The finance function is evolving, fast. Where finance used to focus on traditional activities such as account management and act in an advisory role to the C-suite, the finance function of the future will be focused on driving business performance by leading strategic planning through data-led decisions.
Rethinking finance means rethinking the way businesses plan.
Integrated business planning presents a significant opportunity to develop the role of finance to meet future business needs. It offers a framework for finance to use that matches their new purpose of creating value adding activities for businesses.
Finance Function is Developing Naturally Across Industries
Research shows that finance function, particularly the role of the finance leader, is developing across industries.
An average of five functions other than finance now report into the CFO.
Further research reveals that four in ten CFOs say they spent more time over the course of a year focusing on activities that weren’t traditional finance activities. The survey revealed that these non-finance activities were predominantly strategic leadership, organisational transformation, performance management, capital allocation and big data and analytics.
This shift in finance function makes perfect sense. Businesses face an increasingly challenging economic landscape alongside increasingly competitive markets. Finance is perfectly placed within the business to harness data, operational knowledge and analytical thinking to drive business performance.
What is an Integrated Business Planning Framework?
Integrated business planning (IBP) is an alternative approach to business planning.
Traditional business planning often silos different business activities. Marketing has their strategy, HR has theirs, IT has theirs and so on. What this means for businesses is that the larger strategic goals are often disjointed from departmental strategies and activities may not align well with larger business goals. This results in poor business performance and business productivity for many companies.
Instead, an integrated business planning framework seeks to align strategic business planning with operations and finance. It looks to create one single, cohesive business plan for everyone in the company.
It achieves this by:
- Being one process of continuous improvement
- Having both short and long term strategic planning
- Using advanced data analytics that are shared across the business
- Cross-functional collaboration and communication between all departments
- C-suite adoption and sponsorship
Finance Has a Key Role to Play in an Integrated Business Framework
So, where does finance fit into an integrated business framework?
IBP can be a driving element in developing the function of finance. As discussed above, finance has increasingly been tasked with more and more responsibilities outside traditional finance activities, with many more departments reporting into them.
As finance begins to play a more strategic role in businesses, an integrated business planning framework gives finance a methodology to use to align these different responsibilities successfully, resulting in better outcomes for the business.
