Jim Collins of IBM shares key trends and top tips to help capital markets firms get the most out of data using financial performance management.
Q. Can you give us a quick snapshot of what financial performance management is?
Financial performance management, and performance management in general, focuses on three key factors: increasing revenue, decreasing cost and increasing profitability, and managing risks. We help capital markets firms retrieve data from disparate systems, put it in one location, and then analyze it and collaborate on decisions to benefit the firm. It benefits every financial services institution, but the key benefit for capital markets firms is searching the data for predictability to make predictive forecasts.
Q. What financial performance management trends do you see in capital markets?
One of the trends that we’re seeing is cognitive business, or digital business plus digital intelligence — creating knowledge from data. By digging in and understanding the data better, you can expand everyone’s expertise across the enterprise. Cognitive business systems understand like humans do; they reason, never stop learning and interact with humans in a natural way.
In all segments of the financial services industry, there is also an increased focus on customers — both internal and external. Everyone has to better understand their customers and better predict what they want.
Additionally, because of executives’ heightened concern regarding increased competition, and growing customer demands and expectations, we’re seeing a lot of reassessment of business models — how firms go to market and how their operations go to market.
Q. What financial performance management solutions could increase a capital markets firm’s competitive edge?
Implementing an integrated strategy across finance and IT and all business users is important. Financial performance management programs make it easier to do that, in part because of mobile accessibility and dashboards that easily allow access by the business users to data from across the enterprise.
Additionally, companies have to let go of routine day-to-day activities that aren’t adding value to their organization. Outsourcing those activities allows your team to concentrate on the things that add value to the business. That could mean cloud or outsourcing technology.
Today, enterprises need IT solutions that offer speed, foresight and agility. To remain competitive, you need to quickly make decisions but also be agile enough to change them if a better alternative appears. Unfortunately, there is still a lot of legacy architecture that is holding back many firms and limiting their competitiveness.
Q. What are your top tips for a financial performance management strategy?
Scope, scale and speed are important. First, with scope, you have to clearly define where you want to be and where you want to play.
With scale, you’ve got to protect your competitive advantage. You can’t be afraid to place bigger bets on emerging technology. Your entire organization must be totally committed, especially if your business model is changing, and that often requires a culture change.
Finally, you must be able to adopt an agile approach to everything you do, from innovation to execution. Then you must make decisions and take action. Don’t worry that you may have made a decision that isn’t 100% successful. You learn from mistakes — you just need the agility to redirect.
This article first appeared in the Fall 2016 issue of FINTALK Report.