“Competing in today’s business environment requires accurate data to support increasingly complex growth strategies. The demand for accurate financial information isn’t just each month, but weekly and for some companies daily.
“This is not a problem that can just be solved by adding more human resources to process more data and generate reports. Greater transaction volumes, more complex operating models, and demands for greater business insights needed to enable strategic decision-making will require the improved application of data processing automation and improved data models.” Ralph Canter, managing director, Financial Transformation, KPMG.
The finance function has entered a new role. Finance professionals are now expected to be strategic advisers to the business. This is not to say that closing of books, audit and reporting are not going away. These are table stakes.
But as finance undergoes its own transformation and adopts technologies like cloud, automation, machine learning, and collaboration because of WFH, we picked some of the most raised questions by finance executives we’ve met at roundtable discussions in 2019 and asked Terry Smagh, senior vice president & general manager, Asia Pacific & Japan at BlackLine, for his perspective on the changes transformation finance.
Terry Smagh, senior vice president & general manager, Asia Pacific & Japan, BlackLine
What remains the biggest challenge for FP&A teams in Asia?
Terry Smagh: In today’s fast-paced, digital world, the Office of Finance is struggling to keep up with the need to provide more accurate and timely data for analysis, reporting, budgeting, and forecasting to business. Governance and compliance also need to be baked in together with data to drive real-time intelligence and achieve strategic insights.
It is important for the Office of Finance to possess the ability to provide on-demand insights as it enables an agile business to thrive and achieve greater operational effectiveness.
Two technologies continue to plague the FP&A team. We discuss these at length with Smagh to get his take on these.
SPREADSHEETS
Spreadsheets have been around for a long time. Is there a future for spreadsheets in FP&A with the advent of technologies like automation and advanced analytics?
Terry Smagh: Spreadsheets have been around for 40 years. We’re fighting the biggest elephant in the room right. How do you get away with that?
Automation is pushing organisations and people to do busy work easier – people want to do things easy, like with one or two clicks. Three things will drive automation into the finance function: security, governance and compliance.
Today financial health is extremely important, and people are looking at these three tenets: security, governance, and compliance are where the data is coming from.
Imagine speaking to investors and saying: “I run my entire business entirely on spreadsheets, with maybe 15 macros, and the whole accounting is done by two guys sitting in the back room.“
Such a statement doesn’t inspire confidence with shareholders or investors who don’t feel comfortable leaving the financials to two guys and a spreadsheet.
CLOUD
COVID-19 is here. Are finance teams in Asia more willing to accept running FP&A applications and data off/into the cloud?
Terry Smagh: There is a huge shift to the cloud in this digital economy. Uncertainty, risk, and change all reached new levels as companies implemented work from home and other policies to prevent the spread of COVID-19.
Now, with almost no time to prepare, accounting and finance organizations are facing a quarter-end close with a distributed workforce. More businesses are seeing the value of increased digitalisation in light of the current crisis.
Cost reasons aside, it brings about flexibility and accessibility to the business. Cloud also provides an On-Demand – ready anytime mentality as organizations strive to be nimble and responsive to market changes.
Cloud adoption varies across Asia, but digitisation is the catalyst to change, more so in finance transformation initiatives, and we can expect higher adoption rates across various industries in the region.
How do they meet security/compliance requirements if they do decide to use cloud-based financial platforms?
Terry Smagh: Cloud-based solutions are more secure and help meet compliance requirements more effectively
Cloud-based financial platforms allow the tasks that are intrinsic to the financial close to be maintained in a central and secure environment. These tasks include everything from audit evidence and management commentaries to externally generated documents such as balance confirmations, compliance signoffs, checklists of close tasks, and regular instructions.
Embedded workflows also allow tasks to be routed among the different users in a process chain. This can be done to obtain a compliance approval, to escalate an issue to a supervisory level, or simply to invoke the next stage of the process.
Linked to email and alerting systems, including mobile devices, such embedded workflows provide organizations with the means to expedite the close process while maintaining appropriate levels of control.
What is the biggest hurdle for FP&A teams transitioning to cloud?
Terry Smagh: The biggest hurdle is a traditional mindset that is resistant to adapt to change. That said, with finance transformation being top of mind in digitization projects and a higher focus on digital transformation among organizations – this should hopefully be addressed as the digital landscape evolves.
FP&A IN THE DIGITAL NOW
What is your advice to advice looking to bring FP&A into the new normal – digital?
Terry Smagh: Technology will constantly improve the way financial data is used and handled. As a CFO what I want to see is where technology can bring improvement. For example, can it bring improvements to real-time reporting and dashboards, right? Will it be able to provide any data trends and outcomes, not only to help my FPA team to focus on what matters most. Can it visually highlight data for me so I don’t have to dig through rows and rows of Excel column – give me an ability to be agile, with analysis.
On automation, artificial intelligence and machine learning, these things should enable people to spend less time on mundane but mandatory reporting results, and more time serving as a partner to the business – not finance the back office but finance the mission-critical function.
Finally, finance should be looking at foresight, having the ability to look at anomalies, having the ability to look at inaccuracies and asking why did that happen? How can I avoid that from happening? And all the unexplained differences in transactions and account balances.
They might seem to be trivial but if you look at fund spending foresight, you never know when we have the ability to save the next biggest downfall from happening right.
