FP&A Transformation: What to Consider

By Thomas Lundell, Finance Director and Chief of Staff​ at NetApp

For quite some time CFOs and the finance community have been talking about transforming the finance function, becoming better business partners and focusing on the value-add, strategic activities.

At the core of that transformation is FP&A, as activities like business planning, business unit strategy, investment allocation and predictive analytics become important to fulfil finance’s new, expanded position within the company.

But to do that, FP&A itself must transform and change from its traditional flux analysis and flash reports to a much more modern and cutting edge department within the company. When starting to embark on your own FP&A Transformation journey, there are a couple of principles you need to keep in mind. 

First, there isn’t a one-size fit all optimal FP&A operating model that all companies in all industries should implement. Personally, I have worked in finance in FMCG, Consumer Durables and Silicon Valley IT. It would not be possible to run the same finance operating model in all those companies at the various life-cycle and maturity stages there were in. The industries and companies were at very different levels of maturity, complexity, growth, and the technological capabilities were very different. So you need to make a proper assessment and decide on a model that is right for your specific company. 

Second, you need to articulate the future operating model (see figure 1), what your new FP&A department will look like in a future state and what your key focus areas will be. If you only articulate what FP&A is not going to be doing, (for instance no flash reports, accruals, or expense reclasses) your transformation will be materially slowed down or impossible. Your team may even fear that they are losing their jobs and will actively work to resist your transformation efforts. Transforming FP&A needs to be a positive thing that will allow FP&A to take on an even more strategic role within your company. 

 Figure 1: FP&A Operating Models

Third, you need to work with a phased and structure approach. Transformation is difficult, time-consuming and not without risk. Your FP&A staff is very busy and working very long hours already. They are buried in basic duties and don’t have the time to undertake major transformations. Furthermore, there is operational risk involved when transforming FP&A. If you do it wrong, you could even inhibit your company’s ability to close the books timely and accurately. So you have to approach transformation in a structured way and use a phased approached to balance the workload of your team and mitigate the operational risk of the company. 

Lastly, the optimal operating model evolves continuously over time, which means that finance leadership constantly must evaluate the current position and continuously transform their departments. Technology changes, your industry changes, your growth rate changes, your business complexity changes, and you need to continuously evolve and adjust your operating model to those changes. Transformation is an infinite game, not a finite game. What is cutting edge today, is probably old-fashioned tomorrow. 

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People From Over The World Are Getting Together To Share FP&A Knowledge

By Michael Royall, author

FP&A Tags: 

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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Advanced Analytics: CFO’s and FP&A Heads - ignore at your peril

by Anne-Marie Rice, EMEA Director at AFP

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:

  • Fully integrated business planning
  • Empowering business partners to become the real owners of their strategic inputs
  • Maintaining agile and relevant projections in dynamic, fast-changing markets
  • Automate traditional budgeting and forecasting process to free up resources to ‘look into the future’
  • Access to real-time data around business ‘Wins’ and ‘Opportunities Lost’
  • Long-term business planning
  • Risk modelling & mitigation
  • Zero-based budgeting
  • Converting top-down planning into success
  • Driving ‘Stretch’ to facilitate growth

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.

  • Lack of investment in analytics technology
  • Lack of investment in professional development to help attract, develop and retain the best talent with the right mindset
  • FP&A staff buried in day-to-day accounting tasks, restrained by legacy processes and systems now ripe for automation
  • Rigid business thinking
  • Selecting the right data from a huge pool of options
  • Absence of a universal business appreciation of technological capabilities
  • Encouraging business partners to ‘speak the same language’
  • Turing insights into action

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.

Professional Development

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. 

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