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SWTCH by Pigment
Three days of predictions, insights, and advice from leaders in finance, sales, HR, supply chain and more
Register now here
By Amrish Shah, CFO at Metabolic
All functions have operational deliverables, with perhaps a very few exceptions like a Corporate Strategy function. Given this “daily business” that has to be conducted, it is logical that risk rears its considerable head when attempting change. The greater the change impact and ambition, the bigger the risk has to be taken into account on how to guarantee “business continuity”. FP&A is not exempt from this.
What are the daily operations in FP&A?
The operational delivery of FP&A revolves around the following big blocks:
Shifting now to change, what are the tensions driving the imperative for FP&A to undergo some fundamental transformation? The critical imperative is the changing mandate of finance. This is driven by the changing external landscape that most organisations find themselves in as well as the increased opportunity that technology acceleration provides. These technology opportunities are in the areas of Cloud-based services, Data Analytics, Visualisation, Cognitive Modelling and many others.
To summarise briefly, the imperative for finance is to play a more impactful role which moves from FP&A focused on reporting and working more in isolation to providing business solutions whilst partnering with the business. As the following table illustrates:
All sounds simple and straightforward, right? No. And the simple reason is that, historically, daily FP&A operations have tended to reside on the left-hand side. Transformation aspires to live in the right-hand dwelling.
This illustrates the challenges of transforming an FP&A service whilst still having the responsibility to deliver operationally. In the end, we want to effectively “transform the operations”. The operational deliverables of FP&A are not likely to change materially in intention. The biggest change imperative is to change how this is to be delivered and, therefore, what kind of culture is required from an FP&A function and what kind of talent is needed.
In this respect, the analogy of a plane in mid-air is illustrative. The plane is a bit old, and there is less than 90% confidence amongst the crew whether everything is working as it should. Secondly, the journey the passengers enjoy whilst on board is less than optimal, which means that when the destination is reached (no doubt late), the passengers alight in not the most optimal of moods –. In contrast, they should be thinking of what a wonderful experience they have had as the first step on their journey.
Both the parts of the plane need to change (the what) as well as how the overall experience is provided (the how).
Is the incumbent organisation capable of delivering this change? I see three big challenges that create some doubt:
If change is not an option, what can increase our chances of successfully transforming the plane mid-air? Whilst by no means an exhaustive list, I believe the following is essential:
In the end, the need to transform FP&A operations is in the interest of the business, not for FP&A itself. Nevertheless, the business will not thank the function for changing in a way that has brought the operational needs into danger. It is possible to pull off such a balancing act by explicitly addressing the challenges related to capacity, competence, and credibility if approached in a transparent, structured, disciplined, and consequential way.
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