By Michael Royall, author
Interview with founder of the International FP&A Board Larysa Melnychuk
The global trend for FP&A is surprisingly singular; apparently, we all want to know how to influence and predict our financial future. At the International FP&A Boards, professionals from all over are eagerly sharing and learning about how to get there.
Three-and-a-half years ago Larysa Melnychuk left her corporate job of 18 years working as an FP&A (Financial Planning and Analysis) professional for several different large companies in the UK. At the time, the discipline, involving—roughly speaking—the use of financial data to make fast decisions based on prediction, was rapidly developing.
When Melnychuk left, she remembered a question that had fascinated her before: how do the other companies do it? It was the seed that led to the International FP&A Board, a professional discussion and debate forum for senior finance practitioners. The Board is now well established in 10 cities and 9 countries in Europe, the Middle East and Africa. Soon, it will be expanding to North America and Australia.
Why is the Board growing so fast?
People are realizing that the classical style of management accounting and financial planning and forecasting simply isn’t enough anymore. When I was a practitioner myself, we were always working on tight deadlines. But at some point, you just need to stop and look at your company from the outside—think about how others might be doing it.
That’s the main reason a lot of prominent CFO’s and Finance Directors attend our boards: to understand what’s happening around the globe. The Boards are exclusive to CFO and FD-level practitioners. We share diagnostic content and case studies, analyze the latest trends and discuss best practices. Contributing to this global exchange of knowledge really appeals to a lot of people.
Our Boards offer a non-commercial and vendor-agnostic environment to do so.
And it seems to be working?
The first Boards were organized in London. That’s where we developed the FP&A Analytics Maturity Model, Rolling forecast and the FP&A Business Partnering Models. They all received great feedback in the global FP&A community. Soon people were joining in the London boardroom through Skype or flying in from the Middle East and all over the place.
That’s when we decided to come to them. Our first International Board was held in May of last year in Stockholm. Now we're on three continents and the exposure and support we're getting are fantastic.
In the Benelux, the events are complimentary to our members thanks to the partnerships we’ve developed. One of those partners is Tagetik, a company that currently sponsors many of the international Boards, namely in the Benelux, Switzerland, Germany, UK and Sweden. Tagetik will also sponsor the launch of New York FP&A Board on the 6th of April 2017.
The Association for Financial Professional (AFP) is our educational partner. They provide the first FP&A certification in the world. We’re provided with the beautiful boardrooms we meet in by the Page Group, the global recruitment and consulting company we’re partnering with.
You've only just had a Board in Brussels and Amsterdam, how's FP&A developing in the Benelux?
Each country has its own dynamic. Even when we discuss the same case study, the results are different. During the Benelux meetings, we tried to lay the foundation for changing the FP&A Analytics Maturity Model into an operational model. It was incredibly inspiring.
Thomas Lundell was present at both meetings. He’s the FP&A director of NetApp and held a presentation about the big FP&A transformation his company is going through right now. Thomas was asked questions long after we'd finished. You could see people’s inner child being released, they were so curious.
What's interesting about the NetApp case study is that it shows that there's no single 'right way' for making the transition to a more predictive, real-time FP&A — each organization is unique, even though we broadly face many of the same challenges.
What would you say those challenges are?
We’re definitely living in the Big-Data world already. Still, there is an inability to use this data for forecasting and planning—or to distinguish key business drivers. Huge amounts of time are spent by financial analysts on cleaning data, trying to find the logic, consolidating the result. This means less space for creative, predictive analytics.
At the same time, many organizations still have not-so-consolidated processes, very dispersed and disconnected. In reality, this should be a company-wide initiative, integrated and collaborative with a simple planning process that’s easy to manage.
In terms of technology, from spreadsheets and markers, we're moving towards integrated and collaborative planning platforms, where different kinds of planning processes are harmonized.
Isn't there software to help with that?
Of course, but before you introduce the new FP&A systems you have to understand the architecture of your model. Not enough companies have predictive models that are based on key drivers that allow you to react fast enough to developments. Historically there are a lot of partially data-driven businesses — very complex and very static models — and we still continue to have that today.
We need to harness the ability the power of modern technology. Excel is still dominating the world, and because of its ease and flexibility, everyone likes it. However, it has a lot of shortcomings and limitations. As I always say, it's good to have Excel, but it's not enough.
So what's next for FP&A?
If a driver-based model is implemented in a good system properly, then organizations can have incredible results—including an agile and flexible decision-making process. But don’t forget the people. FP&A business partnering and a good communication flow are essential for those results. The right talent is increasingly hard to find. We need people to crunch incredible amounts of data, yet with the ability to communicate with decision makers.
Eventually, companies should be able to predict in real time in order to react to current changes. Leading organizations are already moving towards this. They’re utilizing best practices and trends for their analytics, as well as their forecasting and decision-making processes.
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