Empower the Business to Make Data-Driven Decisions
Getting the right insights into the business to guide data-driven decisions can be challenging when change is constant. During the global pandemic, with government lockdowns and a rapidly evolving landscape, the ability to recalibrate and make decisions quickly has been crucial. Yet, even during more stable times, having the ability to empower other business leaders to make data-driven decisions is becoming increasingly important.
In fact, data-driven insights are absolutely key in empowering decision-making. This was clear from a global Workday study of business leaders where technology laggards—those lacking organizational agility—stated that out-of-date information and siloed teams are major barriers to the democratization of decision-making. At the other end of the spectrum, 80 percent of technology leaders from more agile companies stated that employees have access to timely and relevant data without gatekeepers blocking access to such information, compared to just 24 percent of laggards.
This mismatch makes sense. Businesses, as they grew and evolved, accumulate different technologies—systems that are often piecemealed together and lack smooth integration. The same is often true of data sources, with companies often relying on multiple data sources and reporting tools being threaded together to paint the full picture. For finance, this makes it challenging to quickly and confidently report on performance, identify variances, and surface risk—three vital components that can delay business-critical decision-making.
Barbara Larson, general manager, Workday Financial Management, points to the importance of breaking down technology and culture silos if finance is to empower businesses to make data-driven decisions. “What finance must be able to do is to quickly understand the impact of changes on the business through real-time access to data, at varying levels of detail and dimensionality directly from their accounting and planning system,” she says. “Performance, variance, and risk are three of the key insights finance must be able to provide to the business, and the need for self-service access to plans, actuals, workforce details, and operational analytics is much more powerful when it lives in a single system.”
Manage Investor Expectations with Periodic Guidance
For many companies, one of the most difficult parts of the COVID-19 crisis has been the uncertainty and volatility it has created around the long-term future. Financial markets have swung back and forth, leading to pressure from the investor community and a need for a more strategic approach to investor communications. Across many businesses, the finance function is tasked with providing thoughtful and proactive communication on how management teams are dealing with the crisis in addition to scheduled earnings reports.
In the short-term, finance will have to consider the impact of the situation on guidance, and whether it needs to withdraw, revise, or reaffirm. According to Deloitte in the article "Investor Relations: Adapting to the COVID-19 Next Normal," against the backdrop of a rapidly-evolving environment, quantitative information—the preference of most investors—may not be available. “In those cases, affected companies may need to consider how material the disruption is to their business—an increasingly difficult task as uncertainty related to the impact and duration of the pandemic persists—and respond accordingly,” the report states.
In the article, Deloitte recommends several CFOs and investor relations professionals, in addition to reevaluating guidance and assessing disclosures. One of the major focus areas is undertaking scenario planning to forecast potential impacts and associated consequences of areas of particular interest to investors, such as covenants.
Larson echoes this advice. “It’s important that investors understand a number of potential outcomes, so using what-if scenario modeling to help guide the business is really key,” she says. “Finance should also be looking to highlight the stability of the business by emphasizing long-term objectives and being able to demonstrate those metrics clearly. Last, but certainly not least, risk mitigation planning is a pivotal part of restoring investor confidence, as preparedness in such uncertain times demonstrates a degree of control.”
To learn more, check out The Hackett Group’s key actions for finance leaders: Looking Past COVID-19: Five Critical Messages for CFOs.