The risk laden and fast moving nature of the modern corporate world is such that enterprises need to react to changing events instantly. As such, responsibilities that were traditionally the preserve of finance departments - such as budgeting, forecasting and analysis - have become more fluid within the company, and many different departments must now have a keen awareness of them to optimize decision making processes.
This requires a number of things. Firstly, that those who need to, have the necessary financial acumen to make sense of any information that they may be required to make sense of. Secondly, that they have access to the data and the technology they need, and the skill set to understand them so that they can garner and leverage insights. Lastly, and most importantly, they all have to share the same vision and be working towards the same ultimate goal. It is to these ends that many organizations are now operating a ‘Finance Center of Excellence’.
A center of excellence is a group of people who collaborate in order to drive best practices in a specific focus area for successful business outcomes. In the case of FCOEs, this is led by both finance teams and IT departments, who provide staff with the training, reusable knowledge, disciplines and best practices in finance.
The benefits of this are many and persuasive. It promotes alignment between IT, finance and other departments for better communication, higher rates of efficiency, and reduced costs from maintaining budget, plan and forecast consistency and use. Routine planning and analysis workflow are also used to streamline integration across the organization, and it helps increase the success of finance technology and its deployment by helping them deliver more value, at less cost, quicker.
An example of the FCOE in action is at Arbitron. Arbitron, an international media and marketing research firm, has an FCOE with a team of four people who hold a number of responsibilities. They support the firm’s enterprise planning, budgeting and forecasting functions through a bottom-up program of budgeting and forecasting templates. They also support the identification of business drivers and key metrics, develop the majority of the planning applications, provide assistance with all reporting throughout the company, and review data models, planning and forecasting education.
Arbitron has succeeded in establishing an effective FCOE because they have planned carefully and brought in the right people, processes and technology. This has enabled everyone who uses it to develop their financial knowledge. Not only this, but a successful FCOE also enables a reciprocal knowledge trade, with finance learning from the other departments. This leads to better decision making, and creates and agile business ready to deal with anything in the tumultuous business climate we find ourselves operating in.