Optimized budgeting and forecasting requires both human and digital intervention to be successful.
Effective budgeting and forecasting can be achieved with the collective participation of all departments in collaboration with finance teams. Finance leaders can augment the process by cultivating reciprocal relationships with department managers that provide a two-way intelligence pipeline converting data into insights on the ways they can grow value in the business. Accomplishing this involves integrating digital technology with workforce engagement and clear communication channels that encourage transparency.
Finance-Centric Models Create Silos
The traditional budgeting and forecasting role of finance departments revolves around adaptive allocation of financial resources to accommodate the operational and strategic imperatives of the organization. Using traditional spreadsheet analysis to crunch the numbers with various metrics and ratios to accurately quantitatively compute tangible financial needs independent of department heads. This finance-centric focus minimizes the expertise and insights offered by department heads, a rich source of qualitative intelligence. Feeling more like an audit mired in scrutiny, rather than a free flow of insights, department heads are often compelled into a closed, sheltered and insular defensive stance that further propagates the silo effect throughout the organization.
Connecting Data Pipelines
Like a complex plumbing structure composed of a maze of pipes, organizations have various platforms serving the various functions of the organizational ecosystem. Customer relationship management (CRM) platforms manage customer and sales data. Human capital management (HCM) platforms manage workforce data. Additional platforms including supply chain, accounting/billing, inventory management, scheduling and back office are rich sources of data. Connecting the data pipelines through the finance department is the first step towards eradicating the silo effect.
Automation Empoweres Human Capital
Augmenting data collection processes can be further integrated into each department, which would be a boon to department leaders, freeing up human capital to focus on productivity rather than data entry. This gains confidence and reciprocates participation from department leaders. Providing them access to the information equally and encouraging feedback further improves engagement and works towards cultivating stronger relationships that lift the stature of every manager. This galvanizes both participation and loyalty, as each is responsible for the success of the organization.
Technological innovations have transformed modern CFOs into digital apostles that embrace the gospel of digital. Digital doesn't discriminate. It feeds on all data, not just numbers. It hungers for every little piece of raw and seemingly insignificant data it can consume, quantitative, qualitative, tangible and intangible.
Integrating Artificial Intelligence
Augmenting the finance department with artificial intelligence (AI) powered data analytics platforms will serve to take full advantage of this raw data. Digital homogenizes information and pipes it through machine learning algorithms that power artificial intelligence platforms that metabolize oceans of raw data to generate data-driven insights and solutions. This valuable intelligence can be shared with organizational leaders encouraging further collaboration towards strategic goals.
The end result is a core data and analytics (DA) platform, which provides real-time intelligence and predictive analytics. Access to this powerful tool would be shared with department leaders. They can lever this information to spot and remedy inefficiencies to enhance processes that lead to improving productivity in their own departments, adding value to the organization.
CFOs can access real-time data to generate precision forecasts clearly. More importantly, they can spot and react ahead of the curve as landscapes show signs of contraction or expansion. The key word here is agility. Agility is bestowed upon CFOs and finance leaders when effective budgeting and forecasting processes are optimized. They empower the finance department to enable smart budgeting and forecasting virtually in real-time to provide rolling forecasts. This is the embodiment of the collaboration between human capital and digital operations to serve as drivers that not only meet objectives, but spawn new innovations along the way to exceed them.
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