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The Decision Factor offers insightful comments and observations on analytics—from views on new technology approaches and market dynamics to the latest industry trends driving demand for faster, smarter information analysis. This blog contains personal views, thoughts, and opinions from SAP employees, mentors, and friends working in the area of analytics. It’s not endorsed by SAP nor does it constitute an official communication of SAP.

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Simple Predictive Finance—Everything Is Profit and Loss

dollar amounts in columns on paper currency

As I mentioned in my last blog, Simple Predictive Finance: Why the Dream Is a Reality, the finance function is transforming with advances in technology and predictive tools. There are several key points that I believe can help people better understand the context of predictive finance. I covered the first two (simplicity and the path to governed data discovery) last week. Today, we’ll cover a couple more.

The Mission Is Margin Improvements

Everything in any given organization is profit and loss. From the top floor …

Simple Predictive Finance: Why the Dream Is a Reality

future target with arrows in bulls eye

For a couple decades, there was a quote about prediction that everyone seemed to jump on, “Prediction is very difficult, especially about the future.” This not very provocative sentence from the first half of the 20th century (by Physics Nobel Prize winner Niels Bohr) was popular for good reason. How could you possibly be able to predict anything except death and taxes? (Another famous quote, but I won’t go there…)

Where I live, people may not even listen to the weather forecast, since it doesn’t have a great impact if you’re expecting 95 or 97 degrees in Central Texas …

Now You’ve Defined Your Incentive Plans, There’s One More Thing You Have To Do

Now You've Defined Your Incentive Plans, There's One More Thing You Have To Do

It’s the start of the year, and organizations around the world are holding kickoff meetings in order to explain new incentive systems to their employees.

These plans are typically the result of many months of painful negotiations, as corporate stakeholders debate the perfect set of incentives to support the organization’s strategy.

But every system of incentives inevitably opens up the possibility of dysfunctional behavior. Not necessarily because employees are corrupt, but because they feel pressured to “meet the numbers” – and because daring to question the value of corporate KPIs is actively discouraged.

Dysfunctional behavior is just as predictable as …

Why the New Breed of Chief Financial Officer Will Own IT

Why the New Breed of Chief Financial Officer Will Own IT

The increasing number of chief financial officers (CFOs) and their peers from Generation X and Generation Y that are now heading up finance functions are irked by poorly performing business systems that fall way short of the likes of Google and iTunes that deliver exactly what you want in seconds. So it’s not surprising that many have accelerated automation projects already underway to enhance core financial processes with technology solutions that lead to increased productivity and lower costs.

It’s the only way they can free up headcount from traditional finance functions like reporting, and treasury and transaction processing in order …

The New Breed of CFO and How to Become One Yourself

The New Breed of CFO and How to Become One Yourself

‘Stick close to your desks and never go to sea, And you all may be rulers of the Queen’s Navy’

The chorus of “Sir Joseph Porter’s Song” above, taken from the Gilbert and Sullivan operetta H. M. S. Pinafore, is a satire said to be based on William Henry Smith (1825-91), the Victorian businessman who made a fortune through expanding his father’s bookselling business into a national chain which still thrives today as WH Smith. Like many successful businessmen William entered Parliament in 1868 and was appointed First Lord of Admiralty in 1877, – equivalent to the American “Secretary of …

The New Breed of CFO and the Challenges of the Multi-Generational Finance Team

The New Breed of CFO and the Challenges of the Multi-Generational Finance Team

Things are going to change once the cream of Generation Y, (the ‘Millennials’), who were born between 1981–2005, have risen through the ranks of Finance and step into the CFO role. Generation X, the group born between 1961–1980 that are currently filling many CFO positions before ascending to become CEOs are said to be sceptical, pragmatic and continually looking to develop an ever widening skill set that will have seen many make significant contributions to their businesses well outside their finance role. But Generation Y can be expected to raise the bar further, demanding the utmost automation of routine finance …

Filling the gaps in Performance Management

Filling the gaps in Performance Management

Last time out, I discussed the gaps that are frequently found in many organizations’ immature financial performance management cycles; this time, I’ll talk about filling them.

Why Focus on Strategic Planning?

Strategic planning is about setting a course for where stakeholders want the organization to head and describing in detail what needs to happen to get there. This involves some well-defined processes that happen every year in order to set and translate strategy.

Effective execution of strategy requires a strong degree of organizational alignment to ensure everyone is focused on the same goals. It also requires some agility to allow …

Yes, Performance Management means more than Planning and Budgeting

Yes, Performance Management means more than Planning and Budgeting

Analysts, consultants, and software vendors alike are espousing the virtues of end-to-end, integrated software solutions to enable financial planning and analysis processes. Despite this, the majority of organizations today still make do with a mix of spreadsheets and other tools that are frequently cobbled together by the departmental techie to give some rudimentary automation driven by complicated macros that only the techie really understands. For many, it’s a long journey that doesn’t go beyond making the planning, budgeting, and forecasting processes slightly less laborious and time consuming. But if you really want to tackle the problem head on, how can …

Predict, Execute and Control: the mantra for better Financial Planning and Analysis

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Managing financial planning and analysis is an end-to-end process that starts with strategy definition and documentation. It then goes through the detailed planning, budgeting, and forecasting processes that define the activities and resource allocations necessary to achieve the strategic objectives. This is followed by profitability and cost analysis, and other modelling and simulation scenarios. Underpinning this whole process is the need for constant reporting and monitoring.

So, unlike external reporting, which is mandatory based on various regulatory requirements and needs to happen only at certain points in the financial year, internal reporting is on-going. Similarly, we can think of the …

Seven Common Scorecarding Mistakes to Avoid

Seven Common Scorecarding Mistakes to Avoid

Any new endeavor takes time to master. Realistically, it takes at least three attempts to acquire the requisite experience needed to get it right. This is certainly true of IT projects (at least in my humble opinion). Not surprisingly, wise practitioners seek other experience and best practices to accelerate the learning curve and cut down on mistakes. A lot has been written about scorecarding projects, which on the surface, may seem fairly simple—after all, you‘re just reporting on performance indicators. Unfortunately, they aren’t that straightforward. Here are seven common mistakes to avoid.

Ending …