A Comprehensive Guide Into The Future of Finance Operations

Raghavendra Reddy
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With the looming complexity of business decisions, finance leaders need to adapt quickly to become proactive decision experts. Also, learn three key reasons why finance operations should be different in the future.
December 14, 2022

The business landscape is changing rapidly, making it difficult for businesses to keep up. By the time they implement insights, the situation may have changed. Additionally, the complexity of business processes is increasing, as businesses use more and more tools and systems. This generates a complex web of data that finance leaders need to make sense of to generate value.

This changing business paradigm affect the finance team's role. Finance leaders of the future are innate business partners. They need fast and data-backed decisions. So, this culminates to the need for decision experts who are proactive in their business support function.

Why finance operations need to change in the future?

#1 Staggering costs of bad decisions

Profitability and cash flow are essential for survival. As a result, businesses are increasingly looking at all decisions through the lens of return on investment (ROI). This means that businesses are considering the financial impact of every decision, no matter how small.

In order to make the most of their resources, businesses need to make decisions quickly and holistically. This means taking into account all of the relevant factors, both financial and non-financial. It also means being able to act on decisions quickly, without delay.

Bad operational decisions can be costly, both in terms of lost revenue and increased expenses. As a result, finance teams are increasingly involved in all business decisions, not just the strategic ones. They are providing expertise and insights that can help businesses make better decisions that are more likely to be successful.

The rising costs of making mistakes about the future make it clear that the better your analysis of the environment, the better your decisions will be. This is where finance operations comes in. By connecting data points across the organization, finance operations can provide businesses with a holistic view of their operations. This information can be used to make better decisions about everything from pricing to product development.

In short, finance operation is becoming increasingly important. By connecting data points across the organization, finance operations can help businesses make better decisions that are more likely to be successful.

#2 The reducing importance of the rear-view mirror

Businesses need to be able to look ahead and anticipate change. This is especially true for finance teams, who are responsible for providing insights that can help businesses make informed decisions.

Traditionally, finance teams have focused on reporting on the past. This is still important, but it is not enough. In order to stay ahead of the curve, finance teams need to be able to use predictive analytics and scenario-based business cases to forecast the future.

This means shifting from ERPs (Enterprise Resource Planning Systems) as the main data source to futuristic finance tools that can proactively figure out insights and forecast future aspects. ERPs are great for tracking historical data, but they are not designed to look ahead.

There are a number of futuristic finance tools that can help businesses do this. These tools use artificial intelligence (AI), machine learning, and other technologies to analyze data and identify trends and patterns. They can also be used to create simulations of different scenarios, so businesses can see how different decisions might impact their bottom line.

By using these tools, finance teams can provide businesses with the insights they need to make better decisions. This can help businesses stay ahead of the competition and achieve their goals.

#3 Productivity and budget constraints

The business environment is becoming increasingly tight, which is putting pressure on budgets across all departments, including finance. This means that finance teams need to find ways to get more done with less. One way to do this is to adopt new technologies that can automate tasks and improve efficiency.

A recent survey by Everest found that 67% of CFOs identified cost optimization and productivity improvement as a high-priority area for the next three years. This shows that finance leaders are aware of the need to adopt new technologies in order to remain competitive.

How can finance observability help improve finance operations?

Finance observability is different from reporting and monitoring in that it focuses not just on what happened, but also on what could happen in the future and what needs to be done to succeed.

Here is how finance observability transforms finance activities:

#1 Single source of truth

Finance teams spend more than 70% of their time collecting data from multiple sources, cleaning, and preparing datasets for analysis. This work is often done manually, using emails or spreadsheets, which is slow and error-prone. Crashing spreadsheets due to large dataset sizes is also a common problem.

💡How finance observability helps?

Finance observability can help reduce the time required for these activities by focusing on standardization of data definitions, workflow-based real-time data integrations, and data rules. This can help to automate the data collection and preparation process, making it more efficient and accurate.

#2 Analytics and alerts

The next major task for all finance teams is to analyze data and generate business insights. This work is both routine and ad hoc. While Excel macros can handle routine insights using simple arithmetic operations, they are not effective for ad hoc analysis and exception analysis. Additionally, forward-looking analysis scenarios are heavily reliant on the analyst's skill, making the models prone to errors.

💡How finance observability helps?

Finance observability can help finance teams manage both ad hoc and standard business requirements by automating all key insights and alerts at appropriate thresholds. Finance observability tools also have predictive modeling capabilities that combine macro and micro data to generate reliable insights.

#3 Budgeting and forecasting

Finance teams spend a significant amount of time budgeting for the next period, especially during yearly and quarterly cycles. Budgets can be created using simple techniques like "base plus" or more complex "driver-based models." These budgets go through multiple revisions and have complex interdependencies.

💡How finance observability helps?

Finance observability can help with budgeting by creating a central platform for all business budgeting. This platform can automate interrelationships between budgets and enable instantaneous iterations. It can also support easy-to-build driver-based models with audit trails, ensuring a fully collaborative and transparent budgeting effort.

#4 Reporting

Monitoring KPIs and reporting business performance is a key activity for finance teams. This is often done using spreadsheets or digital reporting tools. However, ad hoc reports that require data from different sources are still often handled manually.

💡How finance observability helps?

Finance observability can help with this by offering all the benefits of a digital reporting tool, plus the ability to build custom reports and understand data at a transaction level. This means that finance teams can get the insights they need to make better decisions, without having to spend time manually compiling data or creating reports.

Final notes

Finance observability provides a foundation for a unified data strategy and automated tools to use operations data. It transforms how finance operates. Finance leaders of the future will be more involved in the business and agile with their insights and accurate predictions.