CFO – with the C of ‘Continuous’

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A few forces that were at play these past few years have caused a perfect storm to drastically change the way finance departments go about their business. Disruption by versatile start-ups, the boom in financial and non-financial big data, and the refinedness of analytics tools have put much pressure on the classic annual report. So much, that it’s become almost impossible to maintain it as the central point around which the planning, budgeting and forecasting roles revolve.

There aren’t many companies that haven’t got an annual budget. Either we’ve seen it with others, or experienced it ourselves: that annual stress in the accounting department in December to get everything in order before a new fiscal year starts off. Apart from the fact that this annual reporting causes a lot of stress, it has also become a relic of the past. This,  in a time when organizations need to move faster, act more agile, and be more versatile. A recent study by research firm FSN (for which nearly a 1,000 senior finance executives were questioned) confirmed the obsoleteness of these annual reports for lots of companies. FSN notes that “many CFOs are all too aware that annual budgets are archaic and ineffective in a competitive market.”

Continuous planning as a game changer

The good news: a wealth of (financial, but also non-financial) corporate data, in combination with precise and powerful business analytics, allow for a game changer: continuous planning. This method brings with it a wide range of advantages, as the FSN report points out. Organizations are almost twice as likely to be able to forecast within 5% of earnings, compared with companies that rely on static forecasts. They are also “one and a half times more likely to be able to reforecast within one week, and are almost four times more likely to be able to respond more quickly to market change”.

Advantages reverberating throughout the finance department

What’s more, departments that have dared to take the leap towards continuous planning, also tend to perform well on other aspects that are needed for a future-proof finance approach. FSN reported that “organizations which implement a continuous planning process are almost twice as likely to engage more stakeholders in the process”. “And two times as likely to make more use of non-financial data.”

Want to know more about why companies are turning to continuous planning and how you can implement a truly effective continuous planning process?  Read Chapter 4 of the FSN report “CFOs Who Ignore Continuous Planning May be Putting Their Business at Risk” and find out.

If the above has sparked your interest in continuous planning or rolling forecast, but you don’t know where to start, consider taking a look at what IBM Planning Analytics can mean to you and your organization. Learn more here.