The Fast Close Imperative

The Fast Close Imperative Drivers, Key Considerations and How They Reflect on the Finance Department

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Ventana Research: The Fast Close Imperative

The Importance of Closing Quickly Many CFOs and controllers find themselves in a bind. They look for ways to give the finance department a more strategic role in their company, yet they cannot provide the resources finance would need to be able to handle core functions quickly and efficiently. Our benchmark research “Trends in Developing the Fast, Clean Close” found that some companies are actually taking longer to close than they The research shows did at the time of our previous research on that process design this topic. The close is taking longer for and execution as these companies because finance organizations have failed to automate as much of well as using the their closing process as possible and they right software are are using inappropriate software to manage usually the two it.

most effective ways of accelerating the close.

This is not a trivial matter. Companies that close within five or six business days enjoy several advantages over those that take longer. Closing promptly reflects efficient utilization of resources; such companies are able to spend more time on higher-value, more strategic activities. Faster closers also are able to review their final results sooner and so can be nimbler in seizing opportunities or dealing with risk. For both these reasons, finance departments seeking to become more active partners with the rest of the business must be able to close within one business week; doing so is a sign that they are capable and should be taken seriously. In addition, companies that are required to provide financial statements to public investors or regulatory agencies gain time to prepare these statements and related commentary if they close fast. The research shows that process design and execution as well as using the right software are usually the two most effective ways of accelerating the close. Use of the right software can enable a company to close faster: 53 percent of those using consolidation software close their quarters in six or fewer business days versus just 38 percent of those that use spreadsheets. Moreover, those that use a dedicated consolidation application are more satisfied with the software they use for the process than those that use spreadsheets: 78 percent of dedicated software users are satisfied or very satisfied, compared to just 32 percent that use spreadsheets. In addition to software, process is important as well and dealing with the two comprehensively is self-reinforcing: the right software makes it easier to manage a well-designed process, and well-designed processes take full advantage of the automation capabilities to speed the close.

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© 2017 Ventana Research


Considerations for Consolidation Software Statutory consolidation software has been around for decades, which means the category is quite mature. Still, it’s important to verify that the application you are considering will handle the accounting and scalability requirements of your business both today and for at least the next five years. Besides functionality, we advise buyers to insist on these features:

Suites may have a lower cost of ownership, be easier to learn and use and have component elements that are designed to work together.

• The finance department can control and manage the package, enabling it to make it fast and easy to effect configuration and other user-directed changes. • The software includes workflow management to support more consistent process execution and facilitate process improvements. • The software supports tablets, smartphones and the other mobile devices that are growing in importance as users expect to be able to work anytime and anywhere. • The vendor can show proven successful implementations for companies similar to yours.

With more options and software vendors in the market than ever before, it’s best to keep an open mind and consider the offerings carefully. Most consolidation systems are part of broader financial performance management suites that typically include budgeting and planning tools, reporting and an application for managing the extended close. Even if a company is looking today only at consolidation, it may want other capabilities in the future, so buying a suite can make sense. And doing so has advantages: For instance, suites may have a lower total cost of ownership, be easier to learn and use and have component elements that are designed to work together, which can simplify data handling, process execution and maintenance.

What About the Cloud? Cloud computing is growing in popularity. Today, companies choose to deploy consolidation software either in the traditional way, on-premises, or through cloud-based software as a service (SaaS). SaaS offerings can have several advantages over the on-premises approach: •

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They are accessible anytime and anywhere, which is especially valuable for geographically dispersed companies with smaller offices that lack an IT staff. Upgrades and new releases are managed by the vendor, not the company.


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This deployment approach eliminates the need for IT staff to maintain and support basic on-premises software and so utilizes IT resources more effectively. Using software-as-a-service can be more efficient and provide lower total cost of ownership because of lower initial capital costs for software and hardware as well as reduced maintenance costs. SaaS can be more secure and provide more certain disaster protection than on-premises.

However, SaaS is not the right choice for all companies, and SaaS vendors vary in quality and safety. Some of the most important questions to ask of a cloud vendor include these: • • • • •

Does the service provider have a proven record of implementation success? Are there solid references from companies in the same industry as the buyer? Does the vendor offer all of the necessary functionality and a detailed service level agreement that meets company requirements? Does the vendor have the most stringent security certifications and an infrastructure with proven reliability? Will the company have contractual ownership of data and detailed written provisions for dissolving the relationship?

Make Faster Closing a Priority The first step in shortening the close is to make it a priority. More than threefourths (77%) of companies that set out to speed up the process cut their close by at least one day; only 15 percent of those that did not do so. Finance groups should make closing sooner a priority. Doing so affirms the effectiveness of the CFO, the controller and the whole department. To speed the close, begin by examining the existing process and software to identify opportunities for improvement. Process rationalization, staging of the process and simplification are keys to a faster process. If your company is using desktop spreadsheets to manage the process or if your consolidation software is more than five years old, consider that a newer consolidation package might enable a faster close. Closing the books is a core function of Finance; make certain that antiquated procedures and desktop applications aren’t holding your department back.


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About Ventana Research Ventana Research is the most authoritative and respected benchmark business technology research and advisory services firm. We provide insight and expert guidance on mainstream and disruptive technologies through a unique set of research-based offerings including benchmark research and technology evaluation assessments, education workshops and our research and advisory services, Ventana On-Demand. Our unparalleled understanding of the role of technology in optimizing business processes and performance and our best practices guidance are rooted in our rigorous research-based benchmarking of people, processes, information and technology across business and IT functions in every industry. This benchmark research plus our market coverage and indepth knowledge of hundreds of technology providers means we can deliver education and expertise to our clients to increase the value they derive from technology investments while reducing time, cost and risk. Ventana Research provides the most comprehensive analyst and research coverage in the industry; business and IT professionals worldwide are members of our community and benefit from Ventana Research’s insights, as do highly regarded media and association partners around the globe. Our views and analyses are distributed daily through blogs and social media channels including Twitter, Facebook, LinkedIn and Google+. To learn how Ventana Research advances the maturity of organizations’ use of information and technology through benchmark research, education and advisory services, visit www.ventanaresearch.com.


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