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5 Myths around Automation in FP&A
September 3, 2018

By Daria Huszar, Founder of DJEENI

FP&A Tags
Financial Planning and Analysis
FP&A Technology

Why automate?

Many believe that one of the future roles of Finance, and FP&A, specifically, will be to provide real-time, data-driven decision support for the business. By providing invaluable data-driven insights for example for Sales and Marketing, Finance will have the ability to directly influence revenue. This will transform Finance from a mere ‘cost center’ to a ‘profit center’ function, raising its importance within the organization.

But real-time data handling and transformation into business insights can only happen once process improvement and automation are in place.

Myth 1: FP&A is not transactional

According to McKinsey, on average, approximately 60% of Finance activities can be fully (40%) or mostly (17%) automated with technologies available today.

Obviously, the more transactional and less strategic an activity is, the higher percentage of tasks can be automated. Financial Planning and Analysis is somewhere in the middle of this spectrum.

While the automation possibilities may not be obvious at first sight for FP&A specifically, in reality, many of the tasks are fully (11%) or mostly (45%) automatable.

Myth 2: We can’t automate without IT support

It’s a common experience that as a solution to a problem the implementation of a grandiose new system gets approved. And when this new system gets introduced in Finance, the IT department takes over its setup and maintenance. This often results in slow turnaround times, solutions that are inflexible and requiring special expertise, thus expensive to change later.

Luckily between large IT systems and MS Excel, the most commonly used software in FP&A, there’s a vast land of opportunities and gaps that can be either filled in by enhancing the team’s skills or using simple tools that do not require IT support. 

I like to say that if you compare FP&A in a specific business to a country’s infrastructure, it seems like we only have two extremes at the moment. High-speed trains represented by ERP systems and sophisticated planning tools and barefoot represented by MS Excel. 

By using best practices in financial modeling (taken from investment banking) and data modeling, introducing programming and increasing the overall MS Excel knowledge of your team, you can start building your in-between infrastructure, starting with ‘bikes’. You can hire interim experts to help in setting up your new infrastructure. Albeit it’ll come with a price tag that could be best described as the ‘taxi service’ – extremely efficient but not everyone can afford it. Finding lightweight tools, less dependent on IT means you can achieve more with a lower price tag: you can start operating ‘buses and trams’.

Myth 3: It’s too expensive

Automation can be expensive but it doesn’t need to be. In terms of investment, you can play smart too by taking an incremental approach in the ‘agile’ way. You can experiment with solutions on a small scale, impacting only a well-defined, limited area. Once a solution proves itself, it can be extended later on to more tasks or even the whole operation.
As to the benefits, letting your team do low-value add tasks more than half a day in itself is surely very expensive.

Myth 4: We don’t have time to automate

Automation doesn’t necessarily mean year-long projects at all. You can do it step by step, starting slow, from the tasks that are taking most time from you. This way with the time gained you can automate further.
A word of caution: if your operation resembles a fire station constantly putting out fires and having no extra time on hand, you may have to consider hiring dedicated experts for your automation project, even if only for the first period when benefits like stabilized operation and time gain start to appear.
Sure, you can still opt out but then think about your competition. If you won’t find the time to automate, your competition surely will, gaining a competitive edge over your organization.

Myth 5: I’ll lose my team

With automation, it’s low value-add tasks that will disappear making space for more value-add activities. Luckily as more data becomes available the more demand there is for analyzing tasks where humans can shine. That means not less but potentially more work for those working in Financial Planning & Analysis teams.

 

Can you think of other myths around automation of Finance? Leave your comment below:

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