EPM and transformation of the finance function: promises kept?  - Transformation & Process > BI

EPM and transformation of the finance function: promises kept? – Transformation & Process > BI



For several years, digital transformation has been at the heart of the finance function. It was presented as a turning point that any company should take, regardless of its size or sector, to ensure a sustainable future. The promises made are: agility, efficiency, adaptability and the end of Excel for some… After more than 30 years of existence, what first assessment can we establish of these tools: are the promises kept? Is this a revolution or a long-awaited evolution of the finance function in terms of processes, data and roles?

Finance function transformation solutions, what requirements?

The ERP (Enterprise Resource Planning) or enterprise resource planning system have, as precursors, upset corporate finance without succeeding in responding to all the problems of the finance function. Its counterpart (complement) Excel has seduced but remains inseparable from possible errors and lack of flexibility.

The EPM (Enterprise Performance Management) are presented as a relay to overcome the shortcomings of the first and facilitate the life of the finance function.

Read also: Manage the activity hand in hand with the other departments of the company

EPM tools therefore go further. They make it possible to better manage future activity (budget, estimate, plan) based on the company’s strategy and a more reliable reality. Because the treatment of the realized has also changed.

Controllers are no longer expected to “simple” produce figures followed by an overly brief analysis, but to steer financial activity within ever-shorter deadlines even in continuous time. This requires combining Fast & Quality Close. Fast close because closing times have been considerably reduced to meet the needs of an increasingly globalized economy. They go from D+34 to D+7(1) on average or even less…without reducing the quality of data and projections. Witnesses of an acceleration of financial requirements.

The EPM also had to make the forecasting processes (budget and forecast) more reliable and faster by avoiding email exchanges and Excel files. Thus, the management rules are modelled, centralized and shared by all.

This means that the forecasting processes are aligned with the strategic plan, allow to apply this strategy and maximize the use of resources. The bottom-up and/or top-down methodology used at group level is harmonized and the company’s departments decompartmentalised. This also helps to save time and unify processes. However, this capacity is little used today and this decompartmentalization is slow to come into practice and in mentalities.

The EPM: the break?

This picture seems idyllic but achievable if the modeling of data, processes and urbanization are thoughtful and tailor-made. Each company, due to its specificity, must have tools that are adapted to it and challenged according to its expectations and future prospects. For this, management and operational staff must be involved in the project because the purpose of the tool is also to rethink the communication between them. This is also a function that EPM solutions are supposed to perform.

With regard to communication with top management, the EPM stands out as a break / revolution. Now on tablet, PC or even for the most advanced a digital boardroom or BI tools, managers and leaders can view data in real time close or geographically distant entities and demand accountability.

Read also: Financial statements: it’s time to stop tinkering!

The EPM has thus contributed to changing the habits of the finance function: it has become global, demanding and unified. We are seeing more and more demand for core model solutions rolled out in international subsidiaries in record time to meet this need for internationalization and unified processes.

In a joint study by PwC and DFCG from 2017, the transformation of the finance function is seen as the combination of digital, human capital and internationalization*.

If we tick digital and internationalization, there remains the human capital which is gradually coming into line. This criterion is also considered one of the five success factors of a digital transformation according to the BCG(2).

A necessity understood by CFOs and their employees. As proof, 47% of financial directors of large companies(3) are looking for profiles with digital skills and 45% in SMEs and ETI favor knowledge of data exploitation and interpretation(4).

We therefore ask the financiers mastery of the functional content of the solutions in addition to the solutions themselves whereas before they were only asked for business skills.

Faced with the successes encountered, the financiers have become partly the VRPs of the EPM solutions internally so that they have been extended to functions other than finance: human performance, logistics… Management of the company as a whole and its uniqueness.

However, this idealized picture must be nuanced. Even if the EPM tools are powerful, Excel is not dead and remains an alternative for certain ad hoc analyses: 61% of financial executives surveyed declare to be dependent on spreadsheets for monthly closings(5) … even though this strongly contributes to slowing them down at the end of the month.

In fact, Excel even with the risk of error is reassuring and several solutions such as Anaplan, Tagetik, Onestream or PBCS are inspired by it with security, reliability, workflows and task automation in addition.

The recipe for a successful digital transformation

To succeed in your digital transformation, you must simultaneously master the processthe dataI’organizationthe solution and the strategy, and ensure a successful cocktail between EPM solutions, Excel and financial control that masters everything. There must also be a clear distribution of functions between the EPM, Excel and the other management systems (BI, data visualization, datamining) or operational systems (ERP, upstream IS), this from the scoping phase and the choice of solution. It is therefore important to take the time for reflection and implementation, the only vectors for a successful and revolutionary transformation.

New changes in the digitization of the finance function are underway such as augmented EPM avoiding the multiplication of tools necessary for the implementation of a performance management application or such as AI, predictive analysis RPA in particular to automate the most rudimentary tasks and allow the controller to focus on pure analysis, real added value for the management of the company. It will be interesting to see how the finance function will be further enriched.

To know more

Adama Bayo-Reel is Advisory Senior Manager at Konvergence Business Services. She accompanies financial departments on all subjects of transformation of the finance function: from performance management to change management.

[1] How to further reduce closing times, Option finance, January 9, 2017, CAC40 company deadline, https://www.optionfinance.fr/entreprise-finance/comment-reduire-encore-ses-delais-de-cloture.html

[2] The Five Rules of Digital Strategy, May 2019, https://www.bcg.com/fr-fr/publications/2019/five-rules-digital-strategy

[3] Turnover > 1,500m€ and > 5000 employees

[4] Priorities for 2019 of the Chief Financial Officer Actor of growth, PWC and DFCG, Study carried out on 300 financial directors, https://www.pwc.fr/fr/publications/fonction-finance/priorites-2020-des-directeurs-financiers.html

[5] Study carried out by Blackline and the IMA at the end of 2016, unveiled in July 2017, DAFMag, July 18, 2017, Infographic Financial closing: do spreadsheets slow down the process? https://www.daf-mag.fr/Thematique/business-intelligence-1244/Infographies/Combien-de-temps-prend-une-cloture-comptable–319409.htm

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