Simon Gray, Head of Finance and Operations at Agilisys, discusses how modern agile financial management systems can enhance strategic decision making in the public sector
If recent events have taught us one thing, it is the fact that the world can turn upside down in double-quick time. While significant uncertainty remains around the long-term impacts of the pandemic – and what this will mean for the public sector – finance leaders will need to help their organisations digest new information and act quickly as circumstances change.
The need for responsiveness is acute. If you can’t make timely decisions, then you’re always behind the curve. Financial challenges are everywhere. The key is having real-time access to relevant information so priorities can be set for allocating budgets and financial management.
As a citizen, I want to know that when my council agrees on its latest budget, it is factoring in potential challenges in the future. To do this, modelling is important. Revenue is relatively static, as are certain statutory services that must be delivered such as environmental health, waste collection and street cleansing. These account for a certain level of spend. The big question, however, is around what you do with the rest of the money.
All about the data
The reality is, if you don’t have the data to show how best to utilise the available budget, you can’t make those decisions. Further, you can’t communicate the reasoning behind those decisions to citizens. Finance systems are all about data. The average local authority has hundreds of systems full of financial information covering planning, highways, adult social care, children’s care, schools and so on. Effective finance systems take that data, normalise it and allow a budget holder to decide what they can – or can’t – do with their available budget.
Scenario planning offers the opportunity for finance to support the organisation with a key strategic overview. This in turn enables informed decision making in a timely fashion. For example, if you’re going to start switching off some library services in the community, what have you balanced that against in terms of priorities? What are you going to spend the money on instead? Right up to executive level, that’s the type of data they rely on to make those decisions.
Dynamism and flexibility
There is no doubt that there is plenty of appetite for modern, dynamic financial systems. However, it mustn’t be a knee jerk reaction. It is important that local authorities work with suppliers that have in-depth technical Microsoft Dynamics 365 Finance know-how to ease their transformation plans. Only then can they build the technology-enabled finance team that public sector organisations crave.
Those local authorities that have adopted these solutions are already beginning to benefit from the flexibility in the way systems can be configured to deliver scenario planning. They are enjoying the ability to fit systems to their unique needs and successfully find ways to deliver efficiency to employees and citizens alike. Mobile, portal-based solutions that are easy to access anytime, anywhere are particularly resonating given the need for flexible working.
Up in the cloud
The adoption of cloud-first policies is another key factor in the move to modern, SaaS-based enterprise research planning (ERP) solutions. Purchase to pay, order to cash, expenses, project accounting and payroll are just some of the areas that benefit from a full cloud ERP experience. This is then supported by strong analytics and reporting with flexible on-demand working that adapts to organisational needs.
Microsoft Dynamics 365 Finance integrates all relevant processes across a local authority, including finance, project control, purchasing and customer relationship management as well as billable hours and budget administration. All the information is immediately available, enabling the team to carry out a detailed analysis and adjustments that ensures business agility, minimised cost, optimised spending across departments and process automation.
Four lines of sight
Today’s local authority finance leader has four lines of sight: hindsight and oversight, focused on financial monitoring and historical figures, as well as insight and foresight, focused on anticipating the future and evolving to meet the needs of stakeholders like the board, investors, and the community at large.
Active financial planning enabled by the modern finance systems detailed above, provides those four lines of sight. They help financial directors gain data-driven insights into the potential impact of multiple scenarios, while agile financial management helps shift the focus towards effective resourcing improvements for frontline delivery. They also help finance leaders deal with uncertainty and disruption; an essential requirement as we emerge from the COVID-19 pandemic.