Strategy & Operations » Financial Reporting » Opinion: A four-pronged plan to beat economic uncertainty

Opinion: A four-pronged plan to beat economic uncertainty

Standardising processes and strong data will provide the platform to plan in a very uncertain world, explains Oracle's Alessandro Evangelisti

Standardising processes and strong data will provide the platform to plan in a very uncertain world, explains Oracle’s Alessandro Evangelisti

IT HAS BEEN a turbulent year for business. Continued ambiguity around how and when the UK will leave the EU and a surprise result for the US presidential election have bred an unprecedented level of economic uncertainty, making it harder than ever for companies to plan for the future.

The challenge has landed at the feet of CFOs, who understand they cannot just wait for uncertainty to pass. According to Oracle research, nearly half (46%) of finance leaders plan to invest in growth where they see a strong business case, even if they more cautious.

CFOs need to rein in costs, but they cannot adopt too severe an austerity footing that makes growth impossible and puts them at risk of being overtaken by competitors.

How can they achieve this?

Plan for more change ahead

When the future is unclear, linear planning will not do. Plans must fork into multiple branches so that any outcome can be taken in stride. Finance teams must therefore be able to model and test many scenarios quickly with a high degree of integrity.

Driver-based modelling is widely viewed as the best approach, but it is crucial that insight from sales, marketing, HR and the rest of the business is combined with financial data. Only then can CFOs gain a complete and accurate indication of how the company will react to different market conditions.

The devil is in the detail

When making strategic investments for the entire organization, every line of business (LOB) must be aligned. Encouragingly, 56% of finance leaders now work more closely with lines of business and this percentage will rise as LOBs continue to collaborate more closely.

The CFO must become the company’s ‘data impresario’, sitting at the junction of all LOBs and serving as the broker and validator of departmental data.  This requires that they develop the digital knowledge to interpret this information and that they can clearly present their insights to decision-makers in the boardroom.

Self-awareness is invaluable

Improvements to the way companies manage their resources and cash hold the key to cost savings. However, traditional finance systems are fragmented and do not provide CFOs with the visibility they need to optimize profit and loss.

Today’s profit and cost management solutions allow organizations to build, maintain and analyse cost allocations at a more granular level. They also make it possible to automatically calculate cost, profit, and other core KPIs so that CFOs can gauge performance and trim the fat from over-complicated processes.

Conquer risk to embrace opportunity

Risk management is a top priority for businesses in a volatile market, but playing it safe is not always advisable. Managing risk effectively is equally about knowing how and when to take chances.

A standardised process for identifying, monitoring and responding to threats is essential if CFOs are to guide the company through uncertainty and jump on opportunity when it presents itself. So is transparency. Business leaders may not have the analytics expertise to dive into risk data themselves, so being able to track and summarise audits in easy-to-read dashboards allows them to take swift, well-informed action.

Today’s CFOs find themselves at the heart of business strategy. More is being asked of them, and errors could have make-or-break implications for the business. However, while this is by no means a time for recklessness disruption will not stop just because of uncertainty. In fact it will likely accelerate, and finance leaders will need to manage change with authority if they are to help their organisation succeed.

Alessandro Evangelisti is digital finance & supply chain cloud evangelist, Oracle South Europe

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