In our last lesson, we're going to look at a few ideas and how technology and processes can enhance credibility of the finance function. Let's face it, most of us have less than perfect financial systems to fulfill the sort of World Class mandate that we've been talking about so far in this course, judging by a recent performative poll, there's a lot of XML filling in the gaps in our business processes. misery loves company, but at the same time, having an awareness of the possibilities is important. Transforming credibility isn't achieved overnight, it takes years, the value proposition of finance to the rest of the organization can be significantly augmented by decisions around processes and technology. It can also impact the amount and skill profile of your financial team members. Once you have the right team in place your next star considering how you'd like your staff to spend their time organizations that have Less integration and less capabilities in their financial systems will rely more on manual processes analysis and assembly of information using paper forms and Excel spreadsheets.

Now, I personally love Excel, but recognize that what is broadly used across a team, it poses risks and challenges to sustaining credibility. There's a number of studies of the frequency of errors contained inside Excel spreadsheets, the statistics, my friends are dire. If you're going to use Excel as a primary tool in your finance function, it's critical that you invest in both training your team and establishing XML protocols to standardize the use of this tool. But if you're willing or able to break an addiction XML, you can think about an investment in integrated technology to change how you use your team's time. By eliminating spreadsheets and automating processes. time can be freed up to allow for more natural To bring meaning to information, consider the four steps to achieving wisdom.

Each of these steps requires either a human capital or technological capital to attain, consider your current resources and how they're allocated to each of these four types of reporting activities. Level One is the collection of activity which gives us data. Level two is to sort the data, enabling us to share information. Level three analyzes the information to convey knowledge. And finally, when this knowledge becomes internalized, and shared across the organization, we nurture a very high level of strategic insight. This is an easy for many finance people, as we are all more comfortable with the first two steps on this list than perhaps the latter two.

But if we're serious about inspiring growth and gaining a forward looking perspective, we need technology tools. That free our time from the top half of this list to work on the bottom half. It turns out that the most common excuses we encounter that limit us from spreading wisdom include, first of all having to consolidate information from multiple sources as this is time consuming. And then secondly, the complexity of using report writing tools, which prohibit the creation or customization of system generated reports. In my experience with the food processing company, because we had so many offline processes that were maintained in spreadsheets, our sales and marketing team did not have a strong visibility below the top line. In the food processing business.

There's a myriad of trade spending programs, shelving allowances, flyer coupon promotions, volume rebates buying programs. When this accounting is separately maintained offline. There's less ability to manage the bottom line. So while the company was investing in technology, the investment was still insufficient to keep up with the ever increasing complexity of the business. And the result was a constant reaction to emergencies we often rationalized outcomes with only after the fact analysis, which in many cases was far too late to do anything about the issue other than to chalk it up to yet another lesson learned. Ideally, we should be able to make decisions as market conditions change.

We should be able to do this by having the ability to drill down into real time metrics. processes to enable real time analysis require a different design and a different technology. information must be captured and processed electronically. From the time a purchase order is authorized to the time a check is cut to a vendor. Each step needs to be captured inside the integrated system. If you want to improve your visibility to forecast and plan and having information that's buried inside information does not do any good unless it's readily accessible to those who can act upon it.

Thus, you should be looking for a system that gives you an executive dashboard. And that is web enabled to allow managers and executives to access information anytime, anywhere. As it happens. Real Time management is gaining more attention by managers. I was recently talking about this subject with someone working with one of the leading airlines and he indicated that managers were now given daily dashboards of all the key performance metrics relating to load factors and cost per mile traveled, etc. This information had largely replaced the monthly financial results as the primary management mechanism.

So what is the it scope for achieving all this? Well, first we're going to recognize that we need IT staff with better knowledge of the business processes to get started. Secondly, we need to bring in certain operational information from different applications. Inside the company's financial system, this enables us to build key performance indicators inside the integrated reporting system. Next, we should look to move away from paper to digital processes. These steps will force you to standardize and centralize data collection from across the company.

And if you don't have an integrated system with this capability already, we may need to look at upgrading or replacing our existing system. Depending on the capabilities of your financial system, you may also want to explore integrating business analytics. This will allow you to do everything you do now with Excel without a whole bunch of data manipulation and the offline risk. And finally, if you are currently running multiple financial systems, which often arises if you've done a number of acquisitions, you may need to consider moving to a uniform platform. Anytime you are consciously trying to mature the finance function from one maturity level to the next, and investment is going to be required, you can't mature the finance function using Excel alone, though I'm sure many of you are trying incremental investments and staff or technology come with an expectation of return. So preparing a business case along with an action plan can help you sell the request for resources to get the support from your CEO and fellow executives on the human resource side.

While you may need additional resources during the change process, those resources will free up over time as the finance team matures and stabilize. I've noticed in many of my companies that the learning curve kicks in and people get more efficient in their roles after a few quarters. This is when phase two of your strategy really needs to kick in, which is to challenge your people to add value and find ways to work more closely with the frontlines. Failure to do this will only submit the back office perception and put a cap on the credibility that you have during those higher level strategic conversations. The key risk management issue in my mind is making sure that you develop and retain a stable and competent team. If your finance team is in constant flux and you're continuously recruiting new people, it slows down finance transformation.

On the technology side, having the right technology will enhance your level of influence throughout the organization, and is a better more sustainable way to supplement your finance transformation initiative. On the productivity side, implementing an integrated financial system should improve efficiency. By electronically processing transactions. Business moves faster, you get paid faster, and you may be able to free up human resources that are currently pushing paper or creating and updating spreadsheets. More importantly, an integrated system is more likely to result in fewer errors. This is harder to measure in terms of a financial return, but the intangible quality that comes from having one version of the truth and eliminating the slippery fingers inside spreadsheets and having a standardized Reporting Suite with drillable content.

The benefit of all this is credibility. So we've come full circle, we started with a definition of credibility explored ways that it's won and lost and discussed ideas for its enhancement. The takeaway messages from this course are, first of all, the myriad of challenges confronting the CFO, all boil down to one of credibility. The stronger and more credible a finance function becomes, the better situated is to support and lead the growth agenda. Secondly, we talked about a three stage maturity model for finance. This provides us with a sort of roadmap for transformation, both in perception and in substance.

Stage two focuses on the execution of the existing business model. Stage three focuses on rolling the business and becoming that all important business partner at the top and throughout the enterprise. And then finally, we talked about different strategies for shedding the back office moniker by making careful and purposeful investments in people processes and technology. We started with a people first discussion, and then gave them technology tools to free them from the tyranny of data processing and assembly. credibility determines the form and basis of the conversations at the highest level. To have a productive conversation about growth.

Finance must be delivering credible information and advice, information that gives us a clear indication of where we are as as well as accurately predicting the financial future under a variety of strategic directions. And before I leave you, bear in mind that it's highly unlikely that your CEO or your board of directors is going to give you this sort of a roadmap for organizing your own finance function. These strategies are on your own initiative to plan to gain stakeholder buy in, and to ultimately deliver. It's a challenging yet highly rewarding time to lead the finance function in any organization. We all want to fulfill a higher value level three mission, and I wish you all the best. Thank you for your interest in this topic, and please feel free to reach out to me to ask questions at any time.

So until next time, my name is Blair cook. Bye now.