When Operational Work Becomes A Burden
Companies want CFOs and finance departments to play a larger strategic role in achieving business goals. But it’s challenging for many finance teams to increase the time spent on high-impact strategic efforts when they’re bogged down by time-consuming operational tasks. (See our recent survey Under Pressure: Operational Challenges for Finance Teams for more on the burden front-line finance professionals face.)
When we’re out talking to CFOs and controllers in growing companies, they tell us that up to 70% of their department’s time and resources go to operational tasks, while only 30% go to strategic efforts. We call this imbalance the 70:30 split.
We’re not the only ones to notice this imbalance. PwC reported similar numbers in its 2017 Financial Effectiveness Benchmark Report, noting that finance teams spend just 24% of their time on insights, with the balance going to efficiency and control.
Righting the Ratio
If the above numbers ring true for your department, imagine what your team would achieve if you could decrease the time spent on operations by 20% or more.
You’d have more time to analyze spend, negotiate vendor discounts, improve forecasts, collaborate with business partners, or even streamline processes—valuable projects that could get done if less time was spent chasing down receipts and tracking invoices.
Many companies we’ve talked to say they plan to hire additional staff to manage spend operations. But the problem can’t be solved by hiring alone. As your company grows, so will the number of expense reports and invoices coming through the finance department.
Actually fixing the problem requires a fundamental shift in how work gets done. This means examining existing workflows to find inefficiencies and applying the right technology to automate routine work. Streamlining operational tasks will free finance teams to focus on high-impact activities like analysis, spend optimization, collaboration, and more.
We propose calling the combined effort to reduce the burden of transactional operations and increase focus on optimizing business spending SpendOps.
What is SpendOps?
SpendOps is a holistic approach used by finance teams to increase operational and strategic productivity throughout the entire business spend cycle, from planning through purchase and processing to analysis.
Business Spend Cycle
SpendOps uses technology to drive efficiency and results in two key areas:
- Spend Operations
Reducing effort traditionally spent on time-consuming operational tasks.
- Spend Optimization
Increasing focus on activities such as analysis, forecasting, and collaboration.
Finance departments who implement a SpendOps approach increase the strategic impact of their company resources.
What’s different about SpendOps?
Technology used by finance teams today has been focused more on digitization than transformation, relying on the same processes that have been in place for decades.
Think about expense management software as an example. Essentially, it provides a digital version of the old paper-based expense report. While these solutions automate the employee filing and manager approval workflow, they still create an enormous amount of review, audit, and reconciliation work for the back office.
It’s no wonder that 42% of respondents in PayStream Advisors 2018 Travel and Expense Report said that one barrier to adopting expense management software is that they don’t think there will be enough ROI.
The good news is that advances in technology, a better understanding of the true operational burden of traditional tools, and real-time access to financial data can truly transform historically time-intensive functions like expense tracking and A/P management.
From manage to optimize
It’s no longer good enough to just manage expenses. At Center, our goal is to help finance teams in growing businesses optimize spend.
We’re reimagining the entire spend process, from planning and purchasing through reviewing, auditing, reporting, and analysis. Our use of AI and ML technology, real-time data, and streamlined workflows deliver two key results:
- A dramatic decrease in the time needed for expense processing
- A significant increase in the impact of company resources through insights and recommendations
Along the way, we’re helping finance teams shift their focus to the strategic efforts that will help their companies achieve more.
TO THE POINT
Finance teams have been burdened by outdated processes and technology that did little more than digitize old paper-based systems. SpendOps will create real transformation by streamlining operations and freeing finance teams to focus on optimizing spend.