Challenges and solutions in Corporate Performance Management for finance executives (podcast)

1:25 Brett’s background

• I have an accounting background with a Bachelor of Business and CPA.
• I spent 10 years in the office of finance including Financial Controller and Management Accounting roles. There I saw heavy use of Excel spreadsheets to do planning, budgeting, forecasting and board packs.
• I have been consulting on implementing technology to transform the office of finance for the past 20 years.

2:30 About QMetrix

• QMetrix solves issues of Corporate Performance Management. This covers processes around budgeting, forecasting, business planning, reporting and business intelligence.
• In this area, QMetrix’s key client base is the office of finance.

3:35 Common pain points of finance teams

• There are large businesses still running spreadsheets with critical functions around budgeting and forecasting. If they are not using spreadsheets, they are using old legacy systems that are quite cumbersome, inflexible, difficult to use and maintain.
• Pain point 1: Finance teams aggregate and transpose data across the business. This takes up much time of highly paid finance staff who should be involved in higher value activities like analysis and strategy. We can improve productivity and reduce cycle times in reporting and forecasting.
• Pain point 2: Building a model around revenue and expense drivers can be quite complicated, but spreadsheets are only two dimensional. With the right technology you have the ability to forecast using historical trends across multiple dimensions and use a top down approach that can be quite granular.
• Pain point 3: Some businesses do not have a single source of truth for financial and performance related data. The data is usually spread across Excel files or buried in source transactions which are hard to collate. A single platform taking care of this is essential for high performance finance teams. Having accurate information is a necessity, not a luxury.

7:30 Spreadsheets versus a technology platform for Corporate Performance Management

• Spreadsheets are a fantastic tool but have to be used fit for its purpose.
• With a technology platform everyone can be contributing to the forecast in real time; it rolls up and consolidates, and finance just reviews the outcomes.
• You can also have workflows around the process, and design step-by-step planning guides for other departments to ensure they own the forecast.

 
9:08 If not spreadsheets and legacy tools, what are the options?

• QMetrix works with two leading technologies in the Corporate Performance Management space, used internationally.
• First we understand key requirements and pain points of an organisation, then we make a recommendation on which technology we think is best for them.
• There are several choices in the marketplace. No solution is a 100% perfect fit, but technology is just one important aspect of the decision.
• From our perspective, it’s how we can engage with our clients to ensure they get a successful outcome no matter which technology choice they go with.
• Our sweet spot is businesses in the $20-300 million turnover space – and they are running on a spreadsheet. Many businesses start small and spreadsheets were okay then. But the business has outgrown the spreadsheets which no longer cut it.

12:08 What problems fit-for-purpose technology solves for businesses

• There are a few examples. From a forecasting perspective, executives need to make quick decisions or respond to changes in market conditions.
• For example, a competitor starts selling products directly in competition to one of your key market segments. You need to be able to understand what the impact is going to be.
• Using the solution/technology, you can quickly model out a few different scenarios and impact on profit and cash flow so you are able to understand how to counter that.
• Maybe you can reduce the price of your product. If you do that, you want to know what the impact to your business is from a cash flow perspective.
• With the technology you can have models of the business you can tweak to make those assessments and make a decision based on facts rather than gut feel.

13:34 Process and timeline of implementing a fit-for-purpose technology for Corporate Performance Management

• For QMetrix we start with a scoping workshop with stakeholders that is typically half a day. We look at main drivers of revenue and expense and profitability, and existing processes around budgeting and planning.
• We’re not about replicating the existing state as it won’t solve the pain points. We start to challenge assumptions around the pain points and look at exploring alternatives. We know the capability of the technologies so we can help, and enhance the planning capability within that business.
• We look at key success factors. It might involve getting the wider business involved in forecasting or doing rolling forecasting. There are a number of ways we can drive value, such as creating a fully integrated 3-way Profit and Loss, Cash Flow and Balance Sheet model.
• Then we implement a solution. It could be 4, 6, 8 weeks. It is not a huge time investment from ours and the clients’ perspective.
• We encourage a phased approach. There are some quick wins we can get, but it’s important to deliver some basics and value, and get the business to understand where we are heading with this, and understand the value-add it provides.
• We map out the process of how the project will look like with multiple phases. We might have one 12 months or 2 years later that focus on other areas where we can deliver value. Typically those would be mapped out in the initial scoping session where we have some high level deliverables.

17:50 Feedback from clients after implementation

• We quite often see jubilation and relief. It’s amazing what sort of feedback we get after the first forecast. We hear things like how they’ve got their life back and it’s the first stress free month-end cycle they’ve gone through.
• Finance people are at the core of the benefits. They can partner with the business as they are freed up to do more value-adding tasks.

19:10 Benefits in costs and efficiency

• All businesses are different and get different outcomes. Typically we see a 30 – 50% increase in productivity in the office of finance. There is greater accountability for plans across the business and department heads are more engaged as they have a better process and tool to work with.
• There is typically a 50 – 70% reduction in the budgeting, forecasting and reporting cycle. Visibility and insight is delivered to key decision makers, and they can change course based on facts. They can explore and drill down, and understand the details.
• Payback is usually within the first 12 months.