Finance has always been about improving results. What could be achieved; however, has changed over time. Consider now the potential impact of velocity and people centricity of cloud computing. It is expanding finance beyond departmental optimization and fueling bottom line growth through collaboration.
Before ERP, staff meetings in my old company were lively events. Unfortunately, the only thing we regularly agreed upon was that the organization as a whole was underperforming. Every department had a well-documented theory as to why other departments were at fault. We came to meetings with stacks of reports from our independent systems proving we were ahead of plan. Invariably, we would point to the paint department where containers overflowed with scrap. The paint department, in turn, pointed to poor surface quality from injection molding. All agreed that purchasing was at fault for not lining up better suppliers. It was a fascinating discussion; however, it rarely yielded results. The good news was everyone was engaged.
When ERP came along, things improved. Henceforth, there was only one report. Your department’s yield was whatever the CFO said it was. Sure, departments continued to blame processes upstream; however, there was less wiggle room. The largest remaining challenge was lag time. When we finally became aware of issues via financial reports, significant damage had already been done. Matters got worse when we moved to focused factories and contract manufacturing. We still had a single version of the truth within our four walls; however, more and more of the manufacturing process took place elsewhere. By the time we gained a consolidated view, even more damage had occurred. Staff meetings were like autopsies. The CFO dissected problems from previous accounting periods while the department heads sat back helplessly.
How would this situation play out today with a modern cloud based financial application like SAP Finance OnDemand?
First of all, there are fewer and smaller batch processes. The lean movement toward one-piece flow and the power of in-memory processing make up to the minute profitability analysis feasible. This applies not only to internal operations but potentially the entire supply chain. Next, modern integration platforms allow different entities to run best of breed systems like the departments of yester year yet still consolidate results in real time.
Lastly, thanks to new collaboration paradigms, interdepartmental interactions need no longer be a zero sum game. In other words, department heads have more attractive options for improving the status of their department than shifting blame. Two department heads can sit together looking at the same real time KPIs and nip problems in the bud. Indeed, such collaboration can even lead to improved processes making everyone look better. Thanks to the ubiquitous nature of cloud computing, this dynamic even holds true for plants located in different parts of the world. And lets not forget, controllers are often starving to get their value out to the business, in their hands.
There’s never been a more exciting time to be in finance. Technology is changing the conversation from “who did what” to “let’s build a better future”. The department heads are no longer the problem but rather part of the solution. What number cruncher can’t get excited about adding one and one and getting three!
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Regards Sven Denecken (@SDenecken) and John Hunt (@johnanthonyhunt)
Also see:
Financials OnDemand: Using Collaboration to streamline finance
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