The cost of doing nothing is real, read this blog to make sure your FP&A solution is fit for the predictably unpredictable
Thought for the day: Align your business planning and FP&A investments because whatever the history of the company you work for, the next two years are going to be more important than that last 50.
Does this mean that the past no longer counts for anything or just that the present is radically different from our expected experience?
Even before Covid upended our lives, the path to success had veered dramatically away from the traditional route. Market leaders realized that to maintain positioning they need to continuously re-assess trusted formulas, and adapt as needed to anticipate changes. Meanwhile recent arrivals have gone from disrupter to dominator in the same period of time. In business today, history is, well, history. Uncertainty, whether we like it or not, has to be embraced.
Two key factors
Two key factors have caused this: low barriers to entry in many sectors and a reduction in risk aversion. Against this background, never has it been more important to build unpredictability into financial models. Be proactive when you can, but reactive when you must.
But either way, be active. Set goals. Whether the business you work for is a startup or market stalwart, decision making needs to weigh more heavily on the strategic side of the scales, rather than day-to-day operational planning.
It’s not that operational planning is unimportant. On the contrary. But CPM software should be doing the “heavy lifting” when it comes to the standard tasks which occupy the CFO office, from regulatory reporting to data collection. Once it has been set the task of intelligent planning, that software will then translate data into information which, under analysis, will indicate the effects, and repercussions, of the strategic decisions which businesses need to make to be relevant moving forward.
Because goals, ideas, big or small, need to fit within the scope of viability. And to determine viability you need tools at your fingertips, which can only be provided for timely, effective decision making within a unified FP&A solution which is structured to evolve with the business.
Interdependencies across all activities knit an organization together, for good or bad. FP&A within a comprehensive, cloud-based CPM solution, owned by finance, rather than IT, will bring all your financial and operational processes and data in a unified platform and reveal the effect of these interdependencies. It will be backed up by artificial intelligence and machine learning, both of which are truly coming into their own, because innovation and automation are now mutually dependent. Such a CPM solution will paint the most accurate picture possible of how strategic choices will impact a business. All without hopping from tool to tool.
So whether it’s repurposing an assembly line, adopting just-in-time manufacturing or embarking on a promotional frenzy, give yourself the best chance of getting it right by running the what-ifs based on a one-solution FP&A with the analytical tools to predict outcomes meaningfully, based on aggregated data from every angle. Avoid the pitfalls which are the enemy of sound strategizing: mis-allocation of fixed costs and human capital, cross subsidization among products and so on.
The cost of doing nothing is real, so make sure your FP&A solution is fit for the predictably unpredictable and I recommend you take CCH Tagetik expert solution into consideration. Start on the right path by watching the webinar: Five strategies to drive your FP&A investment in 2021.