By Pras Chatterjee, Senior Director of Enterprise Performance Management at SAP
As many of us get caught up this summer in the intrigue and suspense created by the characters and story lines of Game of Thrones there are parallels that can be drawn on how annual budgets, forecasts, and plans are also full of intrigue, anticipation, and unexpected findings and results. Just as in Westeros, where different houses strive to control the continent, financial planning at the enterprise level often comes with an interesting story line. While it may not reach the level of deception and intrigue seen on HBO Sunday nights, but there is a lot to be analyzed.
The days of creating an annual plan and then reviewing that plan 12 months later are over. The rate and magnitude of change today continues to increase, and the premium on being able to make better, faster, smarter decisions continues to rise. Similar to the power shifts on Game of Thrones(GoT), there may be major upheavals in your industry, in the economy, or in technology over the course of a year. If you haven’t thought about making adjustments to the changes in your world in real time, you’re at risk of missing major opportunities or warning signs.
Bending the knee to finance
Leading the dynamic planning charge is primarily the responsibility of the financial planning and analysis team, which reports in to the CFO. Their job is to manage everyone through the plans, collect the information at hand, and provide analysis powerful enough to set the direction of the company.However, this process is often disrupted, as most enterprises face departments, geographies, business units, and other groups that are disjointed and operate in silos. What’s key is that finance owns the plan. But as we know, a kingdom is only as strong as those who follow and “bend the knee” to finance.
One challenge enterprises face is integrating their financial plans. Integrated financial planning entails bringing together all elements of the organization as relevant contributors and stakeholders in the plan. Too often, departments work in silos: the marketing team has their budgets and tracks their possible spend; IT tracks equipment purchases and perhaps associated depreciation; sales and operations go through typical S&OP challenges. The office of the CFO needs to bring all these silos of data into one version of the plan that everyone can adhere to and see the big picture.
Even when departments are integrated and working as one, perhaps an even bigger challenge is market volatility. A recent study that looks at challenges faced during the planning, budgeting and forecasting process reveals that today’s changing business world (similar to the changing fates of our favorite GoT characters) was ranked as the number one challenge by a wide margin. Many organizations find that by the time they come up with a plan they are happy with, the plan is no longer feasible due to events that occurred while that plan was being composed. Lucky for the finance kingdom, there are technologies that executives can arm themselves with to help overcome these challenges.
Finance can stand tall – with credibility
To initially address these problems, dynamic planning gives the CFO the tools to bring credibility to the finance organization. The goal of dynamic planning is not just about minimizing the downside; it is also about maximizing the upside. It is difficult, if not impossible, to forecast, predict, or plan for unforeseen opportunities. By breaking your planning process into smaller consumable pieces, you’re better able to seize upon opportunities.For example, instead of estimating what the next 12 months will look like, break your planning process down into four quarters and adjust the plans as each quarter rolls off. Focus on the short-term while actively analyzing the results of your efforts. By monitoring your activities in the short term, you will gain the flexibility to affect change as your surroundings change. The result is greater accuracy, productivity, and profitability.
In addition to building flexibility into their plans, dynamic financial planners utilize advancements in technology – such as Enterprise Performance Management (EPM), Enterprise Resource Planning (ERP), and predictive analytics – to quickly access information and gain a better understanding of the impact of their actions.Through these modern tools, the CFO can stand tall, bringing everyone together by combining all the different budgets and forecasts into a singular set of results. No longer are financial analysts required to sit around and massage data to make it look a certain way. No longer does finance need to send spreadsheets and wait in hopes of correctly populated templates. No longer will finance fear losing credibility through presentations in which the numbers they present differ from some other presentation. No longer will finance report on yesterday’s results and effectively state the obvious.
Today, with the latest in financial technologies powered by dynamic planning, finance can rise and help drive the enterprise to forward. It’s time for finance to roar like the dragons they can be and make a fiscal difference!
UK seeks G7 consensus on digital competition after Facebook blackout
LONDON (Reuters) – Britain is seeking to build a consensus among G7 nations on how to stop large technology companies exploiting their dominance, warning that there can be no repeat of Facebook’s one-week media blackout in Australia.
Facebook’s row with the Australian government over payment for local news, although now resolved, has increased international focus on the power wielded by tech corporations.
“We will hold these companies to account and bridge the gap between what they say they do and what happens in practice,” Britain’s digital minister Oliver Dowden said on Friday.
“We will prevent these firms from exploiting their dominance to the detriment of people and the businesses that rely on them.”
Dowden said recent events had strengthened his view that digital markets did not currently function properly.
He spoke after a meeting with Facebook’s Vice-President for Global Affairs, Nick Clegg, a former British deputy prime minister.
“I put these concerns to Facebook and set out our interest in levelling the playing field to enable proper commercial relationships to be formed. We must avoid such nuclear options being taken again,” Dowden said in a statement.
Facebook said in a statement that the call had been constructive, and that it had already struck commercial deals with most major publishers in Britain.
“Nick strongly agreed with the Secretary of Stateâ€™s (Dowden’s) assertion that the governmentâ€™s general preference is for companies to enter freely into proper commercial relationships with each other,” a Facebook spokesman said.
Britain will host a meeting of G7 leaders in June.
It is seeking to build consensus there for coordinated action toward “promoting competitive, innovative digital markets while protecting the free speech and journalism that underpin our democracy and precious liberties,” Dowden said.
The G7 comprises the United States, Japan, Britain, Germany, France, Italy and Canada, but Australia has also been invited.
Britain is working on a new competition regime aimed at giving consumers more control over their data, and introducing legislation that could regulate social media platforms to prevent the spread of illegal or extremist content and bullying.
(Reporting by William James; Editing by Gareth Jones and John Stonestreet)
Britain to offer fast-track visas to bolster fintechs after Brexit
By Huw Jones
LONDON (Reuters) – Britain said on Friday it would offer a fast-track visa scheme for jobs at high-growth companies after a government-backed review warned that financial technology firms will struggle with Brexit and tougher competition for global talent.
Finance minister Rishi Sunak said that now Britain has left the European Union, it wants to make sure its immigration system helps businesses attract the best hires.
“This new fast-track scale-up stream will make it easier for fintech firms to recruit innovators and job creators, who will help them grow,” Sunak said in a statement.
Over 40% of fintech staff in Britain come from overseas, and the new visa scheme, open to migrants with job offers at high-growth firms that are scaling up, will start in March 2022.
Brexit cut fintechs’ access to the EU single market and made it far harder to employ staff from the bloc, leaving Britain less attractive for the industry.
The review published on Friday and headed by Ron Kalifa, former CEO of payments fintech Worldpay, set out a “strategy and delivery model” that also includes a new 1 billion pound ($1.39 billion) start-up fund.
“It’s about underpinning financial services and our place in the world, and bringing innovation into mainstream banking,” Kalifa told Reuters.
Britain has a 10% share of the global fintech market, generating 11 billion pounds ($15.6 billion) in revenue.
The review said Brexit, heavy investment in fintech by Australia, Canada and Singapore, and the need to be nimbler as COVID-19 accelerates digitalisation of finance, all mean the sector’s future in Britain is not assured.
It also recommends more flexible listing rules for fintechs to catch up with New York.
“We recognise the need to make the UK attractive a more attractive location for IPOs,” said Britain’s financial services minister John Glen, adding that a separate review on listings rules would be published shortly.
“Those findings, along with Ron’s report today, should provide an excellent evidence base for further reform.”
Britain pioneered “sandboxes” to allow fintechs to test products on real consumers under supervision, and the review says regulators should move to the next stage and set up “scale-boxes” to help fintechs navigate red tape to grow.
“It’s a question of knowing who to call when there’s a problem,” said Kay Swinburne, vice chair of financial services at consultants KPMG and a contributor to the review.
A UK fintech wanting to serve EU clients would have to open a hub in the bloc, an expensive undertaking for a start-up.
“Leaving the EU and access to the single market going away is a big deal, so the UK has to do something significant to make fintechs stay here,” Swinburne said.
The review seeks to join the dots on fintech policy across government departments and regulators, and marshal private sector efforts under a new Centre for Finance, Innovation and Technology (CFIT).
“There is no framework but bits of individual policies, and nowhere does it come together,” said Rachel Kent, a lawyer at Hogan Lovells and contributor to the review.
($1 = 0.7064 pounds)
(Reporting by Huw Jones; editing by Jane Merriman and John Stonestreet)
G20 to show united front on support for global economic recovery, cash for IMF
By Michael Nienaber and Andrea Shalal
BERLIN/WASHINGTON/ROME (Reuters) – The world’s financial leaders are expected on Friday to agree to continue supportive measures for the global economy and look to boost the International Monetary Fund’s resources so it can help poorer countries fight off the effects of the pandemic.
Finance ministers and central bank governors of the world’s top 20 economies, called the G20, held a video-conference on Friday. The global response to the economic havoc wreaked by the coronavirus was at top of the agenda.
In the first comments by a participating policymaker, the European Union’s economics commissioner Paolo Gentiloni said the meeting had been “good”, with consensus on the need for a common effort on global COVID vaccinations.
“Avoid premature withdrawal of supportive fiscal policy” and “progress towards agreement on digital and minimal taxation” he said in a Tweet, signalling other areas of apparent accord.
A news conference by Italy, which holds the annual G20 presidency, is scheduled for 17.15 (1615 GMT)
The meeting comes as the United States is readying $1.9 trillion in fiscal stimulus and the European Union has already put together more than 3 trillion euros ($3.63 trillion) to keep its economies going despite COVID-19 lockdowns.
But despite the large sums, problems with the global rollout of vaccines and the emergence of new variants of the coronavirus mean the future of the recovery remains uncertain.
German Finance Minister Olaf Scholz warned earlier on Friday that recovery was taking longer than expected and it was too early to roll back support.
“Contrary to what had been hoped for, we cannot speak of a full recovery yet. For us in the G20 talks, the central task remains to lead our countries through the severe crisis,” Scholz told reporters ahead of the virtual meeting.
“We must not scale back the support programmes too early and too quickly. That’s what I’m also going to campaign for among my G20 colleagues today,” he said.
Hopes for constructive discussions at the meeting are high among G20 countries because it is the first since Joe Biden, who vowed to rebuild cooperation in international bodies, became U.S. president.
While the IMF sees the U.S. economy returning to pre-crisis levels at the end of this year, it may take Europe until the middle of 2022 to reach that point.
The recovery is fragile elsewhere too – factory activity in China grew at the slowest pace in five months in January, hit by a wave of domestic coronavirus infections, and in Japan fourth quarter growth slowed from the previous quarter with new lockdowns clouding the outlook.
“The initially hoped-for V-shaped recovery is now increasingly looking rather more like a long U-shaped recovery. That is why the stabilization measures in almost all G20 states have to be maintained in order to continue supporting the economy,” a G20 official said.
But while the richest economies can afford to stimulate an economic recovery by borrowing more on the market, poorer ones would benefit from being able to tap credit lines from the IMF — the global lender of last resort.
To give itself more firepower, the Fund proposed last year to increase its war chest by $500 billion in the IMF’s own currency called the Special Drawing Rights (SDR), but the idea was blocked by then U.S. President Donald Trump.
Scholz said the change of administration in Washington on Jan. 20 improved the prospects for more IMF resources. He pointed to a letter sent by U.S. Treasury Secretary Janet Yellen to G20 colleagues on Thursday, which he described as a positive sign also for efforts to reform global tax rules.
Civil society groups, religious leaders and some Democratic lawmakers in the U.S. Congress have called for a much larger allocation of IMF resources, of $3 trillion, but sources familiar with the matter said they viewed such a large move as unlikely for now.
The G20 may also agree to extend a suspension of debt servicing for poorest countries by another six months.
($1 = 0.8254 euros)
(Reporting by Michael Nienaber in Berlin, Jan Strupczewski in Brussels and Gavin Jones in Rome; Andrea Shalal and David Lawder in Washington; Editing by Daniel Wallis, Susan Fenton and Crispian Balmer)
UK seeks G7 consensus on digital competition after Facebook blackout
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