Workday held its first in-person Rising user group meeting since 2019 in Orlando. Three topics are worth commenting on: Workday’s Extend offering, its industry accelerators and its progress with the Workday Adaptive Planning offering.
Organizations do not live in a vacuum and things happening outside their walls have a direct impact on how they perform. So, it is essential for them to incorporate external data in their forecasting, planning and budgeting, especially for predictive analytics and machine learning (ML) to support artificial intelligence (AI). I use the term external data to include any information about the world outside an organization (including economic and market statistics), competitors (such as pricing and locations), and customers. Until recently, it was adequate for organizations to regard external data is a “nice to have” item, but that is no longer the case. External data is necessary for many functions, including useful and accurate competitive intelligence used by sales and marketing groups. It is also essential for the effective applications of AI using ML for business-focused planning and budgeting and predictive analytics.
General Omar Bradley is credited with saying, “Amateurs study strategy, professionals study logistics.” This is a battlefield commander’s perspective on the often-overlooked importance of mastering the nitty-gritty in achieving military objectives. I think the same is true when it comes to data in business computing because, in my experience, it is often an overlooked or secondary consideration.
The lockdowns of 2020 forced accounting departments to adapt to managing their close-to-report cycle without face-to-face contact, prompting many to adopt digital technologies to facilitate the process. It gave further impetus to the digital transformation of the department, which aims to eliminate unnecessary manual tasks such as consolidations and reconciliations using software automation. And, rather than looking at the close as a set of discrete tasks, Controllers and CFOs increasingly are managing the process as a connected stream of responsibilities from pre-close activities to creating and publishing financial, management and external reports. This approach is consistent with what Ventana Research calls continuous accounting.
Especially in the United States, baby boomer retirements and fewer graduates with accounting degrees is posing a growing challenge to finance department executives in attracting and retaining the best accounting talent. The solution, which may not seem obvious, is to make accounting cool, again.
“Digital finance transformation” became an even more important topic over the past two years as finance and accounting departments have had to cope with an unrelenting set of new challenges that have had a profound impact on business operations, financial markets and regulatory environments. Digital technologies enable organizations to cope with change and improve performance by increasing efficiency, reducing risk, achieving greater visibility into opportunities, shortening process cycles and completing core processes. Digitizing department operations helps attract and retain the best talent because professionals spend less time on mechanical, repetitive tasks. Unfortunately, our research suggests that transformation is more talked about than done. I assert that by 2025, only one-third of finance departments will have achieved a level of technology competence to be described as digitally transformed while the CFOs of those that do will have greater influence in their organization's management.
Environmental, social and governance issues have grown increasingly pressing over the past few years as investors and government entities urge organizations to measure and disclose ESG metrics. I’ve already covered the broader topic as it relates to external reporting and how financial planning and analysis groups are likely to own this mandate going forward. (It’s mainly been a marketing and public relations effort up to now.) FP&A departments are also likely to be charged with responsibility for internal ESG analysis and reporting, because to achieve environmental and social goals, organizations will need to assign specific objectives to individual business units and their responsible parties. I assert that by 2025 more than one-half of corporations required to comply with ESG reporting will centralize responsibility for preparing related reports and filings with FP&A to achieve accuracy, control and efficiency objectives. To do so, FP&A groups must immediately establish a data management strategy consistent with its targeted ESG analysis and reporting approach.
Although the digital transformation of the finance department was a topic of discussion before 2020, it became a front-and-center issue as organizations locked down and in-office interactions became impossible. Finance and accounting departments were immediately confronted with a challenge because of their limited adoption of technology that would support a virtual working environment. As our 2019 Office of Finance Benchmark Research found, they are technological laggards: 45% are at the tactical or lowest level of competence in using technology across multiple processes and functions, while only 12% are at the highest. In my experience, many finance and accounting professionals and those running the department do not necessarily think that such competence is necessary, but this thinking is outdated because, increasingly, technology is the only practical way to address the department’s responsibilities (for example, the new revenue recognition for contracts accounting standards). To gain full advantage of technology, finance and accounting organizations must become “fast followers,” avoiding the bleeding edge but breaking the habit of waiting until the last possible moment before adopting proven advances.
Since its inception 20 years ago, Ventana Research has advocated for a shorter accounting close because it can improve the performance of the entire organization, not just finance and accounting. An important benefit of a shorter close is increased staff time for analysis and the preparation of reports and narratives that improve communications with the board and outside investors. Similarly, the department can provide those in operating roles the financial and managerial accounting results to highlight opportunities and issues they must address.
We conducted our recent Smart Close Dynamic Insights Research in part to assess to what extent the substantial disruptions of the pandemic have impacted the accounting close. When office lockdowns began in the first quarter of 2020, many finance departments were challenged by having to do their quarterly close remotely without their normal face-to-face interactions. In the United States, the Securities and Exchange Commission was so concerned that corporations would be unable to meet their filing deadlines that they gave registrants carte blanche to extend their filing if necessary. As it turned out, only a relative handful did, and all but one of those was based in China; but for many, that first calendar close required a heroic effort. Since then, organizations have made concerted efforts to adopt and use technology to enable them to operate resiliently under any conditions. Our research finds that while organizations have to some extent adapted to operating a more remote working environment, progress toward a faster close has been elusive. The research also confirms that organizations that use technology effectively to automate processes are better able to complete their close sooner.