We are pleased to welcome Mr. Dean Boyer as a guest to the Jedox Blog for our series on “Managing Uncertainty”. Mr. Boyer is a Director of Technology Services at Marks Paneth LLP, a premier accounting firm based in the United States. He shares his expertise on how an EPM solution supports managing economic uncertainty, particularly in times of crisis.
What does your economic forecast look like for the foreseeable future? The global crisis that triggered stay at home orders and lockdowns around the world has had a clear impact on our economy. This will eventually come to an end, which means businesses need to start planning now how to address the impact of this crisis and how they intend to recover.
Turning Data into Insight
The U.S. government expects to jumpstart the economy with a two trillion dollar stimulus package. The unknown and uncertain factor is whether it will be enough? Businesses need to be proactive and begin to plan for how to address the impact on their business and their recovery. The good news is that before COVID-19, the majority of organizations were collecting data about their businesses, and that data can now provide much needed insights into how to adapt and recover.
Agility, Resiliency, Success
The question is, how do we gain these insights quickly and effectively? Most organizations lack the analytic maturity to be able to turn to their team of data scientists and have them build intelligent prescriptive models that easily light up the road to success.
So what’s the alternative? EPM (Enterprise Performance Management) incorporates the power of automated planning, budgeting, and forecasting with the powerful capabilities of tools such as artificial intelligence and machine learning. During this period of economic uncertainty, the Office of the CFO needs to be agile, responding to market trends, resource availability, and operational issues.
To achieve greater agility, the Office of the CFO needs to be able to do the following:
- Process a vast amount of data in a short period
- Develop a comprehensive financial and operational plan
- Budget available resources and investments
- Forecast realistic outcomes
Capture, Consolidate, Visualize
Accomplishing these objectives requires intuitive technology that leverages the current capabilities of your organization. EPM solutions such as Jedox combine data capture, consolidation, and visualization with a powerful AI (artificial intelligence) engine delivering smater, more efficient planning, budgeting, and forecasting models with better insights.
Managing economic uncertainty for your firm and planning your approach to economic recovery requires the development and use of several predictive models. For example:
Consumer-facing organizations need to forecast when and if the consumer base will return or will they choose other means for purchasing goods or services. Planning and forecasting this behavior requires accessing external consumer data. While your internal data helps you understand who your customer base was, only through the acquisition of external data will you begin to understand who your customer base is becoming. COVID-19 has altered our way of life; the impact of that change is currently unknown but, planning for that impact is essential to your organization having a successful recovery.
Capitalizing on Familiarity
Quickly assembling these models requires the Office of the CFO to use familiar technology such as Microsoft Excel. Typically, Excel is not perceived as an EPM tool but, Jedox, working in tandem with Microsoft’s Excel product team enables MS Excel as your interface into their EPM solution. An easy to use (and familiar) interface is hugely beneficial in that it allows your staff to begin developing planning and forecasting models.
Once your models are in place, it is essential to realize that this is a dynamic process that needs to be reassessed continuously. Transitioning from a stagnant economic environment to one that is active generates a vast amount of data depicting a changing market mixed with opportunities and potential pitfalls. Your organization’s ability to decipher that data into practical business actions is a crucial component. Useful data from both internal and external sources acquired continuously can be entered into your model enabling you to identify current trends and activities on a timely basis. Continually obtaining data, in turn, affords your organization the ability to make mid-plan corrections as required for a successful outcome.
An Optimal Opportunity
Organizations that invest in data acquisition, performance management, and artificial intelligence create optimal opportunity to swiftly adapt and recover from a crisis. CFOs that leverage their data assets by implementing EPM gain valuable insights into the economic environment as it recovers. Orchestrating their own recovery begins with inventorying their data assets, investing in a smart EPM solution, and analyzing the results of their efforts.
Fortunately, today’s technology does not require that you need to hire an army of programmers. Instead, CFOs can leverage the skills of their financial analysts to develop comprehensive planning, budgeting, and forecasting models. A paradigm shift of this magnitude could not have come at a better time. With thousands of businesses trying to swiftly adapt and recover, EPM may just be the right solution to help cross the void left by a global crisis.
This blog post is the second in a three part series on the importance of agility to manage uncertainty. Last week we talked about “The Importance of Agility in FP&A To Manage Uncertainty“. Next week we welcome David Upton to the Jedox blog who will share his expertise on private equity management in uncertain times.