Most people have worked with organization wide initiatives such as Enterprise Performance Planning and Integrated Business Planning yet they are not familiar with Integrated Financial Planning and Analysis.
The Amsterdam FP&A Board was held to discuss and answer questions such as: What is Integrated FP&A? What are some factors that enable it? What are the benefits and challenges in having an Integrated FP&A?
Over 30 professionals from leading organizations, came together in World Trade Center building in Amsterdam and discussed the future state and implementation around Integrated FP&A. At the meeting, Erik Nachbar, Finance Director at Tata Steel, presented on a working model of Integrated FP&A and the journey of making it a success in an international corporation with diversified supply chain and operations. There were also group discussions followed by the presentation of the findings by each group respectively.
Introduction to Integrated FP&A
After people briefly introduced themselves, the definition and end state of Integrated FP&A was discussed.
- The mutual understanding for most people involved:
- Reducing the time to collect and analyze information
- Speeding up the decision making process
- Moving away from periodic and rigid to more agile, informed way of FP&A
- Combining Strategy with Operational and Business Planning and Forecasting
- Uniform, continuous process
Even though the definition of an Integrated FP&A was agreed for the most part, there was quite a difference of opinion on different methods of achieving it. Importance of Data integrity and Data management was emphasized. In addition, specific challenges of a top-down and bottom-up implementations were discussed further in depth.
Despite the challenges and different ways of approaching it, there were factors identified to further enable the success of the Integrated FP&A function:
- Driver-based planning models
- Modern, multi-user, multi-dimensional planning software
- Organization structure which can support and sustain it
- Senior management and business culture buy-in
The speaker, Erik Nachbar, Finance Director at Tata Steel, started off with the introduction of the business model and layers of complexity within his organization. It became very clear that interconnectedness of different functions, systems, data and information overall was critical. On top of that, compromises needed to be made in some situations for the best outcome of the organization. After the the Integrated FP&A was put in place successfully, forecasting accuracy and collaboration has increased immediately. Additionally, provided further benefits down the value chain that was previously not possible.
As the final event of the evening, the participants split into three groups to discuss the key steps in Integrated FP&A from the perspective of implementation, culture/people and system/process angles.
The first group argued that in order to implement the Integrated FP&A, the vision and a business case are bare minimum requirements to get started and had to be crystal clear. This process must follow a defined scope, metrics, planning and clean data for a successful implementation. Setting clear goals and metrics to track from the start made the implementation’s progress transparent and measurable.
It was displayed by the second group that Integrated FP&A require a certain mindset and culture for it to work on an ongoing basis. Not only does it require the buy-in and continuous communication but there also has to be promoters/champions continuously education people and making sure that the vision and execution does not falter.
Despite having the most technical angle of the discussion, third group decided that it was best to start with the goal and strategy in mind. It was crucial to be receptive to the needs of the organization and customization could be much needed as there was great variety of complexity between different industries, functions and companies. Sometimes “One size does not fit all” It was also mentioned that consistency in processes and systems where possible was very beneficial.
Conclusions from the Meeting
It is without a doubt that Integrated FP&A is here to stay and the tools that most organizations already use will only accelerate its wide acceptance. The full potential of it is getting unlocked just recently as more and more organizations are refining their processes. At the end, Integrated FP&A will get organizations closer to a state of “no surprises” and better scenario planning to assist strategic execution.
Let us know if you have any examples from your organization on successful implementation or specific challenges on Integrated FP&A at firstname.lastname@example.org