FP&A Analytical Transformation. Stockholm FP&A Board on how to achieve the leading stage

By Larysa Melnychuk, Founder and MD of London FP&A Club

April 26, 2017

The London FP&A Board was created on the 19th September 2013 to guide the development and promotion of best practices in financial planning and analysis (FP&A). In May 2016 we took our first, yet successful step in our international expansion plans by launching Stockholm FP&A Board. By the end of 2017, individual board chapters will have been established in 15 cities in Europe, the Middle East, Asia, the USA and Australia in order to identify and support new global trends, skillsets, and thought leadership in FP&A. 

On 26 April 2017, the FP&A Board gathered in Stockholm for the third time to interactively discuss one of the biggest challenges of moving Financial Planning and Analysis to the next level and undergoing the transformation that is long overdue. FP&A Analytical Transformation became the main focus of 20 senior finance practitioners’ attention from such companies as Baxter, CGI, Danone, Electrolux, Hitachi Data Systems, MSD, Tele2, Philips, etc.

We are very grateful to our sponsors and partners Michael Page, one of the world's leading professional recruitment consultancies, CCH Tagetik, the leading FP&A Technology company, and AFP, provider of international FP&A Certification, for supporting the event.

First, the Board members brainstormed the concept of advanced analytics for FP&A and arrived at the conclusion that FP&A advanced analytics is Proactive and Forward-looking Analytics - in sharp contrast to Descriptive and Diagnostic Analytics that are centered around the most backward-looking and reactive processes. The main points of the discussion are listed below.

Afterwards, the FP&A Board discussed the FP&A Analytics Maturity Model developed by the London FP&A Board. The Model defines 3 states of FP&A Analytics Maturity (Basic, Intermediate and Leading) and 5 stages of the maturity (Basic, Developing, Defined, Advanced and Leading). 

The leading stage of the FP&A Analytics Maturity Model is the ultimate goal for which organisations should aim. At this stage the company has integrated planning process, leading analytical matrixes (drivers), integrated driver-based planning model and system connected with BI, real-time collaborative planning, easy multidimensional scenario analysis and advanced analytics.

The Stockholm Board assessed the current state of their companies and discussed the ways of transitions to the leading stage.

One of the fundamental principles of the FP&A Board work is looking into practical case studies. We were happy to have Paul Mol, Global Finance and IT Director (Purchasing) at Electrolux, as our keynote speaker. He not only gave an excellent presentation on Finance digital Transformation but also shared his valuable insights and his first-hand experience with us. 

One of the most anticipated and engaging parts of the meeting was group work. FP&A professionals enjoyed the opportunity to network with each other and discuss different stages of fine-tuning the FP&A Operating Model. Mainly, they focused on the important subjects of how to transform FP&A People, Processes and Technology and Analytics. To summarize, the Board agreed that the human element of FP&A transformation is a key one. However, if we do not develop company-wide, integrated and collaborative processes that are implemented through modern real-time planning platform, we will not be able to realise the full analytical potential of FP&A function. It was agreed that FP&A talent is very difficult to find and to retain. If FP&A infrastructure is not efficient, FP&A professionals will waste a lot of time on non-value adding activities and will get demotivated quickly. As the result, such companies are likely to loose their best FP&A talents.

The main conclusions of the third Stockholm FP&A Board can be described as following:

  • FP&A Analytical Transformation is essential for the current business environment
  • The Analytical transformation is going slowly due to lack of investments, legacy systems, the business culture, etc
  • In order to achieve the leading stage, we need not only implement digital technologies, but change culture, adjust processes, invest in people.

As Arthur C. Nielsen, the founder of ACNielsen, said: “The price of light is less than the cost of darkness”. So, the companies around the globe can continue trying to reduce the cost of their finance departments as the percentage of revenue at their own peril, while FP&A at the moment requires investment into people, processes and technology. 

The next Stockholm FP&A Board will gather on 12 October 2017 to discuss another popular subject of Driver-Based Planning. Stay in touch with our global FP&A community through the FP&A Club LinkedIn Group and the FP&A Trends resource.  Please do not hesitate to join and to contribute to the discussions, posts, and commentaries.