Fast Close 2.0 – setting the foundation through digitalization

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Digital optimization of the financial close offers new opportunities to re-vitalize the “fast close” approach

Everyone knows that the financial development of an entire corporation or banking institution has to be reported to the market, creditors, regulators, management, and numerous other stakeholders on a regular basis. However, in recent years the closing process has become a constant trade-off between complexity and speed.

On top of this, the complexity of the underlying requirements needed to close are continuing to increase. For example, certain external regulatory requirements (e.g., IFRS 9 and IFRS 16) require even closer integration of all departments involved in the closing process; and obsolete systems and their associated cost structures are creating huge pressure to make the close more efficient.

All of this points to the need for organizations to digitally transform the close process to help reimagine their finance function from simply being a reactive scorekeeper to being recognized as the nerve center of the entire organization.

Six new perspectives to achieve a fast close

Efficiency, flexibility, and simplicity are well-known buzzwords that have been overused to propagate the concept of a “fast close.” But what has changed?

Digitalization has created new ways of thinking, new business models, and new technologies that make it worth reassessing the potential of the closing process.

The following six perspectives form a closure framework to revaluate the close from an accounting, risk management, and regulatory control perspective.

                                                           The six perspectives of the closure framework

  • Sourcingwhat is the value-add of individual closing activities? High value-added activities (e.g., accounting policy decisions) need to be supported by digital technologies. Those activities with low value-added (e.g., various ledger closing activities, reporting) need to be automated or outsourced.
  • Data enablementdo you use your data’s full potential? A central data warehouse is the baseline to meet new regulatory or internal requirements (e.g., efficient steering of your business). The focused management of structured data paves the way for advanced analytics, data mining, and predictive modeling.
  • Process digitalizationhow does digitalization become tangible for your employees in their day-to-day operations? Robotics enables functional departments to easily automate standardized and highly repetitive activities (e.g., reconciliation), avoiding human errors, reducing lead times, and ultimately freeing up time to focus on high-value added activities (e.g., analysis to create true insights). Artificial intelligence (AI) is enabling the digitization of even more complex processes such as managing unstructured data, forecasting, and even decision-making itself.
  • Integrated reportinghow independent are your business users? Equip your business users with the necessary tools in the course of a self-service business intelligence approach. Many of the steps required to prepare decisions can be carried out via drill-down and slide and dice functionalities.
  • New technologiesare you a bank, corporation, or an IT service provider? New technologies are creating new opportunities for IT infrastructure. For example, cloud technologies enable a cost-efficient and scalable platform approach. The degree of utilization can be defined based on your individual requirements, and ranges from outsourcing simple infrastructure services to obtaining a fully-fledged software as a web service.
  • Governance and mindsetdo your internal stakeholders share the same goals? Transparently defined governance structures and properly specified KPIs are the baseline to efficiently manage the end-to-end closing process. Consistency of the company’s overall goals and an individual stakeholder’s objectives can only be ensured by linking the individual’s KPIs with corresponding incentives and other performance-related measures (e.g., gamification of the entire management by objectives process).

Capture the digital maturity of your closing process

The first and most important pre-requisite is to capture the digital maturity of your individual closing process, which then defines and sets a roadmap for the implementation of digital initiatives. To do this, it’s important to adopt an approach that identifies the optimization potential pertinent to your organization by following these essential steps:

  • Digital maturity assessment – it’s essential to start with an individual assessment for the six perspectives to define tailor-made, strategic initiatives that can optimize the value creation of your closing process and avoid value-free change and operating costs.
  • Focus interviews – this is followed by analysis of the questionnaire results and one or two focus interviews to define individual strategic options based on benchmarks and best practices.
  • Prioritization workshop – finally, these defined strategic options need to be prioritized and transformed into concrete initiatives and a roadmap for implementation of your digitalized closing process.

What’s next?

With a digital maturity assessment of your closing process and the derived initiatives in place, you’ve already set the foundation for a Fast Close 2.0. This will provide focus areas for investment in your digital future, independent of whether the processes are performed in-house or outsourced. Capgemini’s Digital Global Enterprise Model (D-GEM) architecture provides a perfect in-depth assessment toolset for further investment.

But how does the optimal closing process look like? What are the impacts on the current operating model? And most importantly ­– when will the first tangible results for your employees and management be delivered? More about this in my next blog.

To learn more about how Capgemini can assess the digital optimization potential of your closing process by leveraging the closure framework and D-GEM methodology, contact:

Learn more about how Capgemini’s Finance Powered by Intelligent Automation offering helps you navigate the myriad of products, tools and services, enabling your business to benefit from an intelligent solution that combines automation, digital platforms, know-how and insight.

Daniel Biechele is responsible for developing and implementing strategies to digitalize the finance function, combining deep industry experience and leveraging Capgemini’s Business Services portfolio.

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