Written By: Simon Bittlestone, CEO, Metapraxis
A ‘no-deal’ Brexit is very much on the cards. The European Banking Authority has starkly warned businesses to ramp up preparations considerably over the next eight months before we head out of the European Union, and the British Bankers’ Association has already admitted the loss of passporting rights will be “disruptive and costly” for business. Financial services, just like all sectors across the UK, can no longer continue to act like nothing is happening. So, why are businesses choosing to ignore this reality?
It goes without saying that Brexit is synonymous with uncertainty. Will Britain stay in the customs union? Will EU workers be allowed to stay in their UK-based jobs? It is the C-suite that is tasked with dealing with these questions and is responsible for paving the way for a smooth transition. At times, this burden is a heavy one. But, whilst nothing can replace the instinct of experienced leadership, technology can help instill confidence that the right decisions are being made.
Technology for the past, present and future
Ultimately, risk-taking will always form part of the job description for top level executives. Brexit certainly hasn’t made this any easier; there have been new announcements about the state of the negotiations with Brussels almost every day since Article 50 was triggered. Amongst the uncertainty, CFOs need confidence in their own decisions, and this is where technology can step in.
Often, building confidence takes the knowledge that previous decisions have been the right ones, contributing to improved client retention, business performance or sales growth. With the right technology in place, the historical context of the company can be mapped out. This allows executives to see easily what’s gone well and what has been less successful, and use this information to inform present and future decisions.
Finance faces an enormous challenge in achieving data driven success, largely because of its greatest foible: Microsoft Excel. Preferred for its flexibility and ability to create custom documents with ease, it is limited in its ability to reflect each of the varying complexities of an organisation with scale and efficiency, and exposes the organization to spreadsheet errors. With that in mind, the finance function must embrace how financial analytics platforms can enable flexible, automated and robust planning, analysis and reporting – providing the right information for decision making.
This technology can also analyse future business performance through scenario modelling, which is a game-changer when faced with endless questions, worries and possibilities. For example, if exports to the EU fell dramatically and the government didn’t secure alternative trade deals as quickly as expected, how will this affect profitability? Modelling hypothetical situations such as this will allow the finance function to understand the potential impact of them better and therefore make better strategic decisions. All this can happen in real-time in the boardroom, saving time, money and increasing chances of success as plans can be implemented much more quickly.
It’s not always plain sailing
Brexit or not, any business will have to deal with unfavourable circumstances at some point. Part and parcel of being a C-level executive is guiding the firm through them, which becomes much easier if you are prepared in advance. Brexit isn’t the only external factor that can affect the success of a business. Market fluctuations, a drop in the value of the pound, interest rates, consumer demand – these are all relatively uncontrollable, but they have an impact and should be accounted for when planning for the future.
Too often, data analysis is focused on the outcomes, leaving CFOs to deal with the consequence rather than the cause. Instead, they should focus on the drivers of business performance. Consistently tracking a number of drivers over time makes it easy to quickly correct a problem before it escalates further whilst also helping to break down the silo mentality. For example, the CFO could be furious at an apparent worsening cashflow, whilst the CEO has confidence in the firm’s positive profit story. Collating data on all the relevant business model drivers into a clear and succinct diagram gives much more unity to boardroom discussions on what can be done to improve performance. A united management team can make faster, more effective decisions much more easily, which is vital through the current economic and political climate.
Having a full, unfiltered picture of the business history whilst simultaneously predicting the possible outcomes of future scenarios gives executives the confidence to make quick and effective decisions. This is essential, especially with the time pressure of Brexit looming over everyone’s heads. It must be said that uncertainty will not dissipate entirely until after the event, it’s human nature to turn your head to the next big concern. But, whilst nothing can replace the judgement of an experienced executive, technology can provide a much-needed helping hand in tumultuous times.