“Business transformation has emerged as one of the most critical endeavors in today’s enterprise. When done properly, it can ensure the livelihood of a business for the foreseeable future. Done wrong, business transformation can leave an enterprise in even worse shape than before, facing the prospect of having to spend big to fix it.”
Most business transformations center around intelligent technologies that can connect the right data, tools and business logic to understand, analyze and evaluate corporate performance. However, none of these technologies will do any good unless it has the ability to access and produce timely, accurate, and consistent data which can be used to make critical business decisions.
Dynamics within a business are constantly changing – from their customers and business models to their cost drivers and profit margins – nothing ever stays the same. In order for a business to grow and continue to be profitable, new processes must be able to take root. The challenge for many business leaders understanding their costs and profits and how they relate to planning, performance, and sustainable growth. This is where creating a sustainable business model, or a “profit by design” methodology comes in. The heart of “profit by design” is a focus on profits, managing margins and understanding cash flow to gain a solid understanding of how much it will cost the business to operate now and in the future. With an understanding of a company’s finances, leaders and team members are better able to plan their budgets, forecast their needs, manage cash and positively influence the financial performance of the company.
Many businesses are updating their legacy planning systems to integrated business planning applications that translate the organization’s strategic objectives into operational terms that provide actionable guidance across the enterprise. Business capabilities are the link connecting strategy and business model to enterprise architecture and the underlying technology that executes the strategy. Understanding this link enables companies to align resources, people, and processes to transform themselves in response to market dynamics to maintain a competitive edge.
What sets modern finance teams apart from their competition? The short answer: their cost management methodology.
“Using cost management as a strategic lever, as opposed to a defensive response, creates new opportunities. It is no longer a reactive tool. It is a proactive way to become more competitive in the global environment.”
Modern finance leaders have transformed not only the way they view their costs, but also how their costs operate within their overall finance strategy. The biggest difference between finance teams with this viewpoint and those that are still struggling to understand their cost is that they are using new technologies and thinking outside the box. They use new tools, new techniques, completely new cost structures that not only reduce costs, but also free up money for growth.