Biotech and life sciences companies operate on the cutting edge of science, but their finance teams often work with dated tools and processes. In addition, key stakeholders often include private equity partners, stockholders, grants, and venture capital — and all of them need tailored financial information.
Sage Intacct partnered up with Gatepoint Research and surveyed 100 finance executives across the biotech and life sciences sector to find out how their teams prioritize those needs, what obstacles they encounter, and how they use technology to elevate the role of finance in their business.
Small teams, big agenda
Most companies surveyed are pre-revenue therapeutics startups from less than 10 to 500 employees.
Half of the executives surveyed report a finance team smaller than 4 people. And while there is a natural correlation to company size, even companies between 250 and 500 employees report an average team size in the single digits.
“How big is your finance team?”
Those small teams, however, are tasked with several initiatives. As Sage Intacct has previously written about, the role of the CFO is expanding, which is one of the reasons startups bring them on board sooner. In the survey, they asked finance leaders to identify their top initiatives:
“What are finance initiatives at your company?”
Gain operational efficiencies by simplifying and automating processes topped the list, nearly 60% of finance leaders reporting that their current processes are challenging.
And that’s no surprise — with funding going largely to R&D, finance often is stuck with rudimentary bookkeeping, which often means lots of spreadsheets. The problem with spreadsheets and manual data is that it takes a long time to gather, is prone to errors, and hard to analyze.
Finance leaders recognize the importance of data analysis to drive strategic decision-making for their businesses: 49% of the executives surveyed said building data analysis capabilities and skills is a significant initiative.
The data clearly shows strategic initiatives, rather than tactical ones, pointing to a fundamental shift in how the finance function operates within the business. This shift has been underway for years. So what is keeping finance from making the change?
Poor integration and manual tasks hold finance teams back
To become an informer of strategic business decisions, finance needs to free up as much time gathering data as possible, and shift resources to analysis. Given the size and cost targets of most finance teams, automating data capture and consolidation is the only viable option for teams. But finance leaders report challenges with simplifying processes and building better analytical capabilities — primarily integrating data from different systems or spreadsheets. Even when data is captured automatically, it often still needs to be consolidated, which again takes time and opens the door to errors. Fundamentally solving the problem by replacing all of their systems with one big solution is often impractical and too expensive.
As a result, teams keep spending their time aggregating and manipulating data in Excel instead of taking advantage of reporting automation to analyze data and inform strategic decisions for their business.
By the time their numbers are aggregated, finance is looking so far in the rearview that it’s challenging to make forward-looking decisions. But in a space where companies operate predominantly on investor capital, access to real-time data can be a critical tool for making financially sound decisions.
How new technology changes the game
Big data and advanced analytics are no longer just buzzwords, but tangible tools to help CFOs add value in strategic areas of their business.
By integrating various business systems with finance at the core, finance departments can access their key metrics in one dashboard, and truly understand where they are, in real-time. That also makes reporting their numbers to stakeholders and investors much easier.
Already today, most CFOs look to advanced analytics as a key tool for operational decision-making, and three in four plan to make moderate or extensive use in the future.
In addition, Covid-19 has noticeably driven finance leaders’ expectations in using data to manage risk. Scenario modeling and planning are valuable tools without the added urgency of a global pandemic. But they are equally useful to prepare for other market fluctuations or funding rounds.
The expectation is clearly to that there will be more use of advanced analytics tools. To get there, the biggest obstacles remain manual tasks, outdated processes, and data integration.
Those are the same obstacles that are holding finance back in their day-to-day operations today. The benefits, therefore is twofold.
Driving change can be difficult for resource strapped teams but pushing through the change promises to fundamentally shift what finance does and how it can add value.
The survey audience clearly recognizes this shift and need to act: 95% of finance executives surveyed plan to re-evaluate their financial management system in the next 12 months.
Sage Intacct partners with finance teams drive their digital transformation. Their cloud accounting is ideal for the needs of biotech and life sciences companies, and the only accounting solution endorsed by the AICPA.
Go to sageintacct.com/biotech to see how biotech companies can transform their business with modern cloud accounting.