Have you noticed how the pace of change in the world is accelerating and wondered how businesses are managing to keep up? The answer - most are not.
Despite facing unprecedented disruption from a worldwide pandemic, hindered supply chains, talent shortages, and other factors, over two-thirds (63%) of CEOs told KPMG that their processes and execution are too slow.
An inability to gain holistic insight into business performance, outdated technology, and backward-looking approaches to forecasting and budgeting were all factors holding businesses back even before the pandemic erupted two years ago. And now, with change happening at a faster speed than ever before, that inability has resulted in an acceleration gap, the delta between the intensifying rate of change and an organization’s ability to keep pace with it. According to McKinsey, only 20% of respondents in a global poll said their firms excel at making timely decisions.
Where does that leave the remaining 80%? They're playing catch-up and trying to figure out how to improve their business. But that’s difficult to do if the goalposts keep moving faster than ever before. It’s especially difficult if you’re among the companies struggling to emerge from the acceleration gap and yet sidelined by enterprise resource planning (ERP) models that simply can’t adapt to change.
The struggle is a strategic problem with real consequences. Success in today's world depends on being able to quickly adapt to new conditions. Yet if you’re forced to work with systems that can’t adapt to change, adaptability is fated to remain maddeningly out of reach.
What can these companies do? To begin, they must be at ease with letting go of traditional ways of working and the technologies that those calcified processes are based on. Second, they must assess the limitations of their current ERP system–and be willing to accept the possibility of something better. Something more adaptable. Something beyond ERP.
Traditional ERP systems, for instance, were built with a legacy mindset. And if there's one thing CFOs have learned in the last two years, it's that legacy attitudes are of little help amid the constant changes happening in the world. ERP systems were created in a time when things were more predictable. The companies that rely on them tend to have a history of acquiring multiple solutions that in turn cause a fragmented data landscape. This results in disconnected and isolated processes that slow down your organization just when it should be accelerating.
While we're seeing examples of providers migrating legacy software and labeling them as cloud-ready, this Band-Aid solution isn't going to close the gap, for ERP systems are monolithic creatures with baggage that includes an extensive hierarchy, cumbersome checks and balances, and clumsy bolt-on modules that require frequent IT intervention. This is not the fluid, automated, collaborative environment that an agile organization requires to close the acceleration gap.
Two Imperatives for Narrowing the Gap
"The acceleration gap is real,” according to a global study, conducted by Longitude. “More than half of leaders (52%) say there is a growing divide between where their business is and where it needs to be to compete." Thousands of businesses around the world have closed the gap, and they've done it by applying a set of imperatives that have helped them transform their businesses into agile, fast-moving businesses. We'll take a look at two of them right now.
Imperative #1: Running in the now. Legacy-ridden systems and processes hold organizations back because they aren’t built to run in real-time. One of the main reasons for this is that critical information that organizations rely on is locked in silos, as are the business operations that rely on it. An organization cannot operate at the required speed if silos exist among teams, systems, and their data. This only serves to postpone action and decisions.
This isn't unheard of. According to Accenture, 75% of executives claimed that their companies are stuck in operational silos that slow them down. What is the solution? Many finance leaders cite the use of technology to integrate data better between disparate systems as the most critical component in enabling faster planning, execution, and analysis cycles and improving decision-making.
Imperative #2: Mitigating uncertainty with the full picture. This imperative is intertwined with the need to eliminate silos. Organizations today cannot function effectively if they make educated guesses about what will happen next. They require quick access to all of their data as well as the platforms that enable them to turn that data into insight. Unfortunately traditional ERP systems and "easy access" are contradictory concepts.
The most advanced solutions, which go beyond traditional ERP's limitations, are designed to do precisely that. DataRails, for example, is a cloud-based financial planning and analysis platform that automates financial reporting and planning from all your spreadsheets, platforms, and departments, as well as integrating with any preexisting internal systems your company uses. With always-live data and real-time reporting, you are continuously viewing the whole enterprise picture and operating in a known state.
Acting with confidence and enabling the business to change necessitates putting old systems and processes in the rearview mirror and examining how the organization is performing now. Decision-makers can better predict future demands and handle them as they arise with this holistic perspective of the company as it is currently operating. A Deloitte study of human capital trends found three out of four (74%) executives report an urgent need for reskilling to meet emerging business demands, but just 10% are ready to act on them.
The data is there for them to meet those escalating reskilling demands; what's missing is the ability to use it to get a complete understanding of the business's position. These leaders know that their business is constantly evolving, and whereas legacy systems can help them digitize their data to achieve things like rearview mirror-type reports and standard headcount reports, what they need now is a way for HR leaders to interact with data by answering crucial, more probing questions: What talent do we have? What are the different skill sets we have across the teams, and who should we invest in? When and where will we require new roles?
Making Room for Strategic Roles
Narrowing the acceleration gap allows teams and their leaders to devote more time to strategic financial planning and analysis. They simply become more equipped to add more value to the business.
A modern cloud planning process is a great example of this. In legacy systems, data is fragmented and disconnected, and planning is a time-consuming, weekend-stealing manual exercise performed on spreadsheets, which leaves little time for strategic analysis or advice. However, in a modern environment, most of the planning cycle is automated, allowing teams across the organization to estimate and recalibrate on demand, budget continuously, and model what-if scenarios to foresee the consequences of their actions.
The bottom line is that outdated, hardwired processes leave little room for agility, which is exactly what businesses need now more than ever. Agility is the outcome of these and other best practices targeted at narrowing the acceleration gap, which is increasing by the day for certain companies.
Traditional ERP systems would have done so by now if they could assist decision-makers in navigating uncertainty. However, when change accelerates, the need for a new method becomes increasingly apparent, and the flaws in outdated ways make success that much more difficult to achieve.
留言