Corporate Financial Forecasting Webinar
Advances in technology are creating opportunities to realize the benefits of creating better alignment of
This Corporate Financial Forecasting Webinar video is from the Proformative webinar "Financial Planning, Budgeting and Forecasting" held on August 21, 2012. The webinar features presentations from Rob Frascone, Solution Consultant,
Corporate Financial Forecasting Webinar
"A couple learning objectives. The bottom line is today we want to share a number of best in class practices in today's world of budgeting and forecasting. We're going to be covering a lot of ground in terms of what companies are doing on that front. And we'll hear about what one company did, from one of the folks who's in charge of budgeting and forecasting at that company.
So, without further ado I'd like to go ahead and get us on that path. Starting us off this morning is Rob Frascone, Solution Consultant at Host Analytics. Rob brings to Host Analytics over 14 years of experience in
And with that, Rob, I'd like to invite you to take it away.
Rob Franscone: All Right. Thanks, John. I just wanted to give everyone an overview today of what we're going to be talking about. Of course, the topic is financial planning, budgeting and forecasting. But to narrow it down a little bit, I'm breaking up my presentation into a couple of different perspectives.
One, I want to give you is our perspective on what we've seen as the evolving role of finance. How have finance and finance departments gone from number crunches and data gatherers and report preparers to true business partners. Number two is talking about some best practices that can really get you there to that Nirvana of building those relationships with the business, by being a true business partner. Being involved in the strategic decision making process. And number three is really the
underpinning of the whole presentation. How do you leverage technology to get you there? So that's essentially what we're going to be talking about today.
So, when you think about the evolving role of finance, I'm sure we've all thought about it over the years in our
When I look back through my career, and I looked back about ten years ago when I was in corporate finance with a large publicly traded software company and I remember how backwards-looking our perspective was. We had so much focus on closing the books and consolidating all the data that we barely had enough time to prepare our historical reporting for our public company reporting for the FCC, etc. That we had no time at all to do any real analysis or any true budgeting and forecasting. Because of all that, we just weren't seen as a business partner really at all. We were all focused on just reporting those financial results.
So anyway, you fast forward a little bit to now, and you can see that that role is changing. And the focus is changed from that of historical results and auditing to much more of a proactive business partner approach within the organization. I think the biggest reason for this is the business demands it. It has to happen to survive in today's environment. It's a different world that it was 10, 15, or even 5 years ago. The business requires that finance be it's partner, to model out, to look out in the future, to help it understand, most importantly. What are the implications of all the different courses of action going to be? What do they look like so that you can make an informed decision when the time actually comes?
To do all this, you need data and the data needs to be much more real time. It's no longer good enough to look out weeks or months. You need to be able to look at the data in a much more flexible manner. That means you can't look at in a single dimension anymore by cost center and accounts. Thankfully, there have been advances in terms of technology that will make this possible.
So the trend is that finance departments are moving away from focusing on historical results. They're focusing on driving business performance and profitability and really driving business results. The focus of this webinar really is that. How can finance leverage technology to enhance their evolving role as they become more involved in that strategic decision making process?
So, we've talked to a number of our customers and prospects and we do on a regular basis. We have discussions with them, we ask them how their businesses are going and what their planning process looks like. So I just want to share a little bit about what we're hearing there. What we've found is they're are a lot of issues that finance departments are facing. These issues are really serving as barriers to finance departments serving as strategic partners within their organization. We need to break down those barriers or kind of propel them forward into that particular role.
So, I want to just kind of walk through some of these things. Some are pretty basic in nature. With an Excel-based planning system, you have version control issues, broken links and you have errors and some of these errors, there have been some studies that have indicated that 80% of plans done in Excel have some kind of error that organizations don't even know about because they can't find those particular errors. So known errors and unknown errors.
What does this lead to? It leads to long nights, it leads to staff burnout because it's really just not a process. In terms of reporting deficiencies, there's a true inability to be able to just present the information in a board quality format. Some of this is related to problems associated with getting at the data just to have it available for reporting and analysis and the desire to be able to quickly answer questions that management raises. We have true ad hoc reporting tools where you can drag and drop
dimensions to get an answer to a question very, very quickly without the help of IT.
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In addition, just being able to drive visibility and accountability through your organization by utilizing data visualization and scorecarding capability are inherent in dashboards.
Scenario modeling. How do we model out these large events that may or may not happen? Acquisitions, new product lines, new channel partners. How do we get a view of that with good detail data so that we can make decisions ahead of time that are accurate. That can add value to the business.
Finally, the strategic plans are not really driven to operations. There's still a true disconnect between the
As you can see, as we solve some of the business, or the process efficiency related issues, we begin to move closer to improving the overall organizational performance. So the two are really inextricably tied together.
So when you think about the evolution of financial applications that kind of get us to today, we kind of go through a couple of different generations. The first thing I want to say about all that is that technology is really helping to really change that landscape. If you think about the first generation of financial planning applications, it really
just was focused on just generating budgets. Just basic data aggregation. So it was pretty basic functionality. It didn't really allow much time for an actual review of the data that was being entered and aggregated. If there was just a small amount of time left after all that work was done, for just a little bit of review, the people were typically happy. With that came simple consolidation, really basic iteration control. Just having the core ability to manage the process to a system and just rudimentary dash-boarding and reporting.
Most of the first generation was really comprised of, just first generation apps, the financial apps, and Excel. That really made it up. We move into the second generation of financial applications and we kind of add on top of what we had originally. So we just kind of take the next step on top of that core system or Excel based planning tool that organizations were using and we built in some basic modeling and drivers into that process.
So we had the beginnings of being able to analyze different scenarios or just be effective certain changing drivers in that process. Certain things like reducing operating expenses by 5% and being able to see that flow through to your business, to your P&L, your cash flow and your balance sheet. Early on was just the beginnings of being able to get to that point where you could try to model out scenarios to make better decisions when the time came.
Again, those second generation applications were typically more advanced. The Excel applications for just the second generation of the core financial applications. The third generation is really where we're at today. What that really includes is software as a service based CPM solutions or
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