Isn’t the world a strange place at the moment.
I received a mail recently from a mid-tier ERP house suggesting that finance teams should adopt their new ERP solution to simply provide better FP&A reporting! Yes, they did say reporting.
No mention of the key steps required to develop FP&A maturity within the organisation.
No mention of the operating model or required outcomes.
No mention as to the scale of the undertaking, investment required, impact on business operations and likely benefits.
Moving ERP systems won’t fix a lack of clear FP&A outcomes.
Moving ERP will not fix a poorly performing legacy operating model with supporting data issues.
The upalatable truth is that moving ERP will simply delay Finance leaders getting the FP&A they need.
Most ERP programmes fail to deliver, very few deliver tangible benefits above breakeven, most under deliver finance analytics and management information leaving finance frustrated, leading to a proliferation of excel as the FP&A tool of choice.
Listed below are my top tips for shaping the FP&A your organsiation needs:
A pragmatic structured approach enabling finance teams to rapidly model FP&A outcomes, understand process and data issues within the organisation and a sustainable means of delivery.
1. FP&A Required Outcomes:
Focus on required business outcomes and their value to the organisation with supporting data sources, think simple and cadence, think what do we really need to help run the business.
2. What does good look like:
Reach out to connected user groups to look for additional business value, what works and what doesn’t. What is easy to achieve and things to avoid. The UK&I SAP User Group, #GenerationCFO and CIMA provide great content and will help raise the bar with an alternate view. Collaborating is a cheaper option than engaging the big 4 and enables Finance to take responsibility for their own evolution.
3. Understand what’s wrong with your existing FP&A model
Develop a snagging list of FP&A issues, cutting across people, process and technology, the defining issue may be an immature finance operating model.
4. Understand Business Operations:
Document the down-stream operating model that drives the finance data and its cadence. Often finance don’t fully understand the processes and cadence driving their data.
5. The Equation for success The FP&A Playbook:
Required outcomes x Best Practice / AS-IS Lessons Learnt V Business Benefits / TCO = FP&A Target Operating Model
I recommend building a “day in the life of” FP&A playbook demonstrating the process, business roles, responsibilities, outcomes and cadence in the form of services with associated measurable business value and costs making up the operating mode.
The playbook will prove a valuable business change management tool mitigating siloed operating model’s and internal cognitive distortion blocking business refinement (e.g. we have always done it this way).
6. Adopt Kaizen to influence and refine the target operating model (change):
Go #AGILE #KAIZEN, trying to deliver to much at the beginning normally results in very little be delivered at all, business change activity works best when broken down into bite size sprints, prioritised to deliver at a pace that the finance team and business can sustain.
This enables you to carry out snagging on the analytics delivered and supporting operating model and data models whilst moving forward with the next manageable sprint.
7. Analytical tooling
DO NOT listen to the legion of sales people trying to flog you a new data warehouse or reporting solution, instead sweat / augment your existing tech to deliver the analytics you need, following the Digital up-cycling approach.
Finance should enrich and cleanse the supporting data model and eradicate the need for data transformation rules being applied.
Finance must establish a sustainable super user concept so that FP&A teams can develop their own scenarios and analytics from consistent data sources and template models, embedded into the Finance COE design. Build internal delivery and training capability to reduce the dependency on partners and interim project teams.
9. Owning Enterprise Transformation – The role of the Digital CFO
For many organisations just achieving credible financial analytics and forecasting, linked to a sustainable monthly operating model cadence with well-oiled planning and forecasting capability supported by real time data is enough.
With CFO’s now seen as the responsible adult in the boardroom taking responsibility for transformation oversight, £2 out of £3 invested in digital is wasted (World Economic Forum 19) they demand tangible business benefits and zero business disruption.
FP&A and Finance operating model evolution becomes a great opportunity for CFO’s to demonstrate to the business what good transformation governance, documentation and execution looks like, including;
requirement gathering > benefit mining > design, build, test > support and training documentation.
Good FP&A within Finance should be the norm, so keep it simple, focus on required outcomes, data and the supporting operating model, and deliver it in bite size chunks.
How can I help
If you are considering embarking on a FP&A or Finance Operating model reboot then let me help you evaluate your options and approach? It starts with a coffee and a chat. Get in touch with Alisdair here.
This article was written by Alisdair Bach, a senior SAP Business Transformation Programme delivery turnaround specialist and SAP Enterprise Architect.