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"Infor is the world's third largest business software company. We develop and acquire proven software products that have rich, built-in functionality. Then we make
them better. In order to address objectives around both core and strategic financials, CFOs should look
to Corporate Finance Management (CFM). CFM is an integrated approach that combines flexible transaction
processing and other core applications with the real-time reporting, analysis and planning capabilities
necessary to strategically guide an enterprise."
Source: Infor
The Strategic CFO: Success Secrets of High-performing Finance Teams
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Table of contents
Finance executives must meet a growing number of complex demands and challenges if their
companies are to reach the next level of profitable growth.
Operational excellence around core financials is certainly essential. CFOs and their teams are
expected to standardize transactional processes and deploy effective and
eficient financial
systems. They must deliver strong performance in everything from cash management to
regulatory compliance to merely address foundational financial requirements.
But finance executives can't stop there. To differentiate their companies and take their own careers
to new levels, they must focus on strategic financials. They need to provide forward-looking insight
that enhances strategic planning and decision-making. They must extend the capabilities of their
financial systems beyond core activities into new areas, automating more processes and driving
productivity gains still higher.
This comprehensive perspective covering core and strategic financials is known today as
Corporate Financial Management (CFM). As CFOs focus on addressing these strategic and
operational challenges, they will have to invest in CFM systems and applications that enable them
to meet their objectives.
This is where a further challenge emerges.
Finance executives must deploy systems that are robust, flexible, integrated, rapidly deployable
and cost effective. It is these criteria that will determine whether financial leaders are meeting their
business objectives and maximizing their investments in Corporate Financial Management.
In this paper, you will learn:
- Four market drivers that are transforming the world of corporate finance
- Three top challenges confronting today's CFO
- Five critical success criteria that have guided top performing CFOs in their
finance system
investments
Most importantly, you will learn the success secrets that are enabling
finance units to rise to an
increasingly valuable position within the enterprises. You'll discover how today's top
finance
executives are seizing the strategic high ground and delivering exceptional
financial guidance.
Never before have the demands on finance been so great or the stakes so high. There are several
mega-trends that are reshaping the role of finance organizations and transforming the careers of
the executives in charge of them.
- Intensified Market Pressure. Surging competition is coming from all directions. Whether it is
emerging domestically from increasingly productive rivals or from abroad as an array of new
entrants fight for global market share, nearly all industries are in throes of hyper-competition. In
order to overcome these pressures, CFOs are challenged to analyze trends, patterns and past
experience with increasing precision and insight. Companies are looking to
finance organizations
for guidance enabling them to capitalize on their opportunities.
- Increasing Complexity. The ongoing proliferation of information technology has certainly created
complexity. It has created new transactional channels on the Web and new sources of data
throughout an organization. It is not uncommon to have multiple disparate systems running
financial applications creating silos of relevant data. Corporate consolidation also brings
complexity as new processes, systems and data sources multiply. Against this backdrop, CFOs
are charged with standardizing financial processes and ensuring relevant data is accounted for.
- Restrictive Regulatory Environments. The introduction of new regulatory statutes through
Sarbanes-Oxley (Sarbox) and International Financial Reporting Standards (IFRS) have created
still more concerns for finance organizations. CFOs are now expected to provide transparency,
visibility and control and the personal and organizational risks associated with
mismanagement of these difficult tasks are extremely severe.
- Growing Costs of Financial Talent. While the demands on finance continue to pile up, it isn't
feasible to simply add more people to manage these growing responsibilities. In this period of
relatively low unemployment, talent comes at a premium. As a result, finance leaders
find they
must enhance, extend and leverage existing financial systems to avoid a destructive escalation
of costs.
This increasingly demanding environment has created a set of key problems or challenges for CFOs
at enterprising companies looking for a different approach. Among them:
Process Disruptions in Core Financial Operations. Finance leaders and managers are
struggling with many process challenges that might be considered core or foundational issues.
They may even be mission critical. The problem is that the handling of these processes is neither
effective nor eficient. Typical processes that must be considered: Procure-to-Pay; Contract-to-
Collection; and Service-to-Bill.
Concerns may also arise around cash low management problems, for instance. The accounts
receivable process might be poorly designed. Systems that should be automated are not. This
might hamper the enterprise's ability to swiftly collect cash. Or accounts receivable may not
be synchronized with accounts payable. Such problems can hinder a company's ability to
effectively deploy capital. They can also create earnings uncertainty and volatility that
reflects
poorly on executive management.
Budgeting and planning processes may be inefficient as well. According to CFO Research, 60% of
companies say the budgeting and planning process takes too long. Unfortunately, companies
often lack the systems necessary to accelerate the process and ensure it is consistent with
company strategies.
Yet another key aspect of core financials is compliance. Is the enterprise
effectively complying
with Sarbox, IFRS and other regulatory statutes designed to create investor
confidence? Even
privately held companies need to ensure they have strong operational controls in place and have
clear visibility into the business. In many cases, finance is struggling to merely keep up with
today's compliance and accountability requirements, which crowds out time and resources
necessary to manage other operational responsibilities. One issue that hampers the
finance
team is data access. "Many companies have difficulty accessing data," according to a recent
report by Accenture and Canfield School of Management. "This combined with the local use of
spreadsheets means that no single view of data is available."
Inability to Rise to a Strategic Level and Provide Valuable Insight. While operational excellence is
necessary to merely address the core aspects of finance, it's another challenge altogether to rise to
a strategic level within the enterprise. This is the point where finance provides advice, insight and
analysis that can truly differentiate a company and generate profitable growth.
According to a recent survey of CFOs by IBM Business Consulting, the top areas for providing
greater value for the business include:
- Supporting the CEO to create shareholder value (68%)
- Measuring and monitoring business performance (65%)
- Managing governance/controls/risks (54%)
Executives are looking to finance groups to provide greater decision support and performance
management. In too many cases, however, the finance organization may struggle to produce basic
reports much less compelling analysis. It might not be able to clearly state which products are
performing the best or which customers are most profitable. Such challenges prevent organizations
from redirecting their activities and resources to the areas of greatest opportunity. Indeed, the
corporation may end up punishing units that represent the most significant growth while propping
up underperforming units.
To elevate finance to a more strategic role, CFOs also will have to identify new areas where
processes can be enhanced and automated and then, oversee the task. Non-standard processes
such as "recruitment-to-retirement" may be ripe for process improvement. Companies that are
globalizing may want to explore new ways to automate processes around taxation or treasury.
Moreover, finance organizations can increase their strategic value by extending excellence in
financial management out to trading partners and other activities on the edge of the enterprise.
Uncertainties about Financial Systems that will Cost Effectively Support Strategic and Operational
Initiatives. To address the challenges around core and strategic financial, it will take systems that
can streamline and automate processes. This creates a new set of uncertainties for the CFO. If they
fail to obtain relevant and robust capabilities, their systems may not be able to scale up to meet
growing demands. And if they spend excessively or choose systems requiring long
implementations, they are unlikely to derive a strong return on their investment.
Surveys of today's enterprise resource planning (ERP) users have found that at least one third
find
it "difficult" or "very difficult" to implement new capabilities. Rigid,
inflexible systems have clearly
made it difficult for many finance organizations to incorporate new layers of functionality and
automate new processes.
Yet another challenge lies in avoiding systems that do not work well together. Some vendors
offer
"point solutions" that address a speciic problem in a sophisticated way. Unfortunately, these
products aren't easily integrated with other applications in the financial management system. The
resulting havoc and escalating integration costs can undermine any gains that could have been
realized with these specialized tools.
These are the risks that CFOs face as they contemplate investments in
financial systems that will
support them as they grow, enhance core processes and seek to elevate their organizations to
increasingly strategic levels. They need to select and deploy inancial systems that are robust,
flexible, integrated, rapidly deployable and cost effective if they are to meet their overarching
objectives.
In order to address objectives around both core and strategic financials, CFOs should look to
Corporate Finance Management (CFM) as a proven solution. CFM is an integrated approach
that combines flexible transaction processing and other core applications with the real-time
reporting, analysis and planning capabilities necessary to strategically guide an enterprise.
In a single, integrated environment, CFM provides core financial applications such as general
ledger, accounts payable and receivable, cash management, asset accounting and compliance.
It also extends outward to manage and automate other non-standard applications such as
procurement, contract management, vendor management and human capital management.
It supports self-service transactions for procurement, expense management and human resources
purposes. And, finally, it delivers the powerful reporting, analysis and performance management
capabilities necessary to address the strategic concerns of top decision-makers.
This is the approach that is enabling today's top CFOs to separate themselves from the pack. Too
many finance organizations remain mired in ad hoc and fragmented financial environments,
prone to process disruption and swallowed up by tactical demands. However, those who have
developed integrated financial systems have laid the foundations necessary to elevate
themselves to an increasingly strategic role.
World class Corporate Finance Management solutions should be expected to deliver an array of key
beneits to the CFO and the rest of the finance organization:
- Meeting Critical Business Challenges. The CFM solution provides a single, powerful platform to
not only establish effective financial management and regulatory compliance, but to enhance
strategic efforts such as planning and forecasting.
- Integrating Financial and Operational Data. While many financial organizations struggle to
consolidate data, CFM can integrate financial planning and operational data to provide consistent
and accurate reporting across the business.
- Reducing Errors and Data Duplication. In a single, integrated environment, transactions can be
posted once as opposed to several times in multiple systems. This eliminates the necessity
for re-keying data and eliminates associated errors. Reporting, after all, is only as accurate as
underlying data in the system.
- Cutting Costs and Creating Efficiencies through Self-Service. One important way that
finance
accomplishes more with less is by enabling employees, partners and other parties to manage
certain transactions on their own. By enabling employees to manage their own expenses or
allowing vendors to track their own payables online, finance can realize enormous productivity
gains.
- Establishing a Consistent and Auditable Environment. Given the growing requirements for
regulatory compliance, the deployment of a single, integrated system provides stronger
financial controls and greater visibility into underlying processes, patterns and data.
- Gaining Flexibility and Agility. Whereas many legacy systems are rigid and monolithic, CFM
provides the flexibility to change as the business changes. Whether new perspectives are
required due to new acquisitions, divestitures or other factors, this solution allows
finance to
easily change structures of analysis around customers, suppliers, partners, products and
internal departments.
- Extending and Elevating Financial Management. Through robust CFM systems,
finance can
extend its reach to encompass areas such as Enterprise Asset Management and help the
firm
maximize its returns on assets in the field. It also can become more predictive providing
actionable insight into where key business opportunities lie and how they can be seized. In this
way, finance helps set plans and budgets that are truly reflective of strategic priorities.
The combined capabilities of Corporate Financial Management result in compelling performance
gains in the finance organization. Not only is finance more effective and
eficient in its core
processes, it extends its reach to automate other processes within the enterprise and elevates its
strategic role as a provider of valuable analysis and guidance.
When considering an investment in a financial system that can support the objectives of managing
both core and strategic financials, there are several key criteria to keep in mind. It is necessary
to address them to ensure that the solution matches the needs and requirements of a dynamic,
enterprising firm that aspires to growth and is capable of continuous change. Among the key success
criteria:
- Cost and Speed of Implementation: Decision-makers should expect comprehensive product
functionality and support without a huge license-to-implementation ratio. While some solutions
require $5-6 of implementation cost relative to a single dollar spent on the software license, the
proper ratio should be more like $1-2 of implementation to every license-related dollar. Those
lower ratios should reflect a more rapid deployment capability.
- Cost of Ownership: Finance teams should not be expected to continually upgrade and reimplement
the solution. Look for a solution provider that delivers an enduring and scalable
system that won't require heavy investments in maintenance and support. The solution should
support your business rather than burden IT.
- Integrated Solution: Seek a solution that integrates the financial environment by consistently
linking various applications whether those modules address core transaction processes or
more strategic uses such as budgeting, planning and forecasting. Through such integration, the
system should provide both a transactional and strategic view of corporate financial initiatives
and processes.
- Open, Agile and Flexible Framework: Look for an open, service-oriented architecture (SOA)
framework that enables finance to integrate its systems with other operational systems
(including supply chain management and customer relationship management). This scalable
architecture should enable finance to add applications and extend its reach with a minimum
of disruption. Such frameworks should enable finance to more effectively align with other
operational groups and even trading partners as part of an integrated process or on an ad
hoc basis.
- Global Functionality with Local Support. In an era of increasing globalization, it's important to
have local support for these mission-critical systems. Seek a solution available in relevant
languages that meets currency requirements and compliance statutes for the regions of
operation.
It's important to get the balance right with respect to required functionality and investment.
Enterprising companies need robust systems that can scale up as they grow. In order to both meet
their business objectives and maximize their return on investments in these systems, they need
to invest appropriately and ensure their costs are carefully managed.
Infor delivers business-speciic software to enterprising organizations. With experience built-in,
Infor's solutions enable businesses of all sizes to be more enterprising and adapt to the rapid
changes of a global marketplace. With more than 70,000 customers, Infor is changing what
businesses expect from an enterprise software provider. For additional information,
visit www.infor.com.