By Nick Nesbitt, Managing Director at Tagetik UK
Today’s finance organisations are riddled with fragmented manual processes and CFOs are increasingly concerned about undetected errors (including their own), lack of collaboration and accountability and inefficient workflow.
Last minute changes and inconsistent information are two major causes for errors. Too many finance functions rely on data collected during in-person meetings and often from more than 6 different sources.
Yet, manual processes are not the only problem. Multiple contributors, compliance demands and mounting deadlines add to the stress too.
So, how can finance teams best manage their external reporting process and avoid errors? The answer may well lie with technology.
Getting your processes right
Producing the company results is a time consuming and highly stressful exercise which unfortunately doesn’t end when financial statements get approved. There is still the process of communicating the results to your stakeholders, from the executive team to the board of directors, investors and regulators.
And they want more than just accurate numbers. They also want to read the story that the numbers tell about the business. If this weren’t enough, each stakeholder has a different point of view and this makes it challenging and potentially risky to meet the needs of everyone.
Communicating with external stakeholders involves different departments across a company, from finance to HR, Risk, IT, etc. and can take different forms that can either be a press release, an investor deck or a board book.
When data is manually inserted into a system, there is always a degree of risk involved. If numbers from disparate, incompatible operating systems or applications need to be recombined into another, versioning issues arise. Questions may be raised concerning accuracy and even the objectivity of data may come into question if it passes through too many layers of hands.
It’s the finance team’s responsibility to pull together all the data from the various departments. The problem is, finance doesn’t own the data so tracking it down can be time consuming and error-prone.
Workflows and audit trails increase accountability and decrease risk. It is therefore essential to give the content and consumers of your reports alignment, accuracy and confidence.
The worst part of the reporting process is that is has to be done over and over again. It’s not a one-off operation but instead happens every month and every quarter. It’s a time consuming, manual and repetitive process that takes away from other value-added activities.
And the reliance on manual processes can lead to a lack of data consistency and control. With regulatory mandates intensifying the need for change, having the right systems and processes in place in the form of a reliable, unified corporate performance management platform, can be the solution to reporting process headaches and a cure for CFOs sleeplessness.
The right platform shouldn’t require major technology investments or significant process redesign as you should be able to easily map it into your existing IT architecture.
Automating your reporting process means having one source for multiple reports, one database for accuracy and consistency, a repeatable process that saves time and resources, the financial intelligence to ensure accuracy and workflow to manage many people across many departments.
An effective unified system should enable all the above allowing you to communicate your numbers to all your stakeholders accurately, timely and simply and, by doing so, to reduce your financial reporting risks.Automate and turn your data into a winning reporting process for your company.
Box out: John Hancock/Manulife case study
Manulife, a leading financial services group based in Canada, acquired US insurance leader John Hancock in 2004 to become one of the largest insurance companies in the world. With different processes and regulations in North America, it was increasingly difficult to manage all of the reporting so, in 2011 the organisation began to focus on how to improve financial reporting processes across entities. Challenges included multiple reporting requirements and a reliance on manual processes. For example, data provided by decentralised business units for the same footnote needed to be consolidated manually. To add to the complexity, finance teams in each country were using different processes. The Canada team used embedded Excel files while the US team manually updated all numbers and text, resulting in an inconsistent financial statements reporting process. Another problem was that only one user at a time could update a document.
In September 2011, the company formed a project team to identify a set of goals and begin the search for an automated reporting solution. The plan was to implement a solution in 2012 for the John Hancock unit in the US and roll out to parent company Manulife in 2013.
The team’s overarching objective was to simplify the financial reporting process. A critical goal was to create one source of the truth for producing all financial statements. The reporting solution also had to integrate with Lawson’s general ledger system. The project team also wanted to ensure consistency and standardisation across all financial reports without error-prone and time-consuming manual work.
In January 2012, the company selected a Collaborative Disclosure Management (CDM) solution with advanced functionality.
In March 2012, the team documented and reviewed business requirements and implemented the CDM in a test environment. Next, the team began testing, building reports and training. The company also established a working group of super users, including IT and financial reporting personnel.
In May 2012, the CDM software was officially implemented. Leveraging the existing Lawson general ledger system and Essbase database management system, the team created a second data mart so that all financial information could be uploaded into a central repository. Over the following months the project team focused on generating nine reports, which included multiple sets of audited US GAAP statements, audited statutory reports which are filed with insurance regulators and National Association of Insurance Commissioner (NAIC), and unaudited footnotes included in regulatory filings with insurance regulators and NAIC. Within six months, the company had trained staff, created all requirements and started generating financial statements.
In early 2013, the organization began using the CDM for additional John Hancock reports, including multiple sets of management discussion and analysis (MD&A) required by the NAIC and insurance regulators as well as internal quarterly management reporting for the audit committees and board of directors. By the end of 2013, 96 people at John Hancock were accessing the software and the finance team was producing reports involving three different basis of accounting methods and 15 legal entities.
In addition, Manulife began using the CDM to produce its annual and quarterly interim financial statements. By early 2014, Manulife was also using the CDM for the MD&A in its quarterly reports to shareholders and for its press releases.
Today, John Hancock/Manulife has a central repository for all financial reporting information. The data collection process is much simpler and the organisation has a more controlled environment where users know exactly where to go. The CDM also allows to continuously monitor the data with built-in checks to make sure it balances before anything is uploaded from the general ledger.
Processes are much more streamlined and standardised. For example, business areas have standard templates that allow them to update their data during the quarterly or annual close process, resulting in greater consistency across financial statements.
The organisation has developed a very strong group of expert users on North America’s finance teams. The group’s efficiency has helped expedite the management review process and has significantly reduced reporting time. For example, the team was able to issue John Hancock’s 2013 financial statements four days earlier than issued in 2012.
Going forward, the project roadmap includes leveraging the CDM’s linking functionality between various Manulife reports and utilising the software’s XBRL capabilities and implementing new job scheduling functionality. So many reports run back-to-back and these can take 15 to 30 minutes each to run. The CDM helped create a scheduling function that actually will allow jobs to run overnight. When the team arrives in the morning, financial statements will be updated and ready for management to review.
Nick Nesbitt – Managing Director
An established and seasoned consulting services leader, skilled in creating, running and leading successful Performance Management delivery and implementation.
Nick has worked in the CPM market space for approximately 18 years after starting his career in accounting with Arthur Andersen. The last 10 years have seen Nick operate as a consulting leader, managing large CPM technology practices in supporting and delivering software vendor solutions, most notably Cognos and Hyperion. His career has incorporated working for a number of the large SI consultancies, specifically Accenture and IBM Global Business Services, where he was involved in selling and delivering software and consulting solutions across a wide range of industry sectors. His role at Tagetik has seen Tagetik UK & Ireland grow substantially in terms of successful new customers and software and consulting revenues. Most recently, Tagetik UK & Ireland was awarded Tagetik Best Performing Business Operation for the second year running.
How to use data to protect and power your business
By Dave Parker, Group Head of Data Governance, Arrow Global
Employees need to access data to do their jobs. But as data governance professionals, it’s our job to protect it. Therefore, we must perform a fine balancing act to weigh robust data protection against the productivity of workers who need the data to maintain business-as-usual working processes.
Data grows exponentially, and most organisations will admit that they simply don’t know what data they have, where it is, and the controls that exist around it. This creates 2 challenges:
- Burgeoning amounts of unstructured data makes the business increasingly vulnerable from external attackers or internal data breaches.
- Because data is the key to understanding a customer’s wants and needs, if the business can’t identify its data and unlock its value, it’s at a competitive disadvantage.
As a European investor and alternative asset manager, here at Arrow Global we take care of £50bn of assets and own a data estate exceeding 160TB. How we manage our data is key to our success. We understand the difficulties involved in opening up environments to allow people to work productively, while at the same time locking them down to protect our organisation.
When it comes to analytics, I believe that Arrow is highly proficient because we employ a talented team of data scientists. But even for us, the sheer volume of raw and processed data, that resides in both our structured systems and unstructured data repositories, has the potential to put our business at risk.
We know there’s always more that can be done to strengthen our security posture and ensure regulatory and contractual compliance, while at the same time using our data to drive the business forward.
Data protection isn’t just about compliance
For many organisations, data protection has centred on demonstrating compliance with the GDPR. At Arrow, our efforts have gone one step further to include our contractual exposure.
Being a more mature data organisation, we had previously tried to develop an application in-house to manage our data estate. However, with 160TB across the company in production data alone, we simply couldn’t achieve the scale we needed to handle the sheer volume of data. Of course, the volume is just the start – once you know what data you have, you then need to be able to categorise the data and put it into a structure, so the business can analyse it for a specific use case.
We knew we needed to go to market to find an industrial-strength data discovery product to replace our in-house application. By aligning our choice of product to our overall IT and change strategy, meant that ultimately, we ended up with a far better outcome than we’d anticipated.
Position data as both a risk and an asset
Data touches every part of an organisation, so when it came to building a business case for buying-in a data discovery software platform, we approached it in a way that would speak to different people at the same time. We did this by posing the question:
“What do we want to do with data in a way that is GDPR-compliant, contractually-compliant and enables us to better service our clients?”
These are the black and white tests of data governance – to recognise the importance of securing and protecting data. They’re applied in a way that enables us to commoditise data and use it to drive the business forward, by forcing us to consider how we would use the data – for example, creating value-based pricing for our clients.
In aligning the business case to initiatives that were already priorities within the boardroom, we knew that we’d gain the attention of the senior leadership team and it would be easier to get the buy-in and budget we needed. And in the end, everyone wins – we get what we need to protect the data, and the business gets to distil the data’s value to better meet our customers’ expectations.
Get visibility of data at scale
For us, things got really exciting once we were able to see all of our data at scale. We chose Exonar because it allowed us to discover our data in ways that other products couldn’t. And the interface between the user and Exonar meant that everyone – both technical and non-technical users – could understand the technology and the findings it revealed.
When we saw exactly what data was in the estate, where it was and who had access to it, data security became much easier and the risk of data being compromised was dramatically reduced. We can see exactly where the vulnerabilities are and restructure how our data is stored to strengthen security. Then over time, we can use search, workflow and analysis to optimise the infrastructure and continually identify new areas to improve.
Commercialise the data
From a wider-business perspective, once people can see the data, they can start asking “What if…” to query it and distil its value. But it’s more than just the data itself. It’s not uncommon for data relating to the same thing to exist in unconnected systems across the business. For example, customer interactions and incidents or events.
Exonar is capable of joining the dots in disparate data sets. By stitching these data sets together, we can get a better overall view of our customers and use the outcomes to think of new, different or better ways of serving them through enhancing or adapting our offerings.
Why other financial services businesses should also take a smarter approach to data
- By changing the way you approach data, you can use it to protect and power your business and the people you serve.
- By positioning data as both a risk and an asset, you elevate its position to give it priority in the boardroom. Ultimately, it’s data that helps the business make informed strategic decisions about how to strengthen its competitive advantage.
- By gaining visibility of data at scale, you can see exactly what data you have and where it is. This gives the business confidence about the actions needed to ensure it is secured in both a regulatory and contractually compliant way, and that people are doing the right thing with data at all times.
- And joining different data sets provides you with a single view of ‘X’ within your data, no matter where it is. Helping to support your wider-business strategy and priorities, it gives you the information you need to secure a business advantage and generate value.
How business leaders can find the right balance between human and bot when investing in AI
By Andrew White is the ANZ Country Manager of business transformation solutions provider, Signavio
The digital world moves quickly. From keeping up with consumer behaviour patterns, to regulation and compliance, the most successful organisations are always on the cutting-edge of technological developments.
However, when it comes to investing in artificial intelligence (AI), a hard and fast strategy does not guarantee a top spot amongst the league of tech greats. Instead, it pays to take a considered approach to balancing reliance on automated processes with a human touch. Why? Because creative and strategic thinkers are the true propellers of innovation; automation is simply the enabler.
The International Monetary Fund (IMF) developed the ‘Routine Task Intensity’ (RTI) index as a measure of which processes are likely to benefit most from automation. According to this metric, jobs requiring analytical, strategic, communicational and technical skills score low on the RTI index, while simple, repetitive tasks scored highly.
The lesson for business leaders here is simple; your digital investments are just as important as your stake in talent. When deciding which processes to automate, start simple, and remember to value the skills and potential of your people.
Keep customer-centricity at your core
Customer-centricity means that every business decision, dollar spent and new hire is centred on one question: how does this benefit my customer? Investments in AI are no different. To be truly successful, they must have a customer-focused outcome.
Where companies get this wrong is by implementing cost-saving measures or ‘copy and paste’ software that fails to improve the customer experience – often having the adverse effect.
Take the virtual chat-bot, for example; if implemented poorly, it can send your customers into a frustrating and seemingly infinite cycle of dead-ends. The modern consumer is far too digitally savvy for this shortcut, and will quickly move onto the next merchant offering a more seamless customer service experience.
To guarantee your investments are delighting rather than infuriating your customers, it helps to take an outside-in perspective of your business processes, aided by Customer Journey Mapping (CJM).
Before you commit to digital investments, CJM can trace and map each customer touchpoint, signalling pain points or conversion rates throughout their journey. These data-driven insights lead you to the areas that would benefit the most from automation, instead of implementing a broad band-aid solution.
Avoid the ‘set and forget’ method
When investing in enterprise-wide AI, the ‘set and forget’ method rarely works. Real transformation requires an ongoing dedication to refining and improving AI-driven processes, as well as adapting them to the evolving needs of your customers. This is the best way to achieve customer loyalty, by proving that your organisation listens to, and understands its users.
A human perspective is invaluable here, paired with process mining – a method that thrives on finding process inefficiencies – to create a consistent feedback loop of improvement.
During periods of uncertainty, customer loyalty is everything, so aim to protect it at all costs.
The power of your people
The rise of automation can be linked to the corporate world’s obsession with speed and efficiency. However, the psychology behind this goes deeper than being the biggest and fastest producer; it’s also about reallocating resources into attracting and retaining the brilliant minds that drive companies into the future.
When communicating digital change, it’s critical to highlight the valuable impact AI has on augmenting jobs; removing the burden of mundane, repetitive tasks and allowing for more strategic skill-sets to shine through. For lower-skilled workers, invest in upskilling or re-education where possible.
Successfully rolling-out digital transformation plans means that every employee across all tiers of your company understands the value of AI. The starting point here is education to achieve buy-in. Change communications must be accessible, constructive and value-focused, supported by key culture influencers who champion automation within teams.
Enterprise-wide buy-in is an important element of refining and improving digital processes, as cross-functional collaboration can offer valuable insights into common pain points or inefficiencies ripe for automation. Supported by process mining, collaboration provides a holistic view of how each investment will impact other processes. There is no point investing in automation that streamlines one process and makes another more people-centric, so be sure to take a balanced approach to your investments.
Remember, AI is not about creating an army of robot workers; it’s about increasing efficiency and productivity so that an organisation, and its people, can work smarter.
Are you a fighter or a freezer? The 4 “F’s” of Surviving Danger
By Dr.Roger Firestien, Author of Create In a Flash.
The fight, flight, freeze survival response – or FFF for short – is designed to mobilize our brain and body to fight an enemy, run from a tidal wave or freeze to hide from a predator.
FFF is how humans react when they encounter a dangerous situation. It is a primal response that happens instinctively even before we are able to think about the situation we are confronting.
The FFF alarm causes our brain to focus on negative memories, probably to scan them to avoid repeating dangerous situations and negative outcomes. We get tunnel vision as our pupils dilate to increase our focus and long-range vision, but as a result we lose our peripheral vision.
Humans use the FFF response and so do organizations.
When organizations encounter dangerous situations, like, say, trying to survive a global pandemic, they can respond by either fighting the situation, fleeing from the situation, or freezing and waiting for the situation to pass.
I would like to propose a fourth strategy for organizations to deal with a danger like the pandemic. It is the fourth “F.” The farm response. More on that later.
What kind of organization is yours?
The fighter organizations were the ones that fought the idea of a global pandemic or pushed back against the research that reported how serious the virus was. Think of the meat processing plants that didn’t provide proper protective gear or the religious organizations that refused to take a break from large services.
The results were catastrophic for the organizations and deadly to the employees and worshippers.
It is pretty easy to identify the fleeing organizations. You don’t see them anymore. Unfortunately, this is the organization that just doesn’t have the resources or the energy to fight. You will recognize them by the “For Rent” signs in the windows of the buildings they used to occupy.
The organizations that freeze are a little more difficult to identify. They are still around but are frozen by fear. They are the organizations that, although they are in a position to move forward, are too frightened to take a risk or even look at the periphery of their business. Their tunnel vision blinds them to opportunity. The freezers hide and wait for the danger to pass. They are the ones who miss out on possibilities.
For example, if you are in the business of supplying concessions to sporting events, airports and national parks, your business is in deep trouble now. So, what are some ways to keep people buying food and drinks with so many venues closed?
Many national parks are now open and visitors need to eat. How can you sell food while supporting social distancing? Answer: Sell picnic meals to your patrons. And, sell a blanket that commemorates the park that diners can spread out and have lunch while social distancing with their families. Then, they’ll keep the blanket that reminds them of their visit to the park.
Sound like a good idea? It sure does. You can keep your park concession business, allow people to social distance and add to your product line with that commemorative blanket. Did the company implement the idea? Unfortunately, they did not. They froze and missed the opportunity.
However, businesses are finding ways to optimize their organization and capture opportunities. They are the farmers. The farmer organizations study the situation, just like farmers study the weather and the land. They look at the resources available to them and get to work.
Farmer organizations pivot and get creative.
Distillers, who before the pandemic, were making vodka, whiskey, gin and other spirits quickly changed their operation from distilling booze to distilling sanitizer.
Telemedicine, which had limited acceptance before the pandemic, almost immediately became the accepted way to deliver care. Now, the doctor comes to you.
Fitness trainers are conducting their sessions via Zoom or in person outside on sidewalks in front of their gyms so they can social distance.
My favorite ranch, SK Herefords, sells their beef at local farmer’s markets in the Western New York area. This spring when the large packing houses shut down and grocery stores were limiting the amount of beef customers were able to buy, my farmer friends were there at the markets with locally produced farm-raised beef. Sales soared and demand skyrocketed.
Why? The farmers were ready. They used their resources and were not afraid to optimize them in a rapidly changing and volatile environment. Farmers live with constantly changing weather conditions and market prices and are accustomed to rapid change.
To operate with constant change, all of us, like farmers, need to be constantly creative. Phil Keppler, my philosopher farmer friend from SK Herefords says, “Creativity helps you to not look at things as a problem. It’s trying to find the solution – and that’s the exciting thing about it. Things aren’t problems anymore. It’s just difficult situations and you’re trying to find a solution to that situation.”
A good mindset for what our world is experiencing now… it’s a difficult situation and we are creating solutions daily.
Fight, flight, freeze or farm. What kind of organization is yours? And, what can you learn from “the farmers?”
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