Stop thinking like an accountant and start acting like a strategist
Benchmarking is an easy way to use the skills you already have to kick start your strategic credentials
Working as a Delivery Manager at Forest Grove I have worked on a range of data projects throughout Australia and New Zealand. Most commonly I work on implementation projects integrating new finance systems. Working directly with finance teams they typically start with a financial reporting or budgeting project, big pain points and quick bang for buck.
This however is only the start. It is important to define a process that allows us to complete these functions efficiently and correctly so that more time can be spent on aligning their financial systems with corporate strategy.
Finance teams are often under constant time pressures to consolidate the latest budget numbers or have the board reports finalised. They work so hard and spend so much time on these tasks they don’t often think about the additional strategic value they can provide.
Some finance teams have even taken a back step with advent of big budget BI projects, data scientists or fancy terms like machine learning. While these projects are great, they are spending long periods extracting, cleaning, data warehousing etc and value is therefore never gained as quick as planned. Gartner reports that 70–80% of these projects never even return value.
The finance team with their experience in reconciling, consolidating and reporting the data is in a better position than they often realise to take advantage and generate strategic value for their business.
One quick and easy way for teams to get involved is through financial benchmarking- evaluating their firm’s performance against competitors or other similar companies. Benchmarking can be broad such as gross margin % or more refined such as profit per hour of service. Setting these benchmarks and measuring against them allows us to determine if the company is performing better or just selling more widgets.
For example, financial benchmarking can give us insights into business units that might be profitable because they are larger but are in fact performing worse overall per product than another unit. Benchmark based goal setting can also add additional value, ensuring your company is constantly improving until they are performing at industry best practice levels.
Finding financial data on competitors can be tricky but there are ways finance teams can access this data without leveraging outside council.
· The Australian Bureau of Statistics offers trends on industry, products and consumer behaviour.
· Industry specific financial reports for example Stewart Brown In the aged care sector provides quarterly reports on benchmarking.
· Publications such as Business News Western Australia often publish detailed industry reports on listed and sometimes unlisted companies.
The next step is systemising this data, ensuring it is flowing from your data sources, being calculated and giving you the ability to slice and dice the data. A static excel report is not going cut it for a dynamic strategy focused finance team.
A financial system like Prophix allows you to use separate versions for actuals, industry benchmarks and goals and then measure these across time. Systemising the process so that once industry benchmarks are entered the numbers are calculated directly from source data.
The ability to quickly see how your total business is performing and then drilling down or pivoting to investigate business units or products adds immediate value. Prophix can even distribute these reports or dashboards to team leaders for commentary allowing the insights into how they are performing against the industry or even company benchmarks.
In modern times finance teams sometimes feel like their job is to report the numbers and leave the prediction and detailed analysis to BI or Analytics teams. With a few additions to data already verified, finance teams can have more input on the strategic direction of their company. A benchmarking project is a quick way to add strategic value.
