2024 FP&A Trends Survey. Empowering Decisions with Data: How FP&A Supports Organizations in Uncertainty
Click here to read the report
2024 FP&A Trends Survey. Empowering Decisions with Data: How FP&A Supports Organizations in Uncertainty
Click here to read the report
We all have noticed a huge change in how our businesses operate during the last few years, regardless of the industry. Chief Information Officers (CIOs) are talking about new digital ways of doing business and the utter lack of ready talent in your FP&A teams to manage a new scenario of unforeseen competition.
I am sure that most of us have heard the below comments from senior leadership teams:
Indeed, FP&A teams are expected to play a crucial role in a company’s digital transformation process since they handle critical financial and operational information across the entire business. It may include sales, operations, supply chain data, and real-time industry and market statistics.
However, in reality, finance and FP&A, in particular, as a function, are not transforming themselves at the same pace as the business in which they are operating. In many cases, we are held back by legacy practices and processes which have largely become irrelevant in the new age.
In this article, I have jotted down a few basic things we did in Japan where we faced the same questions of relevance.
This transformation journey encompassed three facets – structure, technology, and storytelling.
We modified the structure of our teams in three aspects.
We realised that close partnering with our business teams is imperative for the “new normal”, as it can facilitate quick analysis turnaround and decision-making. So, we introduced Finance Business Partners (FBPs) who worked within business teams. They understood the business issues first-hand and solved them by taking the specialists’ help depending on a specific need.
We also adopted technology. We introduced online dashboards for many areas instead of month-end updates. It meant there was no need for the managers to wait for monthly reports to make decisions. We also invested in scenario-based forecasting tools, tools for doing auto analysis on areas such as Accounts Payable (AP), Accounts Receivable (AR), sales, closing financials, etc. All these were off-the-shelf products, so we did not spend much on customisation. We also introduced several self-service tools, which moved the responsibility of data capturing to the actual people instead of finance doing this work. Lastly, we introduced reporting by exception instead of sending routine reports, which nobody looked at. It helped us release more time for other FP&A activities.
We trained our FP&A guys in storytelling. The training was focused on simple but effective stuff like knowing your audience, anticipating questions in advance, not cluttering slides, avoiding accounting/finance jargon, and always connecting to a corporate strategy. Other key principles introduced were as follows:
I learnt some important points during our journey, and I feel they may be vital for you as well.
“Predicting rain doesn’t count; building the ark does”
Warren Buffet
While it is impossible to predict the future, we all, as finance leaders, should think of what can happen and ensure that the company is ready to face it successfully.
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