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Expanding Finance's Strategic Role

Expanding the role of finance in strategic planning will help companies set an

Effective strategic planning requires complete, accurate business information. Investment in business analytics tools has surged in recent years as new technologies have become

Effective strategic planning requires complete, accurate business information. Investment in business analytics tools has surged in recent years as new technologies have become available. With the competitive advantage proper analysis and planning can bring, it's essential for corporate finance departments to have a say in strategy meetings. Finance and accounting professionals are in a unique position to identify certain metrics and processes that will make business intelligence all the more impactful.

The baseline
The goal of any strategic planning session is to make good decisions about the direction of the company, and the only way to do that is to have all the relevant business data on hand in an easy to understand format. Beyond simple accounting, planning and analysis, finance departments can bring a different perspective to the strategic planning process, one based on an intimate knowledge of past revenue performance and a thorough understanding of the company's financial history.

Most companies have some form of process automation when it comes to collecting business intelligence, and are able to produce a variety of basic reports from enterprise risk management or customer relations management tools. While this can provide a basic outline of a company's performance and give executives a general idea of how the company can move forward, industry leaders typically have a more holistic approach. These organizations tend to completely automate their reporting processes, implement business-wide key performance indicators and utilize finance in a strategic capacity to make fully-informed planning decisions.

The finance team can impact departments across the company, from marketing and sales to operations, by delivering strategic insights that help each division set - and meet - their quarterly, yearly and long-term goals. For example, companies can look at data with the finance team to determine whether a target of 10 percent growth is realistic based on past performance and can figure out exactly what needs to be done - how many new clients are needed, or how many more units must be sold - to achieve that goal.

Best practices
One of the basic aspects of business analytics is its ever-changing nature. Processes evolve, and business environments change. As a company learns more about its competitors, the market and its own performance, its leaders will begin asking new questions and setting different directions during strategic planning sessions. Preparing for and accepting this change is essential to effectively utilizing business data.

Given the evolutionary nature of strategic planning, there are certain techniques companies should utilize to stay on top of the constant changes. One of these techniques is to break planning efforts down into phases. Starting out small will help businesses acclimate to a new way of looking at business information, whether it's delivering insights to different divisions or even simply approaching data from a new direction. From there, businesses can begin to expand their efforts.

When establishing phases for strategic planning, organizations should first establish which process or business metric they are trying to improve, whether it's revenues, leads, profits or some other aspect. Then, they should determine which department or departments will have the most influence over reaching this goal and establish what information they will need to move forward. Providing the pertinent information is one area where the finance team can be of particular help.

Businesses need to keep a few things in mind when deciding which metric to focus on improving. If, for example, a company wants to improve its cash levels, it will have to figure out what factors are in play (sales, payroll, etc.). Once those factors are identified, businesses can begin to take effective action to improve them using data provided by finance.

To learn more about leveraging technology to evolve the strategic role of Finance, Accounting and Treasury, register early for Proformative's upcoming technology conference, ProformaTech 2013.