Dear Robert,
As we enter 2021, I am writing to urge you to take a fresh approach to our investment in finance systems.
We can be proud of what we have achieved this year in the most demanding of circumstances. As a management team, we kept our staff safe, we became more closely bonded and we managed to keep our bankers, suppliers and customers all on side. But it wasn’t easy.
At the height of the crisis, we weren’t sure how to react because we didn’t have the information we needed at our fingertips and we couldn’t reforecast the business as quickly as we needed to. Decisions were made on a mixture of gut feel and experience because our business systems couldn’t keep up with the pace of change.
We may be at the start of a new decade, but I would like to remind you that our finance systems are two to three decades old. So, behind the scenes, we were frantically piecing together new spreadsheets, populating them with new data by hand and all of that with our key finance personnel working from home.
Despite everything, the future is bright and full of new opportunities. The crisis has forced us to close parts of our business and retire products that (if we are honest) were not performing, but it has also opened up new vistas of opportunity such as moving more of our services online, adopting ambitious new business models and expanding into more promising consumer markets. However, continuing to grow our customer-facing capability without investing in our finance systems is unsustainable.
Over the last 20 years our investment in customer-facing applications has outweighed our investment in finance systems by a factor of 4:1? The practical implications of this are threefold.
- We cannot guarantee to process efficiently the volume and variety of new transaction types arising from the new opportunities and business models
- We are going to miss out on new information about, say, customer behaviour, buying habits, pricing and product success that will help us forecast the future with more certainty and make timely and accurate decisions.
- We are going to let our customers down and probably lose customers because our systems are broken and we cannot fulfil customer expectations.
So, what should we do? Well, the crisis has shown above everything else that our finance systems need to be agile so that we can respond to change, whether that is a global pandemic or change in the normal course of business.
I consider there are three urgent actions we need to take.
- Re-visit our information systems strategy to confirm our information, process and data requirements (financial and non-financial) for the next decade.
- Where our information systems strategy identifies gaps, support this with modern, flexible and highly automated applications in the cloud.
- Invest in predictive and analytical technologies that allow us to shift up a gear and fully exploit our information systems.
On this last point, our headcount in the finance function has been held at the same level for the last three years. We need to consider what new training, development and skills are required in the finance function to fully exploit the new capabilities. However, I would like to stress that we will not be able to attract the best talent available if we do not invest in modern systems.
Having worked so closely together over the last year, I am hoping that most of what I have said is self-evident, after all, you have seen first-hand our shortcomings.
I trust you share my enthusiasm to secure a solid finance systems foundation for the post-COVID era. Above all we mustn’t hesitate. I look forward to working with you in the New Year to deliver the exciting and ambitious business plans that have been agreed by the board.
Regards
Gary
Gary Simon CFO