We’re less than a month away from entering a new decade, but the finance department continues to face the same challenges in financial planning and analysis (FP&A) since the digitization of finance. Finance executives still struggle to gather, process, and analyze an overabundance of financial data due to a dependence on time-consuming and error-prone forms of manual input and reporting.
The era of throwing more people and resources at challenges is over. In the age of digital transformation, manual reporting and analytics will not help you economically scale, especially now that we’re gathering data at a velocity and volume that far exceeds the ability of analysts to manually interpret it. Adding additional staff to the equation only serves to balloon costs and risks of manual errors. Not to mention the limits it places on an organization’s competitive edge.
For many businesses that still rely on spreadsheets for their “go-to” reporting and analysis they run the risk of inaccuracies that could impact business performance, but also under-utilizing their most skilled asset (i.e, their employees).
The constant strain of incoming financial data ensures that those analysts, particularly in the Office of Finance will not have time to focus on additional or strategic, value-add projects, resulting in unnecessary business losses and/or opportunities missed. Essentially, the amount of business data we are collecting and analyzing has effectively outpaced affordable human processing, and come 2020 it’s imperative that companies recognize the need for faster solutions to succeed.
How Has Corporate Performance Management Software (CPM) shifted the Office of Finance?
Though this technology might seem new to those still reliant on manual processes, corporate management software (CPM) is the second form of automation companies have been able to use to help transform time-consuming, manual processes (first being the introduction of accounting software). This term CPM covers the practices that help companies plan, automate, and manage the financials of their organization, such as streamlining budgeting, planning, financial reporting, consolidation, and scorecarding.
Since its introduction to the market, CPM has enabled the finance team to bring the automation of reporting and forecasting to finance teams, including analysts. It’s been predicted that 83% of enterprise workloads will be on the cloud before the end of 2020. With this growth, this software is continuing to evolve to the next phase, something we at Prophix call: The Third Wave of CPM Automation.
What Can We Expect From The Next Wave of Automation?
This next phase of CPM will be focused on using technologies such as AI and natural language technology to streamline automation even further, while also transforming the way finance professionals analyze and present high-level insights.
This implementation of AI brings enormous promise to the CPM space including time savings; trusted, error-free reports; anomaly detection; and forecasting. With AI, companies free their analysts from tedious, repetitive tasks while giving employees the intelligent insights they need to take on a more strategic role at work. AI also provides anomaly detection, automatically detecting and surfacing unusual transactions before intuitively organizing them by risk rating.
However, an industry switch to artificial intelligence is not a change that will come overnight. It requires companies to invest now, developing the necessary employee skills and building the right data infrastructure. For companies working with more manual processes, the first step is creating an internal process to automate those mundane, repetitive reporting methods to stay competitive in an age of digitization. The threshold of data humans can analyze is a finite amount while the volume of data we’re collecting is still growing. Organizations are continuously inundated with vast quantities of data yet they are not scaling their data analyst teams to match this data overload. Those who can tap into the Moneyball effect; crunch the most numbers, the quickest and most efficient will have a competitive advantage, and AI in CPM is the fast track to making those processes easier and more accurate than ever.
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Alok Ajmera is the President/COO of Prophix, a leading provider of Corporate Performance Management (CPM) software solutions. Alok joined the company in 2004 as a consultant and has worn nearly every hat at Prophix since then. This experience gives Alok a deep understanding of each critical functional area of the company to enable him to drive Prophix’s ongoing rapid growth. Recognized as a CPM visionary, Alok regularly speaks about what it takes for businesses to thrive amidst changing economic and technological conditions, and why it’s critical for the office of finance to lead the way in establishing organizations that consistently make smart, data-driven decisions.
