Biotech and life sciences companies are at the forefront of science, but their finance teams frequently use outdated tools and processes. This is not ideal when key stakeholders, including private equity partners, stockholders, and venture capital investors, require customised financial information.
Sage Intacct and Gatepoint Research surveyed 100 finance executives in the biotech and life sciences industries to determine how their teams prioritise these needs, what challenges they face, and how they use technology to elevate finance’s role in the business.
Small teams, big impact
Most companies surveyed are pre-revenue therapeutics start-ups with fewer than 10 to 500 employees.
Half of the executives surveyed have less than four people on their finance team. Even companies with 250 to 500 employees say that their average team size is in the single digits.
Those small teams, however, are tasked with several initiatives, including:
- Gaining operational efficiencies by simplifying processes (59%)
- Automating manual processes (57%)
- Building data analysis capabilities and skills (49%)
- Optimising the finance operation model (46%)
- Harnessing data to meet changing information needs of stakeholders (42%)
The fact that nearly 60% of finance leaders report that their current processes are challenging is not surprising. With most funding going to biotech R&D, finance is often stuck with rudimentary bookkeeping, which means lots of spreadsheets. The problem with spreadsheets and manual data is that it takes a long time to gather, it’s prone to errors, and it’s hard to analyse.
It also introduces other challenges, including:
- Poor integration of data from different systems (47%)
- Cumbersome administrative and manual tasks (45%)
- Budget constraints for finance technology (41%)
- Lack of relevant skills within the finance team (27%)
- Inadequate or outdated finance systems (26%)
Finance leaders recognise 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 and suggests a fundamental shift in how the finance function operates within the business. This shift has been underway for years. So, what’s stopping finance from making the change?
Hampered by poor integration and manual tasks
Biotech finance teams need to spend less time gathering data and more time analysing it to inform strategic business decisions. Given most finance teams’ size and cost targets, the only viable option is to automate data capture and consolidation.
But finance leaders find it challenging to simplify processes and build better analytical capabilities, especially when combining data from different systems or spreadsheets.
Even when data is automatically collected, it often still needs to be consolidated, which again takes time and leaves room for mistakes. It is often impractical and expensive to solve the problem by replacing all of their systems with a single cloud-based solution.
As a result, teams spend their time aggregating and manipulating data in Excel instead of using reporting automation to analyse data and make strategic business decisions.
By the time their numbers are added up, finance is so far in the past that it’s hard to make decisions about the future. But in an industry where most companies rely on investor funding, having access to real-time data can be an essential tool for making sound financial decisions.
Technology can change the game
COVID-19 has changed how finance leaders think about using data to manage risk. Scenario modelling and planning are helpful even when there isn’t a global pandemic. But they are equally helpful in preparing for other market fluctuations or funding rounds.
By putting finance at the centre of all business systems, finance teams can see all of their key metrics on one dashboard and know where they stand in real-time. That also makes it easier for them to report their numbers to stakeholders and investors.
Most CFOs today see advanced analytics as a critical tool for making operational decisions, and three out of four of them plan to use it moderately or extensively in the future, but significant roadblocks remain, including manual tasks, outdated processes, and issues with data integration.
Driving change can be difficult for resource-constrained teams, but pushing through has the potential to fundamentally change what finance does and how it can add value.
The survey audience recognises this shift and the need to act: 95% of finance executives surveyed plan to re-evaluate their financial management system in the next 12 months.
As the only AICPA-endorsed accounting solution, Sage Intacct helps biotech companies to transform their business and drive digital transformation with modern cloud accounting.
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