Factors Driving Financial Close Transformation
⇨ Most organizations said SAP S/4HANA providing opportunity to consolidate financial activities and modernize F&A function was a top driver of their transformation.
⇨ Organizations prioritize efficiency when undergoing financial close transformation.
⇨ F&A teams should be sure to build a business case and get executive buy-in ahead of financial transformation intiatives.
More and more, organizations realize the need to overhaul their financial close activities. In SAPinsider’s Financial Close Transformation report, more than 60% of respondents surveyed either agreed or strongly agreed that their organization’s financial close processes and technologies are too reliant on manual methods and legacy tools.
Outdated manual tools and methods can lead to delays and errors, which can prove costly in the long run. Finance teams must run jobs, monitor outcomes, and manage dependencies. These tasks must be done in a specific order, so one delay early in the process can cause a domino effect, delaying each subsequent task.
Financial close relies on input from across a number of departments and teams, many of which are siloed from one another. This separation can make it difficult to ensure accuracy, often leading to costly errors.
Most organizations noted that the move to SAP S/4HANA provided the push to transform their financial close process. The survey found that 54% of respondent organizations said SAP S/4HANA providing opportunity to consolidate financial activities and modernize F&A function was a top driver of their transformation. The next most commonly selected answer was insufficient automation leading to manual work and manual processes, chosen by 33% of respondents.
Other significant drivers included business growth and evolution creating the need for more agile solutions (26%) and the need for enhanced capabilities to generate timely actuals for reporting (23%).
Efficiency is Key
SAPinsider organization made it clear that improving efficiency of the financial close is overwhelmingly the top goal for financial close transformation, with more than 60% selecting it as a top strategy. No other strategy was selected by even 50% of respondents. This emphasis on efficiency is due in large part to the ever-changing regulatory landscape and the need for organizations to be more agile.
One of the most commonly cited impediments to efficiency is an overabundance of systems with the SAP landscape. Some organizations reported have 25 or more ERP instances, which can lead to duplications and inconsistencies. Embedded solutions like SAP Group Reporting, SAP Document and Reporting Compliance, and SAP S/4HANA for Advanced Compliance can help streamline and standardize financial close processes.
Other solution extensions, such as Intercompany Governance and Smart Close from BlackLine, offer automation capabilities that can also cut down on tedious manual work. That way, organizations can minimize time spent on the close and re-deploy those resources elsewhere. It also reduces the opportunities for human errors leading to inaccurate data.
What does this mean for SAPinsider?
Build a business case for financial close automation: Organizations can only achieve the benefits of financial close transformation if such a project is authorized. This requires buy-in from executives. F&A teams must make a compelling case to management by highlighting the benefits of automation and increasing efficiency within financial close processes.
Focus on the long-term: Establishing a continuous and predictive financial close allows organization to be proactive rather than reactive to shifting market forces and a shifting regulatory landscape. This can be done by tying timing and sequencing of close activities to organizational goals, rather than closing deadlines. A continuous and predictive close will also equip decision-makers with real-time data, allowing them to push for a more agile organization.
Improve data quality: By consolidating ERP instances, F&A teams can provide data that is more accurate and consistent. Higher quality data reduces the time teams must spend cleaning and evaluating information. This allows teams to work on more tasks and projects that add value to the organization.