The short-term effects of the COVID-19 pandemic on global economies and society are plain to see: the temporary interruption of most production has had dramatic consequences for employment, and corporate financial planning and performance. However, the long-term consequences could be worse still.
Faced by a radically changed consumer market, many companies will be pressed to verify the medium-term viability of their offer, if they are to attract capital that is rapidly moving from one industry to another. The smart money will follow companies which can convert production lines and develop new business models. Normally these processes take time. But “normal” has taken on a new meaning.
Certainly the COVID-19 crisis has rewarded the transition to digital which is already in process at many companies, and confirmed the importance of a risk management strategy capable of interfacing with ESG (Environmental Social & Governance) issues to identify and implement consistent responses. In short, it has made it possible to generate value.
The office of finance has long been the subject of a digital revolution focused on various fronts. Companies have adopted different strategies at different speeds. Evaluating on which of these fronts our company is already active allows us to understand our ability to face the challenge posed by the pandemic and how much still needs to be done to transform this threat into an opportunity. Here are five key fronts:
1. Unified information systems for reporting, business intelligence and risk management
For every IT management issue the company has faced over the years, the solution identified and implemented at that time was the one considered the most effective. The result is a proliferation of systems and databases often managing the same piece of information. The best case is the duplication of data collection and maintenance, and a consistent failure to arrive at a single version of the truth.
The first step to solve this problem was the appointment a Chief Data Officer who has a complete, in-depth knowledge of such databases and is in a position to establish the best input regime to minimize costs. In the long term, a more radical structural solution will be required, involving a rationalization of existing vendors and platforms within the company. But not before the issue of software updating has been resolved, as well as the permanent elimination of the company’s legacy systems. The latest financial data management technologies are multi-purpose solutions, capable of interfacing with big-data and covering all phases of information processing, from data collection to the preparation of presentations and reports.
2. The primacy of cloud technologies over on-premise for flexibility, updating, and easy implementation
The use of cloud-based applications offers great advantages but requires a fresh vision when it comes managing IT structures. The management of the machines running the applications is entrusted to an external party which has to guarantee performance in compliance with its TOS (Terms Of Service). Choosing this provider and getting the terms right is therefore crucial, and the economies achievable when using a single contractor must be balanced against the risks – switching costs can be high when using a single supplier. This is mitigated by using a software solution that can be effectively implemented on multiple platforms to facilitate switching processes and, consequently, reduce risks.
3. The involvement of all platform users and awareness among those using supporting IT tools
The management of such pervasive and complex systems cannot be delegated to a single party. And while information providers will, as a result of system rationalization, see the time dedicated to powering these platforms reduced, it is equally true that in future they will be required to collaborate and be increasingly involved within the platforms.
To increase confidence in information, each user must be able to take “cradle-to-grave” ownership of data accuracy within their sphere of competence, validated by automatic workflows established within the process. Deadline management must be incorporated within the applications based on a minimum number of interactions and points of contact. The possibility to deploy corporate technological solutions easily, even with suppliers or external contacts will be crucial, whether they are information users (such as financial analysts) or contributors (accountants, actuaries, translators, etc.). An application that can replicate current data feed methods with a user-friendly interface, while incorporating the features mentioned so far, will be favored over less collaborative alternatives.
4. Artificial Intelligence and machine learning to support multi-scenario planning and risk assessment
A well-organized information structure is only the first step. Today, increasingly complex algorithms allow not only the automation of routines, but also to assist information users in interpreting certain phenomena, and proposing innovative analyses and results based on trends, correlations and probability calculations. Increasingly detailed multi-scenario analyses, constantly updated and revised recovery and impairment plans, constant, real-time monitoring of performance and timely feedback on corrective actions: the intelligence of business processes will be increasingly incorporated into applications and will constitute a true corporate property that will continue to produce value over time, beyond changes in management and strategies.
An application that leverages these technologies represents an investment that not only enhances the skills of its users but generates value from information.
5. Blockchain technologies, information management and impacts on privacy and security
The impacts of blockchain technologies on the way of doing business are still unpredictable. What is certain is that the systems that manage information within the company must be able to interface with each other seamlessly and guarantee the confidentiality and privacy of the shared data, while ensuring correct fruition and enhancement by all parties in the value chain.
Within this vision, the company will create value through constant communication with the outside world, and through sharing its present and future strategies and performance with all stakeholders. The transformation towards this new way of communicating and doing business must be based on an application capable of managing internal and external information flows with the methods and features described so far.
In the post-COVID scenario, the right financial information management application could be your best ally when facing future challenges, providing quick answers to ever-changing and unpredictable needs. The strategy of reducing budgets for the development of IT platforms or falling back on solutions only capable of satisfying contingent and short-term needs (without the ability to scale and spread the implementation of the solution itself), is short sighted in my opinion, and can only be harmful in the medium term.
(view this post also on CCH Tagetik blog)