In today’s rapidly evolving financial landscape, organizations are increasingly recognizing the need for digital transformation to stay competitive. As a seasoned financial expert with over 15 years of experience, I’ve witnessed firsthand the power of strategic investments in Enterprise Performance Management (EPM) solutions. PricewaterhouseCoopers (PwC), a global leader in professional services, has developed an innovative approach to revolutionize finance through EPM investment. Let’s explore how this strategy is reshaping the future of finance and driving business growth.
The imperative for digital finance transformation
The finance function is undergoing a seismic shift, driven by advancements in data analytics and processing capabilities. According to a recent study, 97% of executives have taken steps in the last five years to change how they create, deliver, and capture value. This statistic underscores the urgency for organizations to adapt and evolve their financial processes.
However, many companies struggle to capture value from digital transformation initiatives. The root cause often lies in the approach: embarking on transformation journeys without first redefining operational and management needs for the future. This oversight can lead to marginal improvements or overengineered solutions that fall short of expectations.
To address this challenge, PwC advocates for a strategic shift in perspective. Instead of viewing finance as a mere record-keeper, organizations should reimagine it as a strategic business partner and performance coach. This transformation requires finance teams to collaborate closely with cross-functional leaders, focusing on critical questions such as:
- What is the optimal accountability model?
- How can we accelerate and connect planning and forecasting processes?
- What new factors need to be considered as market dynamics shift?
- What data sources and frequency are required to support decision-making?
By addressing these questions, finance teams can lay the groundwork for a more strategic and value-driven approach to digital transformation.
Leveraging EPM for strategic finance transformation
Enterprise Performance Management (EPM) solutions emerge as a powerful tool to drive this transformation. Well-designed EPM systems provide agile forecasting, scenario modeling, risk mitigation, and enhanced decision-making processes. By implementing an “EPM-first” strategy, organizations can unlock the full potential of their finance function while paving the way for smoother Enterprise Resource Planning (ERP) transformations.
One of the key benefits of prioritizing EPM is its ability to bridge the gap between financial and operational data. This integration is crucial for generating actionable insights that drive business performance. For instance, a multinational company leveraged EPM to redefine its enterprise data model, resulting in a more efficient chart of accounts design and enhanced reporting capabilities.
Moreover, EPM solutions offer a faster path to value realization. While ERP implementations can take 18 months or longer, companies can start capturing value from EPM in as little as three months. This agility is particularly critical in today’s volatile business environment, where 34% of CEOs believe their average competitor will be out of business within three years if they don’t adjust their business model.
As an expert who has guided numerous startups through financial restructuring, I can attest to the transformative power of EPM in driving agility and predictive capabilities. By bringing together disparate data sets into a cohesive and integrated model, businesses can make more informed capital allocation decisions and respond swiftly to market shifts.
Unlocking the potential of AI and machine learning through EPM
The integration of Artificial Intelligence (AI) and Machine Learning (ML) into financial processes represents the next frontier in digital finance transformation. EPM solutions serve as an ideal entry point for organizations looking to harness these technologies, offering a low-cost, high-value approach to drive innovation.
Many leading EPM solutions now incorporate ML features, enabling finance teams to:
- Generate more accurate and predictable forecasts
- Model future outcomes considering financial, operational, and external factors
- Integrate planning models with a wider range of structured and unstructured data
The impact of these capabilities can be substantial. For example, a global technology company unlocked over $250 million in working capital by applying ML to granular customer and payment data, resulting in more accurate rebate forecasts and reduced accrual levels.
It’s worth noting that the implementation of AI and ML through EPM doesn’t require perfect data. In fact, an EPM-first approach allows finance teams to become first movers in the AI space, implementing predictive capabilities that can later be enhanced by a thoughtfully redesigned ERP system.
| EPM Capability | Business Impact |
|---|---|
| Agile forecasting | Improved decision-making speed and accuracy |
| Scenario modeling | Enhanced risk mitigation and opportunity identification |
| AI-driven analytics | Unlocking hidden insights and predictive capabilities |
Implementing an EPM-first strategy: Key considerations
As organizations contemplate the shift towards an EPM-first approach, several key considerations should guide their decision-making process:
- Vision alignment: Ensure a clear vision for the specific capabilities, processes, and operating model that will enable finance as a strategic business partner.
- Data model assessment: Evaluate whether the current data model supports the necessary insights for success in an evolving industry and business landscape.
- Reporting strategy: Develop a comprehensive reporting strategy that clearly defines the roles of EPM, ERP, operational systems, and enterprise data platforms.
- AI opportunity identification: Assess untapped opportunities to streamline insights or apply AI within the current ecosystem to drive immediate value.
- Cross-functional alignment: Collaborate with cross-functional teams to identify changes required to accelerate and advance forecasting processes in support of more agile decision-making.
By addressing these considerations, organizations can determine whether leading with an EPM implementation or starting with an ERP implementation and adding EPM capabilities later is the most appropriate path for their digital finance transformation journey.
As we navigate the complexities of modern finance, it’s crucial to recognize the interconnectedness of various financial technologies. For instance, the rise of digital wallets for small businesses is reshaping how companies manage transactions and cash flow. Similarly, blockchain technology is revolutionizing finance by enhancing transparency and security in financial transactions.
Moreover, the adoption of digital payment solutions in commerce is closely tied to the broader digital finance transformation, impacting how organizations collect and analyze financial data. By embracing these interconnected technologies alongside EPM solutions, businesses can create a robust ecosystem that drives financial excellence and competitive advantage.
In conclusion, PwC’s strategy of digital finance transformation through EPM investment offers a compelling roadmap for organizations seeking to revolutionize their finance function. By prioritizing EPM implementation, businesses can unlock rapid value, enhance decision-making capabilities, and pave the way for successful ERP transformations. As we look to the future, the integration of AI and ML within EPM solutions promises to further accelerate innovation and drive financial performance to new heights.
