In late 2019, Mercer surveyed business leaders about their expectations for the next three years. Nearly three out of four (73%) said they expected “significant disruption.”
Imagine how the other 27% felt when 2020 came around.
The stark reality of business today—that change is faster than ever, but will never again be this slow—demands enterprises remain agile and responsive to what is happening now, and confident of what will happen next. With historic disruption fueled in part by the global pandemic, business agility is no longer just a defining trait of the most successful businesses, even though it’s undeniably true that top performers are agile. Business agility is now a requirement for survival.
The challenge for many CFOs, and their accounting and FP&A teams, is that the technologies and processes they have in place actually hinder their efforts to achieve agility. The reason is that their data is trapped, siloed in disparate systems that don’t play well with one another. You see this particularly in organizations whose FP&A teams use modern planning systems, but their accounting teams remain hobbled with legacy—and sometimes multiple—ERP systems that simply weren’t designed for the world we now live in.
Ideally, the record-to-report process should be the engine that propels faster and richer insight. Too often, however, it's spread across a siloed and complex environment that proves so persistently inefficient that decisions are either delayed or based on incomplete or outdated information.
No organization can afford the latencies inherent in working with legacy ERP systems and siloed data stores.
A recent webinar, “Workday Financial Management: When Old ERPs No Longer Cut It,” spotlighted some telling statistics about how finance officials are (and aren’t) able to make use of data. Three out of four (75%) say operational data silos are their biggest hindrance to speed, which likely influences the 80% who complain that it takes too long to make decisions. And 72% say they have difficulty meeting the demand for forward-looking information.
For many, the problem is rooted in inefficiencies within the record-to-report process. Those inefficiencies are artifacts of legacy ERP systems.
Chief among them are processes built on a fixed accounting key designed to summarize information. This is convenient for, well, summaries, but the process itself involves stripping data away—a counterproductive practice in today’s data-rich, insight-driven finance world.
Legacy ERP systems are also often divided into multiple instances. Or to provide finance with necessary data, they must interface with three to four other backend systems. Extracting data from these systems for predictive analysis or even to execute a timely close tends to be linear and reductive. So as finance moves through the process of acquiring the data it needs, that data has to move in and out of different systems, which in turn erodes the quality of that data. Even after closing, finance must restructure the data yet again to make it consumable and comprehensible for management and board reporting.
Even organizations that use a modern, cloud-based planning solution to forecast, budget, and model what-if scenarios can have the full potential and ROI of their planning investments blunted by these largely manual and inflexible legacy systems. A lack of dimensionality—of the context and granularity surrounding the data—results in a lack of insight.
Latent access to data can hamstring efforts to establish a continuous planning environment. Some environments are hampered by separate consolidations and account reconciliation. Your organization may also still use a holdover BI tool—still more silos to have to traverse as you work to act on data-driven insights.
How do these challenges manifest themselves? For one thing, summarized data limits dimensionality from actuals, which in turn prevents you from drilling down to underlying transactions that could help explain the “why” behind the numbers.
Not only does this restrict insight, but it can also lead to different levels of understanding, and even different interpretations of the truth. At a time when agility is everything, contradictory understandings of what’s happening in the business can only delay insight.
Patrick Hoynes, director of accounting and reporting at Workday, recalls his own finance challenges at a previous employer that relied on an outdated and inflexible ERP environment. “It was a great company with amazing people, but we struggled with getting to the ‘why’ really quickly,” Hoynes recalls. “We had people reporting from 40 countries around the world. So when you wanted to figure out what was going on in a particular area, you sometimes had to call someone who would be asleep. It was really difficult for us to get a very quick answer.”
Hoynes said if his firm had a modern, cloud-based financial management system back then, the accounting group could have drilled right down immediately to see what was driving the numbers. “We could have gotten those insights so much more efficiently,” he said.
“The problem is gaining access to the right data at the right time,” says Hoynes, repeating what has become a popular, if plaintive, rallying cry for accounting and FP&A teams everywhere. “Separate, disconnected systems don’t serve this need.”
What does? A single, shared data model for starters. According to Accenture, 99% of CFOs want to use real-time data to navigate risks. But just 16% say they are able to tap into that data at the needed scale. And 68% believe a real-time financial model—one that harnesses AI, machine learning and real-time, diverse data sets—will be necessary for making better business decisions based on predictive planning and forecasting.
Getting there isn’t as difficult as it may sound. Modern, cloud-based financial management applications, such as Workday Financial Management, provide that single source of the truth for all systems a business runs on. This unified core is designed to bring everything—financial and workforce transactions, third-party and legacy application data, budgets and plans, peer benchmarks, and more—into one system that provides access to applications at virtually any level of granularity.
This is good news for accounting organizations trying to streamline their close processes, finance teams aiming to engage in more accurate variance analyses, or FP&A teams wanting real-time views into actuals so they can understand key business drivers and model more predictive and accurate plans. When all these teams are tapping into a cloud-native, always-on system underpinned by a unified data core,those much-needed insights are little more than a click away.
No organization can afford the latencies inherent in working with legacy ERP systems and siloed data stores. They can’t afford to delay the insights they need to make timely, confident business decisions and accurate, predictive forecasts. They can’t afford to run their business toward agility when all the while they are anchored by systems and workflows that keep holding them back.
View this webinar on-demand: Workday Financial Management: When Old ERPs No Longer Cut It, to learn more.