Firm says it saves money in the long-run by allowing executives to focus on data analysis instead of data gathering.
Board members wondering why they’re starved for quality information from management may find the answer in a lack of good technology. This causes finance departments to spend too much time collecting data and not analyzing it, according to a report from PricewaterhouseCoopers.
The data, revealed in a PwC benchmarking study, Is Finance Rising to the Challenge?, showed that companies that put the resources toward better support technology, that is “standardizing and simplifying processes, data and supporting technology,” were able minimize the costs associated with gathering financial and non-financial info and drive better performance from the finance team.
But companies will need to pay up first, according to PwC. This means more resources toward data warehousing, ERP “and other technology and processes that could help to facilitate more effective information supply and control,” PwC said. Companies will also need to pay higher salaries and pay for education.
In the study, PwC found that company that have successful finance departments invest 30 percent more resources for analytical activities and pay finance executive 25 percent more than other organizations. Further, PwC found that some form of centralization, whether using a shared service center or consolidating transaction processes, which more than 65 percent of respondents have done, improves finance function performance. By centralizing information management in one location, companies not only reap savings but also help in standardizing the technology which in turn frees up finance professionals to concentrate on analysis instead of data gathering, the report said.
Left as it is, PwC reports that the average company spends 55 percent of analyst time on gathering data as opposed to analysis of that data. The need to centralize was most striking in PwC’s results that found that even though nearly half of all financial professionals had access to one database for financial information, under of quarter of that same group was able create a quality board report with the data. Instead, most professionals needed to access multiple applications and databases. All in all, those companies that put the resources toward centralizing and standardizing systems closed and reported financial results in nine days vs. 12 days for those companies that do not.
Taking steps to simplify and standardize,”will clearly be a big step towards re-balancing the role of the finance function,” according to Nick Jarman, a partner in the finance effectiveness consulting practice at PwC.