These 2 Imperatives Will Help You Close the Acceleration Gap

The gap between the intensifying rate of change and an organization’s ability to keep up with it is a strategic problem with painful results. Here’s what’s required to close the gap.

If you’ve noticed how the pace of change in the world is accelerating and wondered how businesses are managing to keep up, the answer is now clear: Most are not. 

Even as they face historic disruption from a global pandemic, hobbled supply chains, talent shortages and more, nearly two-thirds (63%) of CEOs tell KPMG their processes and execution are too slow

An inability to gain holistic insight into business performance, outdated technology, and backwards-looking approaches to forecasting and budgeting were all factors holding businesses back even before the pandemic wreaked havoc two years ago. And now, with change happening faster than ever, that inability has given rise to an acceleration gap—the delta between the intensifying rate of change and an organization’s ability to keep pace with it.  

Data from McKinsey bears this out, noting in a global survey that just 20% of respondents say their organizations excel at timely decision making. 

Where does that leave the other 80%? Playing catch-up and feverishly working out how to evolve their business. But that’s difficult to do if the goalposts keep moving faster than ever before. It’s especially difficult if you’re among the 63% struggling to emerge from the acceleration gap and yet hobbled by old-world enterprise resource planning (ERP) models that simply can’t adapt to change.

The struggle is a strategic problem with real consequences. In today’s world, success hinges on adapting fast to what comes next. Yet if you’re forced to work with systems that can’t adapt to change, adaptability is fated to remain maddeningly out of reach.

What can these organizations do? First, they need to be comfortable with shedding status quo ways of working and the technologies those calcified processes are built around. Second, they must consider the constraints of their current ERP system–and be open to the idea that something better exists. Something more adaptable. Something beyond ERP.

Outdated, hardwired processes leave little room for agility.

Traditional ERP systems, for instance, were built with a legacy mindset. And if CFOs have learned anything in the past two years, it’s that legacy mindsets are of little help amid the roiling disruption of today. ERP systems were designed for a more predictable era. And the organizations that rely on them tend to share a history of acquiring multiple solutions that in turn cause a fragmented data landscape. This leads to disjointed and siloed processes that slow down your business at the very moment it should be revving up.

And while we're seeing examples everywhere of providers migrating legacy software and labeling them as cloud-ready, unfortunately, this Band-Aid solution will not close the gap. That’s because at their core, ERP systems are monolithic creatures with baggage that includes extensive hierarchy, cumbersome checks and balances, and clumsy bolt-on modules that require frequent IT intervention. 

This is not the fluid, automated, collaborative environment that an agile organization requires to close the acceleration gap. And it's why a Hackett Group study found adoption of legacy finance applications was expected to shrink by 11% in 2021. Adoption of true cloud-based finance application suites, on the other hand, was headed for a 25% increase.

Closing the Gap: Two Imperatives

"The acceleration gap is real,” according to our upcoming global study, conducted by Longitude. “More than half of leaders (52%) say there is a growing divide between where their business is and where it needs to be to compete." Yet thousands of enterprises around the globe have managed to close that gap, and they’ve achieved it by implementing a set of imperatives—best practices, really—that have helped them transform their businesses into agile, fast-moving organizations. We’ll look at two of them here.

Imperative #1: Running in the now. Legacy-ridden systems and processes hold organizations back because they aren’t built to run in real time. A primary reason for this is that the vital information on which organizations operate is locked in silos, and the business processes that rely on that data are similarly disjointed. An organization can’t run at the speed it needs if silos exist among teams, and the systems—and data—they use are also siloed. This just delays action and decisions.

This isn’t unusual. Accenture found that 75% of executives say their organizations are stuck in operational silos that hinder their speed. What’s the answer? In a Hackett Group survey, finance leaders cite the use of technology to integrate data better between disparate systems as the most important factor in enabling “faster planning, execution, and analysis cycles and improving decision-making.”

Imperative #2: Mitigating uncertainty with the full picture. This imperative is tied closely to the need to break down silos. Organizations today cannot operate effectively by guessing at what may happen next. They need easy access to all their data and the systems that allow them to turn that information into insight. Unfortunately traditional ERP systems and "easy access" are contradictory concepts.

The most advanced solutions that go beyond the limitations of legacy ERP are built to do just that. The industry’s most adaptable cloud platform, Workday’s enterprise management cloud, for instance, brings together financial, people, and operational data into a unified, intelligent data core—with always-live data and up-to-the-moment reporting—so you continuously see the whole enterprise picture and operate in a known state. Think of it as putting all your data to work—data that’s accessible to every relevant stakeholder. 

Acting with confidence and enabling the business to be able to adapt requires shedding the rearview-mirror view of old systems and processes and analyzing how the organization is performing now. With this holistic view of the business as it’s running right this minute, decision-makers can better anticipate their future needs and then address them as those needs arise. A Deloitte study of human capital trends found three out of four (74%) executives report an urgent need for reskilling to meet emerging business demands, but just 10% are ready to act on them. 

All the data is there for them to address those accelerating needs for reskilling; what’s missing is the ability to use that data to gain a full picture of what the business is facing. These leaders know that their business is constantly evolving, and whereas legacy systems can help them digitize their data to achieve things like rearview mirror-type reports and standard headcount reports, what they need now is a way for HR leaders to interact with data by answering crucial, more probing questions: What talent do we have? What skill sets do we have across the teams, and who should we invest in? When will we need new roles, and where?  

A More Strategic Role for Leaders

One byproduct of closing the acceleration gap is that teams and their leaders have more time to put toward strategic financial planning and analysis. They simply become more equipped to add more value to the business.

One great example of this is a modern cloud planning process. In legacy systems, data is fragmented and disconnected, and planning is a time-consuming, weekend-stealing manual exercise performed on spreadsheets. This leaves little time for strategic analysis or guidance. But a modern environment automates much of the planning cycle, and opens teams throughout the enterprise to forecast and recalibrate on demand, budget continuously, and model what-if scenarios that allow them to anticipate the implications of their decisions. In fact, 88% of Workday Adaptive Planning system customers say their role within their organizations is now more strategic than before.

The bottom line is, outdated, hardwired processes leave little room for agility—the very thing enterprises need today more than anything. Agility is the end result of these and other best practices aimed at closing the acceleration gap that, for some organizations, widens by the day. 

If traditional ERP systems could help decision-makers navigate through uncertainty, they would have done it by now. But as change accelerates, the need for a new approach becomes ever clearer, and the shortcomings of outdated approaches make success that much harder to attain.

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