Where is your finance team on the analytics maturity curve? Is finance in your organization providing prescriptive analytics to help steer the business? Is your financial planning and analysis team use artificial intelligence or machine learning to improve forecast accuracy? These are just a few of the many topics we discussed at the recent FP&A Board meeting in Toronto.
Introduction and Quick Survey
A terrific turnout of over 40 senior finance professionals and a packed room led to a robust dialogue on how to implement FP&A analytical transformation – enhancing the FP&A team members’ skill sets, automating finance processes, and using advanced analytics techniques and technology to become a true business partner.
The forum sponsored by Robert Half and SAP included a presentation on global best practices in analytical FP&A transformation, along with a guest speaker who is a practicing CFO and Head of Business Development Support at Sodexo.
As team members introduced themselves, they were asked to name the greatest challenge in driving advanced analytics in FP&A. The flipchart was rapidly covered in key hurdles facing FP&A leaders looking to drive analytics deployment. Top obstacles noted were data quality issues, prioritizing technology investment, organizational silos, and changing the culture of doing things the same way they have been done in the past.
To get know each other, the group was asked to introduce themselves to their neighbors and write on a sticky note with a key characteristic of FP&A analytics. The group facilitators quickly organized the results into an affinity diagram with following common themes emerging: timeliness, actionability, driver-based forecasting, personalized analytics, accuracy, automation, simplicity, and visualization. The group was not shy about articulating why these key features were critical success factors in implementing success FP&A analytics and driving organizational change.
To get a pulse on the current state of FP&A analytics in the group, we performed a quick survey with two questions. Question 1 was to determine how many in the audience were focusing their advanced analytics on historical data vs. forward-looking. Given the choices of mostly historical; 20% forward-looking, 80% historical; 50% / 50%; or 80% forward-looking, 20% historical, the results revealed that about half the group is focused on 50% historical, 50% forward-looking with the other half split between mostly historical and 20% forward-looking, 80% historical.
Question 2 was technology-related. We asked how many in the group were using Excel as the primary tool for financial planning, how many were using both Excel and a financial planning application approximately equally, and how many were using financial planning application as the primary tool. The results revealed that a third of the group are still using Excel as the primary tool, about half the group is using both approximately equally, whereas only a sixth of the group are using a financial planning application as the primary solution. As we all know, Excel is indeed a flexible tool and deeply penetrated in the hearts of minds of finance professionals. The group discussed new cloud analytics technology and how planning, predictive analytics, and visualization capabilities are now available in one solution, making life so much easier for the FP&A team.
Small Group Discussion: Four Areas of Analytical Transformation
Before the group adjourned to networking with a wine and light food reception, the board members broke into four smaller groups for an energizing group exercise emphasizing implementation steps in each of four areas of analytical transformation: people and culture, process, technology, and business partnering. Each of these mini-groups brainstormed, documented, and presented back to the larger audience the key considerations to address each of the four areas of implementation.
People and Culture started off the presentations, noting that the tone from top is the key first step. Executive communication is required to cascade down to all levels while attentively listening to feedback to ensure that all voices are heard. Change management is vital, as consistency and “walking the talk” are enablers of success. The team spoke to accountability across the company and the challenge of recruiting business partners to buy in to the new world of advanced analytics in FP&A. Incentives were identified as needed to drive behavioral change including potentially rewarding forecast accuracy. Ideally initiative would start small with visible changes while empathizing with the end users. Adoption is made much easier by making analytics simple. Finally, the People and Culture presenter spoke to upgrading skill sets – from accountancy to data science – or what some firms refer to as “citizen data scientist.”
The Process team agreed that the four areas were interdependent and formed a cohesive framework. For process excellence in financial analytics, the organization must strike a balance between simple-to-understand and complex methods. Relying a historical data and ensuring data integrity and alignment is crucial. The speaker talked about the pressure finance teams are under to produce insight and this can result in fatigue, shortcuts, rework, and mistakes in outputs. Driver-based forecasting was identified as critical to accurate predictive forecasting. Finally, an implementation team must encourage accountability in the business partner for collaboration around methods and data.
The technology team came out of their session excited about the new available cloud technologies for FP&A. The presenters began with the need for executive sponsorship to making technology investment a priority and overcoming the organizational inertia of using legacy systems. They spoke about defining objectives and success before you buy software, and creating a team that is interdisciplinary, cross-functional, and matrixed. Educating the end users and selling the value are imperative to success.
The business partnering team emerged from their corner and offered their ideas, including speaking the language of the business – getting out in the business for rotations, embedding finance in the operational units, and building trusted relationships. Finance should not always say “no,” but help the business spend its money wisely. Teaching the business users to fish with self-service FP&A analytics is indispensable. And, of course, people need and love stories. FP&A professionals must be storytellers to effectively communicate.
It was a fantastic event for knowledge sharing, networking, and learning about leading practices in FP&A. Held in 22 cities globally, these forums provide a community of FP&A leaders seeking to be the catalyst for the next generation of analytics in finance.