How FP&A Tools Enable Business Partnering
Written by Paul Barnhurst
Join us to discover the current landscape of 3rd generation FP&A tools and experience leading 3rd generation tools in action to help you to chose the technology that will empower your FP&A team to impact performance across the enterprise.
Link to Register and/or watch the replays: 3rd Generation FP&A Tools Demo Days
Introduction
To succeed at FP&A, one must learn to be good at being a business partner. The days of FP&A working in spreadsheets all day and providing the business with stacks of reports are long gone. Instead, today more than ever, FP&A professionals are expected to be valuable strategic business partners helping drive the business forward to achieve its financial targets.
Unfortunately, FP&A often falls short of this mandate as it spends much of its time dealing with broken processes, siloed data, and manual tasks. For example, research from the Association for Finance Professionals found that FP&A departments spend 50 to 75% of their time cleaning and prepping data. If FP&A hopes to spend more time on business partnering and less time on data prep, it needs to focus on the following:
Achieving & Maintaining Data Quality
Upskilling Employees
Revamping Processes
Utilizing Technology
At the heart of streamlining and automating FP&A processes are the right people and processes combined with a tech stack that enables people to succeed. More and more today, companies need a Strategic Finance Platform (FP&A Tool) that supports FP&A by combining siloed data and enabling collaboration across the organization.
Quality Data
For many companies, transforming the FP&A team from data jockeys to value-creators begins with getting the company's data house in order. If the company's data is a total mess and the company is unwilling to solve this problem, it becomes nearly impossible for FP&A to achieve its potential. One can upskill employees, revamp processes, and utilize technology, but one must put its data house in order before any of that can have the full impact on the team. This does not mean all data will be clean and that one will still not have to prep data, but it does mean the company commits to having a data strategy centered around ensuring the correct data is being captured and that the systems can speak to each other. Fixing data issues will also make getting value from FP&A tools much easier.
FP&A has a role to play in ensuring the business is producing quality data by pushing for a commitment from senior leadership to evolve the company's digital capabilities constantly. Without an organizational commitment to data and data quality FP&A as an organization will not be able to reach its full potential.
Upskill Employees
In FPA's journey to becoming better business partners, leadership must ensure the team has in place the right skills to succeed. FP&A teams are expected to do more today than ever before, which requires an ever-growing and more diverse skillset to succeed. One of the best places to start is by conducting a skills assessment of the team against the business needs. After completing the assessment, develop a plan to address the gaps between the team's skills and the business's needs. FP&A Professionals are expected to wear many hats, and some of the typical roles a team needs to fill include the following:
This does not mean that every FP&A team needs five people or that all these roles will play a prominent role in FP&A departments. However, it does mean that these are the common roles most leading-edge FP&A teams need and that one person can fill more than one of these roles. Therefore, as one evaluates the team, one will need to think about how they can fill these important FP&A roles within the team structure. Having the right skills and people on the team is a requirement to meet the organization's needs and requires developing a plan to achieve and maintain a dynamic team with the requisite skills to be value-creators.
Revamp Processes
How many of us have heard someone say, "I have no idea why we do it that way; it is just how we have always done it." This thinking is a disease for every FP&A department and often limits the team's potential. Often without implementing new technology, a team can benefit significantly from revamping processes. Many of these process gains come when a team with the right skills and a growth mindset is in place. The team needs to be open to questioning any and all processes and finding new ways of doing things.
Reviewing and changing processes is also necessary when implementing new technology; otherwise one fails to generate the gain that comes from a Technology investment.
New Technology + Old Process = Less Reliable, More Expensive Old Process
- Bill Haser, Haser Consulting
Utilize Technology
With the right mindset, skillset, and data culture in place, FP&A is primed and ready to become the strategic finance partners the business seeks. To be great business partners, finance needs to focus on
Understanding the business
Collaborating with the business
Automating and streamlining reporting packages
Driving value-added insights
This is why technology is an important part of delivering on the promise. What the technology will look like will vary for each company and what stage of life a company is at. Some companies might be able to manage with a very simple tech stack and a spreadsheet as the many budgeting and forecasting tool. However, the vast majority of companies will benefit from having an FP&A tool that allows them to:
Integrate multiple data sources (ERP, CRM, HRIS, Billing, etc.)
Collaborate with all business partners in one integrated platform
Conduct data analysis and drill down into monthly results
Provide reporting packages automatically
Easily conduct scenario analysis
Control planning workflow
At the end of the day utilizing technology and an FP&A tool will not solve FP&A's problems, but it can enable FP&A to automate and streamline many processes and free up time to focus more on being strategic value-creators instead of data jockeys. The reality is when FP&A embraces technology and utilizes it to streamline and automate processes and gain valuable insights that would be difficult to gain otherwise; their impact is magnified. At the heart of the FP&A tool set is an efficient and effective FP&A tool.
Conclusion
FP&A teams are expected to do more today than ever before, and in the future they will be expected to do more than they are doing today. In order to meet the mandate of the business FP&A leadership and become the business partners they are expected to be, they need to first ensure they have a plan for:
Achieving & Maintaining Data Quality
Upskilling Employees
Revamping Processes
Utilizing Technology
The plan that one develops is not a one-time event but a journey of constant evolution. When FP&A focuses on maintaining quality data, skilled employees, efficient processes, and technology, FP&A sets itself up to focus more time on business partnering and becoming the value-creators the business needs.