In this series of blogs I am looking at areas where FP&A departments must improve if they are to support organisation decision-making in this technology-driven age. In this blog, I’ll cover the new staffing roles that are essential.
FP&A departments are typically dominated by accountants. Accountants that have an eye for detail, understand the need to provide accurate financially-based analyses to help drive planning, and the technical skills to make this happen. With the latter, most accountants are skilled in the use of Excel and maybe some of the multidimensional analytic technologies, which typically date from the late 1990s.
But in today’s technology-driven analytic world, a world dominated by new types of databases and new Machine Learning capabilities, are these technology skills the only, or even the right skill set to have? Although the word ‘Finance’ is in the title of the department, the words ‘Planning’ and ‘Analysis’ are the focal point of the group. And given that the latest advancements in analytical technology require new, different kinds of expertise not traditionally found in an accountant, then it can be argued that most finance staff are way out of their depth. But there are signs that this is beginning to change.
Although the main purpose of the FP&A department is to orchestrate an organisation’s planning process and provide analyses on results, in today’s competitive world this just isn’t enough. It’s essential that departments are able to justify their existence in terms of the value they bring. For most that mean being a strategic business partner to help senior managers identify weaknesses, spot opportunities, and are able to react fast in supporting the development and implementation of adjustments to strategy.
In doing this FP&A departments must be functionally mature in that they understand their role in planning, resourcing and monitoring performance; that they are efficient in both the resources they consume and in how the organisation operates; they are able to extract competitive information locked away in huge amounts of data that is both internal and external to the organisation; and that they have a collaborative way in dealing with managers and senior executives throughout the company.
To meet these diverse needs, a number of companies have taken the approach of splitting FP&A into groups that each have a different focus. For example:
- Centralised planning and reporting – this group are responsible for producing the organisation’s ‘standard’ set of reports and analyses, typically at the end of each month. The production of these tends to be automated, although checks are made to ensure data transferred from transactional systems was successful. They are also responsible for the collection of budgets and forecasts that are then submitted to senior management for review.
- Local support – these tend to be individuals that work with local managers in a specific department/ territory whose role is to support them with the specific issues they face. This can include analysing costs/revenues that take into account local trading conditions.
- FP&A Systems – a group of people that specialise in advanced analytic technologies and how the organisation as a whole can benefit. For example, they would be responsible for developing and supporting planning and analytic systems used by Centralised planning and reporting, as well as providing support for more sophisticated analyses required by senior management and/or local territories.
As a consequence of this focus, senior FP&A managers are realising that new roles are necessary, whose abilities are often outside of the traditional training given to accountants. These new roles can be grouped under the following headings:
FP&A Architect: These are people who are skilled at using modern planning and reporting tools, and keep themselves up-to-date with what’s going on in the development of those tools. They are able to build models; connect them to various data sources, and link them to other models. They are typically involved in specifying requirements as well as in the system rollout and support of end-users.
Analyst: These are people who understand the new, sophisticated analytic technologies and in the development of new Big Data capabilities. They are typically skilled in statistical techniques and know how to use those tools to identify relationships which can then be used to spot opportunities and/ or predict future results.
Storyteller: These are people who are able to combine results from models built by architects and analysts. They are able to place them in the context of decisions to be made in a way that engages the readers and explains how the results were produced.
Influencer: These are people who are able to work with senior executives in communicating the importance of what FP&A are doing, as well as providing feedback that can shape the direction of the systems and practices being developed by FP&A.
Technology in the past has typically reduced staffing levels within FP&A, but with the advent of new analytical technologies and the speed of business change, there is a growing awareness that it’s time to build up these teams, but with very different skill sets compared to the past.
The article was first published in the D!gitalist Magazine
Connagh@yahoo.com
May 8, 2022