Making Financial Transformation Reality: Hear from Deloitte and eBay at Informatica World
The need for transformation has reached the tipping point
For more and more companies, the need for financial transformation has already reached a tipping point. Innovation Enterprise says a major driver for this is “the pressure on finance departments to become more strategic”. This has caused financial departments to embark “on transformational processes to bring the (finance) function in line with the needs of today’s business environment. Much of this has to do with the streamlining of IT processes and automating repetitive tasks that aid execution”.
At the same time, CFOs tell us that they want to improve the quality of financial and performance insights obtained from the data they produce. Gartner confirmed this by asking CFOs to identify where they see the need for technology improvement. Top areas for CFOs were Business Intelligence (BI), Analytics, and Performance Management. Gartner claims the organizations that it has talked to “are still struggling to make progress with BI and analytics”. And while many IT organizations have made initial investments here, they have tended to be, according to Gartner, tactically focused and therefore, have not addressing more fundamental issues including data quality and data consistency.
Gartner claims these issues have required CFOs and finance teams to work closely with BI specialists within the IT organization. Often quarterly reporting or profitability analysis requires manual pulls of data. Most finance departments are saddled with legacy environments. And the supporting processes for these systems remain difficult, manual, and time intensive. When I worked at very large computer manufacturer, we had to give the finance team at least 2 months to input product changes into the financial system. Clearly, once you move from the general ledger or general ledgers in more complex organizations, you find that much of what takes place within finance is still a manual process. According to a recent study, an amazing “51% of CFO survey respondents say that their collecting, storing, and retrieving financial and performance data at their company is primarily a manual and/or spreadsheet-based exercise” (The Intelligent Finance Organization, KPMG, page 16).
For those that are not in finance, this must be a shocker. But it should come as no shock that many financial organizations are undertaking timely and expensive financial transformations at this time. The goal for these transformations should not necessarily to replace their ERP and other financial systems but instead to improve their overall financial effectiveness and efficiency.
On the effectiveness side, CFOs tell us that they want to improve the quality and timeliness of data that they create so they can take on a more strategic role in the enterprise. I have already shared about how CFOs have a data trust issue.
On the efficiency side, CFOs want to create more efficient financial business processes. So what is holding them back in being more efficient? In most cases, it is the complexity of managing existing legacy financial and business systems and ensuring that everything is in synch between them. What financial organizations have told us is that they do not want to replace their legacy systems but they want instead to replace how they manage these systems so they can get the “head room” needed to be more efficient. What they want specifically is the ability to eliminate the complexity of these systems daily care and feeding.
A financial transformation project, therefore, should aim at improving the supporting financial processes and automate as much as possible around the financial processes that surround the general ledger. When asked what has driven these financial processes to become so cumbersome to manage, we have been told business change—reorganization, new businesses, acquisitions, new products, and new business process. It is managing the change to the financial structures, financial metadata, and hierarchies.
In talking with financial departments, we have heard that many components of the process are completely manual. Every change, for example, has to be managed across enterprises geographies, FP&A systems, accounting systems, and more than one business systems. It is a huge job making everything synch if done manually. One company that we talked said they needed for all of this not to be manual. Another said, automating from a single version of truth would be extremely valuable. Right now, we connect to multiple systems and it is difficult to maintain consistency between each source of truth. A number of things do not always tie together—“I admit it we have system inconsistencies”.
Financial departments are asking for a master of everything that touches financial systems including their SaaS systems. This capability would make the management of changes entire automated and over time system dampen out inconsistencies completely. For most medium to large organizations, this is a big deal. At the same time, they need the ability to test, schedule, and then recast financial results easily due to planned business change. So much of this today is managed in spreadsheets. With automation, financial departments want as well the ability to eliminate manual notifications and review processes for changes to entities and the general ledger. As well they want traceability and tractability for all changes made. One finance department said that they need an audit trail for their management of changes made. They said just think about the effort to maintain hierarchies that go into the expense report system alone. It easily touches as many as 20 systems. Finally, they said it would nice to have transparency to state before a change. This organization said that it is going to become more important to maintain lineage analysis for audit trail.
Do you want to hear more
Deloitte and eBay will jointly present on the solution that they have put together for financial transformation on Tuesday the 12th at 2:40 p.m. in Las Vegas at Informatica World. Their presentation will include their vision for Financial Transformation. As well it will include how to put together a data led approach, their design decisions, and their leading practices. Finally, they will discuss how they built their solution to manage SAP data on top of the Informatica MDM solution.