For quite some time CFOs and the finance community have been talking about transforming the finance...
Apliqo Insights: Melbourne FP&A Board meeting
The next step of the Australian FP&A Board led us to meet in Melbourne with about 30 FP&A practitioners attending and debating about challenges, trends and best-practices in Financial Planning and Analysis.
Apliqo – a Cubewise Company – is proud to be sponsoring such a high-quality forum where the most important challenges of FP&A related to people, process, technology, analytics and business partnering are debated. The event was also sponsored by Michael Page, one of the world's leading professional recruitment consultancies.
A big thanks go to Larysa Melnychuk for creating such a unique community focused on FP&A and the opportunity for Apliqo to be associated with it.
We would like to share some of the insights from the event in short summarized form. The topic of this board was “FP&A Analytical Transformation”.
A short survey was done to understand the maturity in FP&A in Melbourne – here are the results, which are very similar to the results in Sydney:
How long is the average duration of your budgeting and planning process in months?
|1 – 3 months||4 – 6 months||More than 6 months|
How long is the average duration of your forecasting process?
|Less than 3 days||3 – 7 days||More than 7 days|
The event continued with a short discussion (by table) on what the biggest analytical challenge in FP&A is. Below points provide a list of topics that were presented by the attendees (unweighted):
- Accessing data from different systems and being able to manage quality is a major challenge
- Too much data is making it hard to understand what is valuable and what not while being able to use technology to use vaster data sources and volumes to understand key business drivers
- Being able to create sensible customer and product profitability analysis
- Integration between several systems and being able to consolidate the data, also faced with the challenge to connect old and new systems
- Complexity of system environment and how to get it all together
- Ability to build a costing model with proper allocations
- Increase agility, speed and consistency of FP&A processes and output
- Driving standardization, consistency and best-practices within international organizations
- Trying to simplify FP&A processes without dumbing down models and being able to focus on what matters and is material
- Skills in FP&A are moving from classical accounting towards analytics and business partnering
The audience was asked what the top trends in FP&A were. Answers in summary:
- The need for more agility
- Real-time dashboards, visualization and self-service analytics
- Having not just the tools, but the right people
- It is all about insight, not just the data or the reports
- Common threads, “flexible, dynamic, automatic, responsive, visual”
- “Not just about planning, but finding the right drivers”
- Zero-based budgeting has resurrected again and is seen as a new way to drive better performance
Seven people in the audience had already started exploring Artificial Intelligence (AI) and Machine Learning (ML) as a potential solution to drive efficiency in FP&A processes. We are keen to learn more about the outcomes of these initiatives next year!
Additionally to the FP&A Board maturity model definition of “Leading State” the audience added a few points as critical ones to achieve it, being:
- Not running planning process on the basis of pure aspirational targets (which are set top-down by management and are used to drive compensation models) but to base it on realistic targets driven by data, insights and facts
- This would allow organizations to abandum the budget process and move into a more forward-looking, agile forecasting process led by internal and external factors
- Drive collaboration cross-functionally allowing for better alignment and buy-in into commonly agreed plans that are shared transparently throughout the organization
Shaun Gatter – Head of FP&A at GM Holden (Australia and NZ) – followed with his presentation on “Global FP&A transformation across General Motors”, where he presented the journey his organization is going through. GM Holden has set itself the goal to have an FP&A process that is:
- Less variance explanations and reconciliation
- Less manual work
- Enhance business’ analytical capabilities
- Focusing on streamlining “CPR” – Close & Consolidation, Planning, Reporting
- Aligning all processes and systems with best-practices
- Subsequently, the audience was split into four smaller groups to discuss the different aspects of analytical transformation.
Group session workshops
Below are the key points of the group findings on FP&A analytical transformation for people, process, technology, analytics and business partnering:
- A new skillset is required in the new world of FP&A (more analytical, less accounting)
- You can’t just turn accountants into FP&A professionals
- FP&A people need a “sense of curiosity” – this is an important skill
- It is more about attitude, curiosity and approach to analytics than it is about qualifications
- Take leadership on a journey
- Control ownership
- Put a governance and control framework in place to guarantee quality and consistency
- Understand business requirements and put them in place
- Understand tools and technologies in order to understand what can and can’t be done
- Understand drivers and build a model that connects them into one unified view
- Culture drives technological change from manual to automated systems
- Search for automation where possible, necessary and sensible
- Influence user to adopt technology and use analytical tools
- People are more important than technology; technology is the enabler
- Free up FP&A staff from day-to-day repetitive tasks so they can focus on value-add
- Clear communication with business language so business understands FP&A
- Influence and gain respect by building trust and understanding real business problems and drivers
- Understand “what’s in it for me” when talking to the business
- Be transparent and understand business problems, as well as giving autonomy to the business
- Train business in analytical skillsets and tools
- Agreed upon common objectives between FP&A and business
But most importantly getting people, processes and technology right first