01 March 2021

Tim Wakeford, vice president Financials Product Strategy at Workday, explains how the pandemic exposed vulnerabilities and accelerated the inevitable

When the pandemic struck, many finance professionals were still relying on spreadsheets and outdated legacy systems. Then, in the blink of an eye, they were forced to build, plan and create more forecasts and scenarios than their systems and processes were capable of. This need to revisit financial planning on a continuous basis, with little grasp of the future, shed a light on the dangerous reliance on legacy systems. It exposed the lack of agility within many finance teams across the UK, and the compromising position it placed businesses in. In fact, three out of four finance leaders (http://bit.ly/3hYFoG4) found that their planning processes had not prepared them for the economic disruption brought by the pandemic. With slow fragmented systems impeding businesses’ ability to adapt and react quickly, it has accelerated a much needed, and long overdue, digital transformation for finance. If done right and with a focus on data and analytics, businesses have a chance of survival.

A long overdue transformation
Digital transformation had reached the customer-facing front office much earlier than the back office functions, such as finance. This gap became evident when the pandemic hit. From redundancies and furloughing staff to protecting pension investments or ensuring rewards incentives for retained staff, finance teams had to swiftly rework their forecasts and replan for a failing economy.
Hamstrung by legacy systems and struggling with versioning headaches or toggling between different spreadsheets, financial departments simply couldn’t make the decisions businesses needed quickly enough to protect themselves from the effects of Covid-19. These archaic processes are no longer sustainable if chief finance officers and their teams want to be able to react quickly to any market shift.
Fortunately, the struggle with reactive planning was a tipping point for many organisations. The lockdown-imposed move to a new remote working environment, although challenging, kick-started a digital transformation revolution. For John Lewis (http://bit.ly/3i3edKn), lockdown accelerated the digitisation of its payroll system. It allowed the payroll team to deliver payslips on time for a workforce dispersed between furloughed workers, people working from home and frontline employees. The project ultimately ended up reducing operational workload and pressures for managers by over 20%, halving running costs, and increasing efficiency across the organisation. This is just one example of how digital transformation will pay off beyond 2020. It is a critical part of business recovery.

...providing the strategic insights that all areas of the organisation need to make decisions with agility.

Agility to guide the business through recovery
A recent Workday study (http://bit.ly/3oASzzl) showed that top-performing companies are ten times more likely to react quickly to market shifts. Finance touches every aspect of a business, informing all decisions – from payroll, to reallocating workforce, managing the pensions scheme, and hiring a new supplier. The financial offices that left legacy systems behind are able to do this in a seamless way with the help of data. For instance, one of our retail customers is planning their recovery by using multiple budget scenarios based on different assumptions, all sitting in one cloud platform. This avoids the version control issues they had with spreadsheets and provides them with the knowledge that whatever happens they have a scenario in place.
I’ve also spoken to customers who are finding success in driver-based forecasting (http://bit.ly/39enueg), which links operational activities to the calculation of key variable revenues and expenses. This is a crucial part of continuous planning, as it allows decision makers to analyse potential impacts on their key business priorities – whether that’s opening new job positions or keeping the workforce engaged through financial rewards. By reforecasting for different scenarios, teams can continue to keep their plans updated and feedback in real time, in turn, adapting the decisions to the business landscape; something that simply isn’t possible with legacy systems.

The future of the financial office
The pandemic accelerated a step that was inevitable for the financial office: reducing the reliance on legacy systems and embracing agility head-on. With data insights in their hands, powered by processes such as forecast modelling and scenario planning, market-leading finance teams are spending less time and effort filling out spreadsheets. Instead, they have become the guiding light providing the strategic insights that all areas of the organisation need to make decisions with agility. In this new reality, the finance department will allow organisations not only to recover from the pandemic, but to thrive in any future scenario.


Featured in the February 2021 issue of Professional in Payroll, Pensions and Reward. Correct at time of publication.