The progressive CFO

In a climate of growing political and economic uncertainty, there has never been a better time for the finance function to demonstrate its value and innovation, says leading corporate performance management (CPM) solutions provider Tagetik

A potent mix of rising regulatory demands, global competition and economic uncertainty has created the perfect storm for finance departments to prove their value, according to leading CPM solutions provider Tagetik.

The vote for Brexit earlier this year sent shockwaves through the UK, as businesses sought to fathom what the new landscape would look like. With the ramifications of leaving the single market still unclear, the onus falls upon chief financial officers to steer their companies through the uncertain times ahead.

Nick Nesbitt, managing director of Tagetik UK and Ireland, says: “We have entered a period of political and economic unknown, as we await further clarity on what Brexit negotiations will spell for business in the UK and globally. Business leaders are used to change, but the biggest concern facing companies is that investment slowdown will lead to a drop in revenue.

“As businesses jostle to retain their place in the changing environment, CFOs will undoubtedly have a vital role to play in communicating these developments to senior management and stakeholders. If there was ever a time for the finance function to demonstrate its value and ability to strategise, it’s now.”

Such unprecedented territory will impact companies operating in the UK and Europe on many fronts, from investment and liquidity to exchange rates and the cost of human capital, says Nick Nesbitt.

Increasingly, businesses are being asked to plan for an environment in which many of the performance factors will be beyond their control, and they must use insight and long-term strategic planning models to meet the demands. Nick Nesbitt suggests putting together a post-referendum three-year plan estimating the impact of the devaluation of the pound on the business and a three to seven-year plan to give management guidance for the longer term.

“CFOs will be expected to explain and quantify their potential risk exposures, and put in place strategies to control costs, reduce spending and navigate the uncertainty,” he says. “There is little doubt that finance functions are under pressure to raise their game; teams face more challenges, and more opportunities, than ever before, so they must be forward-thinking and progressive in their approach.”

However, the question facing many chief financial officers and their teams is how to keep pace with the growing demands for faster, more agile and meaningful data while continuing to devote their time to reporting accurate results. According to Nick Nesbitt, harnessing the power of people, processes and advanced technology is key.

It is a dilemma Tagetik is well versed in overcoming; supporting the evolution of the finance function is the foundation upon which the company was built. Since its inception in 1986, Tagetik has been at the forefront of delivering world-class CPM solutions to finance offices and has helped transform the finance functions of businesses worldwide.

Nick Nesbitt says: “As well as managing risk and eliminating uncertainty, we want to enable the finance function to take advantage of new opportunities and push ahead of the competition. As the complexities and risks of business grow, so too does the pressure to rapidly deliver business and financial data simultaneously. Our clients understand the importance of being agile and putting in place the right reporting, planning and operational processes and systems, which directly impact a business’s ability to analyse and respond to results.”

Changes to the global regulatory environment are also placing pressure upon businesses, but provide the opportunity to become smarter, he says. The introduction of Solvency II EU regulations for the insurance industry requires significant investment and a long-term approach that will deliver more meaningful analysis.

Solvency II will not only change the rules that govern insurers, but the regulations will transform the technology requirements of companies and the need to link their financial statement to their business strategy. As such, chief financial officers can no longer simply take a rear-view mirror approach to reporting results, argues Nick Nesbitt. They must work in tandem with senior management to drive the business forward with forecasting, planning and analysis.

This calls for investment in flexible technology, which manages operational data, links key performance indicators to financial data and complies with directives by linking regulatory data

He says: “The changing role of finance means CFOs need not only be responsible for accounting, but both proactive and reactive in their approach; creating value and insight, and working as a trusted adviser to the CEO to help make better, more informed decisions for the benefit of the business.”

However, Nick Nesbitt warns this is a challenge for many companies, with chief financial officers often struggling because they are too tied to their legacy systems and do not have the opportunity to invest in systems to release the time they need for analysis and strategic advice. This calls for investment in flexible technology, which manages operational data, links key performance indicators to financial data and complies with directives by linking regulatory data.

Tagetik works with companies to provide a unified CPM solution, with built-in financial intelligence and the ability to integrate disparate data sources, to manage the complexity of a business as a whole. Tagetik prides itself on driving innovation to simplify financial management, provide detailed analysis to meet both internal and external requirements, and aid the company’s progress.

“Organisations should not have separate planning and reporting systems; they need a holistic, 360-degree view of their business,” says Nick Nesbitt. “Finance must be able to analyse increasingly complex information that goes beyond traditional requirements, while still delivering flawless transaction processing and integrity of the numbers.”

Older legacy financial systems are not up to the challenge, with their greatest downfall being that they are not well integrated, he argues, and increasingly finance will recognise the need and opportunity for improvement in their systems, which will become cloud-based or cloud-enabled within the next few years.

“The path to cloud will shift as efforts lead to knowledge and experience leads to improved practices. Finance offices need a solution that meets their needs and can address the demands of the future – they absolutely must not compromise on that,” Nick Nesbitt concludes.

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