predict future performance and the impact of transformative initiatives".
Finance teams spend weeks or months developing a bottoms up budget and a plan for the upcoming year . Historical data is used along with latest economic indicators but by that time the budget is collated for an overall look of the company's performance expectations and approved, majority of that analysis is obsolete as the latest sales/ performance figures need to be included, Their is a change in the market / economic indicators or new data / information is available which was not available even a few months ago.
As an analyst , I need systems that will help me provide insights to the data / analytics rather than spend time collecting the data and then creating waterfalls to an earlier version of the budget regarding whats changed. To help develop an effective and efficient organization that can maximize the benefit of financial planning , the following factors should be considered:
Ofcourse the real change in technology also comes with the changes in processes also. My next blog I will talk about processes changes that are needed with big data.
Many companies today have already invested in a very expensive ERP system as a back bone of the financial systems. These have been adapted and modified to the needs to the company and industry. But the ERP systems in the current state do not adapt well to the ever changing world of data and information. The Aberdeen study notes that " Many organizations find that by the time they come up with a plan they are happy with , the plan is no longer feasible due to events that occurred while the plan was being composed. They also find that they are ineffective at evaluating current trends to predict future performance and the impact of transformative initiatives".
Finance teams spend weeks or months developing a bottoms up budget and a plan for the upcoming year . Historical data is used along with latest economic indicators but by that time the budget is collated for an overall look of the company's performance expectations and approved, majority of that analysis is obsolete as the latest sales/ performance figures need to be included, Their is a change in the market / economic indicators or new data / information is available which was not available even a few months ago.
As an analyst , I need systems that will help me provide insights to the data / analytics rather than spend time collecting the data and then creating waterfalls to an earlier version of the budget regarding whats changed. To help develop an effective and efficient organization that can maximize the benefit of financial planning , the following factors should be considered:
- ERP systems should be stable and well defined but have the flexibility to adapt to changes business needs quickly and efficiently.
- There be the single source of truth - as analysts we spend a lot of time trying to reconcile different sources of data . Patchwork databases are created and maintained to collect data that cannot be collected in the existing systems leading to different sources of data.
- Planning systems developed on top of ERP should be flexible and adapted to the lowest / most detailed level reporting and analysis that will be needed. The reporting systems should not be created for the leadership only because they will ask the questions from the rest of the organization. The reporting system should be adapted to the most the detailed level analysis that can / should be provided and then summed up from there. The first dashboards developed should be for an analyst supporting the business.
- Technology updates and improvements should be done holistically - end to end - Business cannot update for their needs without working with finance. In the end it id the financial numbers that used for performance tracking / reporting.
- Systems should have the ability to incorporate , store and use data from various sources such as government data, surveys , 3rd party data etc so it can be used in conjunction with internal data to develop predictive analysis. Today a lot of this is done in excel sheets as analysts download data from internal sources as well as external sources to develop insights and then load the updated plans . These trends, changes and insights are then explained on power point decks.
According to the CFO research done in collaboration with SAP "~90% respondents feel, to maximize the measurable financial benefit of financial planning and business analysis, the finance function needs to spend less time on simply moving the data around—that is, spending time, attention, and resources on manually migrating and reconciling data from system to system . ( Here is the link to the article)
Ofcourse the real change in technology also comes with the changes in processes also. My next blog I will talk about processes changes that are needed with big data.
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