By Feng Moon, Finance Business Partner at Medtronic Singapore
Working in FP&A is one of the most dynamic & challenging careers in finance and business world. It appears that FP&A professionals wear multiple hats, performing tasks of a master of communication, a strategic leader, a resource allocator as well as a positive influencer. However, nowadays we experience lack of mature theories and models facilitating FP&A professionals’ development.
As a result of FP&A practice combined with MBA curriculum, an FP&A capacity framework was developed to facilitate:
The framework consists of 13 modules that fall into 3 sectors – core skills, hard skills and soft skills.
Core skills reflect the roles an FP&A professional plays in an organisation. Furthermore, they comprise the key financial knowledge & skills used in a daily practice. Module 12 extends far beyond work helping us rethink our health, our families and our spiritual growth. It is about finding the life balance for every business partner who, on the one hand, dedicates plenty of time and energy to developing their careers, and, on the other hand, securing the foundation of their work.
As everyone knows, the FP&A role is a mixture of hard skills and soft skills. A trust-based relationship helps us fit into the organisation while the quality of our business advice creates values. We summarise hard skills (5 modules) to demonstrate what other knowledge an FP&A professional should master and soft skills (5 modules) to explore what soft skills may contribute to success.
It is clear that these 13 blocks do not have the same priority, we rank the priorities and fill “more important” blocks in blue.
Financial skills mainly fall into 3 categories:
Hardly anyone would argue that to become a true business partner one should have strategy & big picture, FP&A most important capabilities. Senior FP&A professionals always immerse widely and deeply in business with a high portion of time allocated for strategic analysis and planning.
Most business decisions should consider both financial and HR impact. For example, target setting always links with incentive discussion. Future Finance & HR business partners will share more similar capacities & knowledge to mutually build up integrated business solutions.
Leadership (Art of Influence)
Influence level decides the financial business partner level. One of good ways to gain influence level is to take an NGO (like church) leader and influence others positively without power.
Communication & Negotiation
Communication and negotiation are crucial and time-consuming soft skills. Just imagine how time-consuming it is to learn a foreign language and present in a logical & structured way. If there is a big gap in this section, take action as early as possible.
Coach has two meanings here. First is finance coach for business & supporting functions. Some FP&A professionals host finance seminars to develop business team’s finance acumen. This creates the culture of “take finance into every business decision” and at the same time helps these FP&A gain trust quickly. Second, an FP&A always takes the role of a personal coach for their business partners helping them achieve their potential.
This framework may also be applied as a development tool for FP&A professionals to identify knowledge - performance gap, analyse this gap and define the areas of improvement.
This example helps you sort out where the main gaps come from and develop an action plan to strengthen your weakness areas and further develop your strong points.
An FP&A development is just a start-up and the road ahead will be long with no ending. Financial organisations of tomorrow will be leaner and business driven. To achieve this, financial professionals should continuously develop not only in finance & business fields but also master influence skills, strategic thinking as well as work-life balance. Hope this sharing will cast light on your potential and boost your career.
A couple of weeks ago I joined the meeting of the Amsterdam FP&A Board where we discussed the subject of the FP&A analytical transformation. In the course of the meeting the participants mentioned their current main concerns, some of which such as Data ownership, Data quality, and Business Glossary (‘Speaking the same language’). This surprised me. Why? Because these topics are ‘hot’ topics of Data Management (DM) with no common vision on the subject.
As a result I decided to write several articles on these topics for FP&A professionals. The main purpose is to share some knowledge and practical experience and to start a discussion about these subjects.
In this article I would like to talk about the following questions: How to recognize a Data owner? and What the Data owner is accountable for?
I was deeply touched when some of participants said they considered FP&A to be the owner of all data that comes to the department. The arguments were: ‘FP&A makes reports’, ‘Nobody else wants to take responsibility’. I wonder how many of you also share this vision?
To create a common opinion on the subject, let’s explore the following questions first:
Case study: an account officer of your company closed a deal with a new customer and signed a contract. He/she provides data about the customer and the contract. First the data is input in CRM system. Then the data moves to the Financial system and DWH undergoing some processing and finally the reaches FP&A department to be used in reports.
Using Data management language, Customer and Contract data (facts represented as text, numbers, graphics, images, sound, or video) went through the data life cycle (creation, transformation, and usage) through different applications. In the process the Data has been transformed, aggregated, etc. These transformations could have taken place according to different business rules. When data got into some context (in the form of a report) it turned into Information (data within a certain context and timeframe, that have a particular meaning  ). It could happen that Data lifecycle has been embedded in different business processes and went through different departments.
What kind of Data has been involved in our Case Study? Customer data is considered to be a Master data, Contract data is usually classified as Transactional data. Business rules are also some sort of data, which usually defined as Meta-data (data about data).
So, on our journey to define Data owner we need to take into consideration several contexts:
You might become lost as there are plenty of Data-related roles described in different sources. I came across Data owners, stewards, users, providers etc. I was always curious: if I were a person who has to play several roles simultaneously, would I get a A4 paper with clear description what I have to do on a daily basis?
I think one of the reasons for such a variety of functions, is that the creators of these functions do not put them in the relevant context (like the four, that we have just identified above).
So, let’s us concentrate only on the context of Ownership and let’s us continue with the Customer and Contract data example.
We all know that it is difficult to find volunteers within your company who would say ‘I am a Data owner’. How can you prove that somebody is actually a Data owner? Years ago, while setting up Data ownership responsibilities within a company, we developed a list of questions that helped in Data ownership recognition. Some of them are presented below:
Now I am convinced that the solution is quite simple. There are two unambiguous ‘recognition’ criteria for a Data owner which are an ability and an authority to:
One small detail (where the Devil is): these rules are applicable for unchanged data. As soon as data has been transformed it might change an owner.
Let’s get back to the Case Study to get a clear picture.
Customer data (name, address, country of residence etc.) stays unchanged till it reaches FP&A department. So, if you as FP&A professional discover some mismatch or finds that the data is not fully complete, what will you do? Who will be able to verify accuracy and completeness of the data and fill in gaps? As for me only one answer is possible: The Account officer is the Data owner.
Contract data, such as e.g. the contract amount might stay unchanged till it reaches FP&A department. And it still the Account officer who might verify the accuracy of the contract amount. But let’s assume that you will need to convert the amount into another currency, decide which exchange rate to apply or aggregate the data according certain rules… What does it mean? From the moment when these data transformations take place, you, FP&A professional, become the data owner. The same rule is applied for the rules that you might apply to transform data, because these rules are also data.
I will offer some general responsibilities for your consideration, but I need to warn you that these responsibilities might vary for each company. Why? The responsibilities are dependable on the size of the organization and overlap with responsibilities of other roles that might exist (such as System owner, Business process owner etc.).
So, a Data owner is accountable (based on RACI) for:
I hope that the article provokes more questions and arguments that I would like to discuss with you. Feel free to contact FP&A Board and me if you want advice on how to apply these concepts within your company.
 DAMA Dictionary, p.66
 Accuracy is freedom from mistake or error, conformity to truth or to a standard, exactness, the degree of conformity of a measure to a standard or true value, DAMA Dictionary, p.12
 Completeness is the quality of being whole or perfect and having nothing missing, Cambridge Dictionary [http://dictionary.cambridge.org/dictionary/english/completeness]
By Steve Morlidge, Business Forecasting thought leader, author of "Future Ready: How to Master Business Forecasting" and "The Little Book of Beyond Budgeting"
It is difficult to think of another business process that is as universally detested as annual budgeting.
The list of complaints will be familiar to anyone who has run a budget process or has been subjected to one…and that probably means everyone reading this article.
Budgeting has been around for nearly a century but it is still with us, despite its well-known failings.
My guess is the reason is that most people are not aware that there is an alternative to traditional budgeting. Most of the ones that have been touted over the last few decades – Zero Based Budgeting and ‘Better Budgeting’ – amount to no more than doing the same things in a slightly different way. In my view, they do the wrong things slightly righter.
The best alternative – Beyond Budgeting – has also been around for some time but it has failed to have the impact that it should have because it has not been properly understood, or it has been actively misrepresented.
The name ‘Beyond Budgeting’ is an accurate description of what ‘it’ is but unfortunately in some people’s minds it conjures up a nihilistic vision of chaos. I believe these fears are misplaced. Control (in the non-pejorative sense of the word) is key to Beyond Budgeting – it is simply exercised in a different way, using different tools. The ends are is the same, but the means differ.
This is summed up in the following table:
The Beyond Budgeting ideas have matured over the last decade or so and there are now many examples of companies that have applied these ideas and seen their business performance improve dramatically. As a result, I think it is time to correct false impressions of what BB is, and why it is successful. To help relaunch these ideas I have written a short book based on my experience of working with the concepts since they first burst onto the scene in 1998.
For progressive and competitive organizations of all sizes, accessing smarter, leaner and faster information to drive a successful business strategy can only be achieved with real-time insights into their customer’s needs and buying behaviours.
Identifying and building ‘products of the future’, before you customers even realise the need, can mean the difference between long-term success and overnight failure – Nokia and RIM (Blackberry) are two examples of market leading companies who failed to prepare for the onset of handheld computing, Apple took the reverse approach, the rest is history.
Advances in predictive and analytical software are facilitating a huge competitive advantage for many companies who recognise the value of using big data to look into the future using ‘precognitive’ technology. But, for many organizations, FP&A analytical transformation remains out of reach for reasons including a lack of preparedness and a business culture that’s become risk adverse from the failure of historic technology investments to deliver the transparency needed to drive a successful strategy.
The World Trade Centre, Amsterdam and Cercle de Lorraine Club van Lotharingen, Brussels welcomed some of the brightest minds in Financial Planning & Analysis (FP&A) to discuss that very topic at both cities’ second FP&A Board roundtables, organized by Larysa Melnychuk (MD of the FP&A Trends Group).
Agenda for the evening:
FP&A Analytical Transformation – what does it mean for organizations and are we ready for big data analytics in finance?
Both sessions welcomed Thomas Lundell, Director of FP&A & Business Control (EMEA) at NetApp, creators of innovative storage and data management. Thomas presented NetApp case study "FP&A Transformation: Becoming Agile, Adaptable and Predictive" which detailed his personal and corporate business journey in transforming FP&A through technology investment.
I asked Thomas what he believes to be the major advantage Analytical Transformation can provide for an organization and how do senior FP&A professionals best relay that advantage when trying to secure investment buy-in from organizational heads. Thomas says:
“There are two main advantages to undertaking an Analytical Transformation for FP&A, both of which certainly will secure investment buy-in from leadership.
First, it improves the speed and quality of decision-making. Business is increasingly dynamic and fast moving. Business executives need to make large-scale, complex decisions within reduced time frames. Going through an analytical transformation will enable FP&A to provide both predictive and prescriptive analytics that will enable executives to make better and quicker business decisions.
Second, it enables FP&A to create an integrated business plan that links up all the functions within the organization and that can capture market opportunity in an efficiently coordinated way. By going through an Analytical Transformation, FP&A can move from doing traditional budgeting and forecasting, to creating integrated business plans that link investment allocation with business unit strategy.“
Discussions broached the matter of how analytical technology can tick the wish lists of many Senior FP&A professionals including:
Both groups addressed the readiness of many organizations in embracing the value-add of analytics transformation and the challenges, which continue to obstruct its advancement even within some of the largest, most successful businesses in the world.
Regulatory changes such as the arrival of the International Financial Reporting Standards (IFRS) 9, who’s enforcement has been delayed until 1 January 2018, may also be fostering a reluctance to prepare, even if just as a resistance to the core principles of the new standard.
Access to quality data and the flexibility to make decisions quickly by utilizing that data to predict the future, remains the FP&A holy grail of business strategy.
“Advanced analytics is the extensive use of data, statistical and quantitative analysis, explanatory and predictive models and fact-based management to drive decisions and actions” Thomas H. Davenport (Professor of IT & Management, Harvard)
But analytics tools are only useful if you know where your data is coming from and there is a solid confidence in its integrity. Asking sometimes uncomfortable questions should be a prelude to any investment decision, learning from past mistakes can be illuminating.
How companies chose to use the outputs of analytical technology was another strong discussion point. Process and systems can predict an outcome but the million-dollar question is Why? By understanding why data is showing a particular trend, companies can focus on what the customer wants in the future and how best to deliver the solutions, which provide an organizational competitive edge.
Treating data as a strategic resource is vital for success, how ownership of that data is structured is no less important. Imagining a different world and reorganized business model, which can better meet the demands of a digital age, may for some organizations, prove a prerequisite to the transformation journey for FP&A.
“Part of making good decisions in business is recognizing the poor decisions you’ve made and why they were poor” Warren Buffett
All business partners should have a natural vested interest in their businesses data resources through both individual inputs and strategic output but who should be the custodian of that data? General consensus leans towards those who can apply science to the data. FP&A offers the process, financial acumen, a grounded approach to forecasting and the hard and soft skills required to maximize benefit from a ‘closed loop’ position which benefits the business at large.
Skill gaps twinned with a sometimes mañana approach to the professional development needed to attract and retain the best and brightest FP&A talent continue to hamper advanced thinking. Empowering finance professionals to think outside the box and paint a picture of tomorrow fuels the dynamism, creative thinking and collaboration required to achieve and maintain a competitive advantage.
Creating a common language and understanding through education and training is a great place to start and a critical accompaniment to change management, allowing staff to grow and develop within their new roles and business structures. After all, human collateral will remain our most valuable asset until and if, we achieve singularity!
But given the obvious advantage advanced analytics can bring to a business, I asked Amrish Shah (Snr Finance & Operations Director PvH NL & MEA at PvH Europe BV) what he feels is the main obstacle to investment in analytics technology that senior FP&A professionals are experiencing within their organizations and how do they work to overcome these obstacles:
"……….Tackling the obstacles of organization readiness and risk adverseness to technology investment, both these challenges require a far greater investment in people. With the right experience, mindset and attitude (one of learning and experimentation) both internally and externally and ensuring that information management is seen as a strategic resource that has to be planned for and tackled as such, professional development needs to be on the rolling agenda of every management team and Board".
There is no dispute analytics technology improves the speed and quality of an organization’s decision-making.
Transformational business journeys including the move to advanced analytics are evolving projects that don’t and shouldn’t have a final end point. They need to be agile and operate around new drivers for the future - one size does not fit all. It’s a very personal journey, unique to individual businesses.
FP&A is leading the charge but they should avoid any attempt to make the journey alone. The relationship between senior finance professionals, CTO’s and CIO’S must be at the heart of this process to ensure a holistic view of the business, its needs and and the task at hand. Choosing to ignore or simply delay embracing the value-add analytics technology can bring to your business and its position within the competitor landscape is a no brainer. We simply can’t ignore the march of progress.
Many thanks to sponsors and partners of the FP&A Board events: The Association for Financial Professionals (AFP), provider of international FP&A Certification and finance training. Page Group, global recruitment firm and Tagetik, leading FP&A Technology company.
Copyright © 2017 Association for Financial Professionals, Inc.
Heuristics are rules of thumb. Psychologist Gerd Gigerenzer believes heuristics are a necessary part of an individual’s decision-making process. Heuristics can be used in FP&A as a way to make decisions about how organizations earn revenues and incur expenses.
Here is a heuristic that I use to make decisions about how organizations earn revenues:
Revenues are more than products delivered or services provided; revenues are about the qualities of the products delivered or services provided. Accessibility, courtesy, and durability are a few examples of the qualities within products or services. As individuals, we purchase food from specific supermarkets and internet services from specific service providers. Our reasons are based in large part on the qualities of the supermarkets and service providers we choose. Individuals who are FP&A practitioners should consider this fact when conducting their work. Revenues represent a validation of what people see in the product/service offerings of companies. What people see is the accessibility, courtesy, and durability of products or services.
Here is a heuristic that I use to make decisions about how organizations incur expenses:
Organizations that sell products incur an expense called Cost of Goods Sold. This expense represents the cost of the product sold. Organizations that sell products or services incur selling expenses. These expenses represent the cost of selling products or services. Organizations that sell products or services incur administrative expenses. These expenses represent the cost of supporting organizations. Thinking and learning about how these expenses are incurred provide insight into an organization’s effort to deliver products or provide services.
Applying the expense heuristic can focus on what people within organizations can control, i.e. their activities. Perhaps people responsible for the cost of goods sold need to choose other vendors for materials or merchandise, improve the use of labour and overhead, or re-negotiate costs with existing vendors. Perhaps people responsible for selling expenses need to change communication methods like using social media instead of radio/TV ads. Perhaps people responsible for administrative expenses need to change how they train employees, prepare financial statements or purchase office supplies. Changes in activities can lead organizations closer to establishing a clear relationship between why customers buy their products/services and how activities fulfil these reasons.
FP&A can be a very detailed process. These details may hinder not only the quality but also the timeliness of information provided. Perhaps using heuristics in FP&A can lead practitioners down a road to improving their work.
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