FP&A 2017 Challenge: Transforming the Service Delivery Model

By Nilly Essaides

The digitalization of the finance function, and growing demands from management and business partners, are forcing FP&A teams to change the way they deliver their services to internal customers. They can no longer operate in silos, have disparate planning processes, look only at financial data, and rely on numerous systems to execute their mandate.

They need to deliver better decision-making support to enable greater agility in a fast-changing business environment. In short, they need to transform the function to be able to serve its internal clients to bring quicker insight to the enterprise.

Here’s how:

Overhaul the FP&A Organization. Many companies still rely on a single team of professionals to perform all of the FP&A duties: report, analyze, perform the core activities of forecasting, budgeting and planning and get a special project or two done when needed. They combine activities at HQ with some responsibilities handled by the business units without clear lines of accountability, resulting in lengthy cycle times and lack of data integrity. A lot needs to change before the FP&A’s organizational structure can become a fully agile function that’s able to deliver business support where and when it’s needed, for example, FP&A needs to:

  • Move more activities into a GBS. Automate or put transactional and repetitive activities into Shared Service Centers (SSCs) or Global Business Services (GBS) to reduce cost and become more efficient.
  • Establish CoEs. Pull more sophisticated but shared skills like advanced analytics into Centers of Excellence (CoEs) to support multiple business partners across functions and business units. The CoEs can be the one-place shop for insight into solving common business questions.
  • Finally, embed finance consultant in BUs. Set up a strong layer of staff dedicated to working directly with the business. These finance professionals should have deep business knowledge and superb communication skills so that they can collaborate with functions and units to identify and solve complex business problems and drive enterprise performance.

2. Remake processes. You can’t expect a different result if you keep doing the same thing. To drive the business forward, FP&A needs to build strong working relationships with the business.

  • Become more collaborative. FP&A needs to open up the planning process to business unit staff so participants can contribute data directly rather than go back and forth through email and move through multiple iteration of forecasts, plans and budgets. This would increase data integrity and speed up cycle times, resulting in better information delivered faster to internal customers.
  • Assign direct responsibility. While the number of participants may increase, each process needs to have a clear owner so there are no conflicts about who is ultimately responsible to deliver the goods.
  • Switch to agile planning. FP&A needs to change its mindset – and that of management – toward using a rolling forecast versus a static budget. A static budget captures a one-time picture even before the fiscal year begins. The rolling forecast takes into changing market and internal conditions and what’s coming 12-18 months down the road, giving management a chance to change course and allocate resources based on what’s likely to happen.
  • Eliminate unnecessary reports. To come up with insight, FP&A needs to prioritize its reporting and get rid of unnecessary reports that no one reads anymore. Reports should contain insight and actionable information that can move the business forward.

3.   Embrace the right technology. FP&A needs to adopt and adapt to digital technologies. which are fundamentally altering their organizations’ business model to speed up cycle time, be able to run advanced analytics, leverage the cloud and big data and fundamentally upgrade their own service delivery model. To do so, it must:

  • Integrate disparate systems and create a single repository of enterprise data.
  • Adopt new technologies to become speed up the query-to-insight cycle for the business
  • Democratize planning solutions to expand the universe of participants in the forecasting and planning process so as to respond better to changing business needs and provide real time (and predictive) insight.
  • Sync operational and financial data to see financial and operational data in one spot and connect the dots between operational drivers and financial outcomes.

4.   Upgrade talent. To successfully deliver its services to internal customers, FP&A must retrain existing staff and redefine the competency model for new hires to create a talent development map that aligns with its new roles. In additional to foundation finance skills, Finance will have to hire and train staff to possess:

  • Business acumen. The FP&A executives of today must be comfortable outside the walls of their own department. They need to understand the business model and its link to strategy. They have to carry credibility with their business partners.
  • Interpersonal, educator and diplomacy skills. Finance executives need to work closely with business leaders and often create change through influence and consensus building. They need to learn to speak the business language and tell stories rather than present numbers. Their role is to raise financial awareness in the organization.
  • Intellectual curiosity and innovative thinking. FP&A is increasingly about asking the tough questions and providing an objective view to business partners. Without the need to constantly learn and find out more, finance won’t succeed in delivering on its mandate.
  • Comfort with technology and analytics tools. In many companies, finance is becoming the analytics hub of the organization. Successful professionals need to become familiar (even if not necessarily fluent) in new technology tools and concepts.

Three Tips for Getting Management Support

To initiate and complete a successful transformation project, FP&A will need management support. That’s not always an easy proposition because the ROI on transformation is hard to pin down. But there are ways to gradually get the buy-in:

1.   A phased approach. Start small, especially when it comes to technology implementations. It may be wise to start with smaller pilots and achieve early successes to build credibility. Start with a region or a country before going global.

2.   Showcase early successes. Write up and evangelize change by sharing early successes stories involving business improvement using new technologies to get senior management on board and business leaders asking senior management to back up more project.

3.   Have a talent roadmap. It’s not enough to embrace new technologies. You’ll need the right talent to leverage the new tools. To this end, senior finance executives need to reconfigure their competency models to fit the new org structure and technology capabilities. Don’t try and hire superheroes; rather, focus specialists who can fit well in one of finance’s new tiers and do that job well.

Learn More

Source: Generation CFO LI Group

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