Nilly Essaides, Director & Practice Lead, Financial Planning & Analysis, AFP
According to FP&A executives, finance is increasingly involved as a strategic partner to business leaders and the operations. In some cases, FP&A is actually being contacted by the business and asked to perform process efficiency analysis and advise on possible improvement, according to Pete Gailer, a senior FP&A professional.
“FP&A is familiar with how operational processes work and can bring a fresh set of eyes to provide insight into how to do things better," said Tijana Balotic Truong, finance professional working in a fast growing FMCG company.
Three Steps FP&A can Take
1. Set up a process that encourages collaboration. Irena Barisic, Deputy CFO of the Brookings Institution noted that she holds monthly meetings with all the departmental heads. Business leaders bring a list of projects and initiatives and the group prioritizes and decides which ones will be added to the capital plan for the current year or the future years.
Of course, this monthly review process didn’t start working overnight. It took some time for everyone to trust the process. The perception of the vetting process changed when managers saw the impact on their own budgets as well as the bottom line. “FP&A can facilitate the discussion among the operational groups and they can entrust finance with doing the financial analysis.”
2. Apply the right models. Igor Panivko, director of finance at the Moscow and Ukraine operations of Konica Minolta added that he always tries to understand the business KPIs, “so I can advise them on how to do things better.” Then his team analyzes the data sources of business KPIs and builds an analytical model that maps business dimensions with financial-ledger transactions and budgets.
Such a centralized analytical model aligns operational performance metrics with financial categories and provides a holistic view on business performance, aggregating financial results by business lines and enabling drill-down to operational metrics on the fly by process owners themselves.
“That’s what we do all the time: we analyze and model to help improve the business results,” Panivko said.
3. Educate the business about the analysis. Finally, according to a recent APQC webinar with David Axson, managing director of Accenture’s CFO Enterprise Value Practice, FP&A executives need to spend time explaining the results of their analysis to their business partners. As companies flip their ratios to more analysis and less data collection, they also spend more of their time working with the business. According to Axson, the leading 10-15% finance organizations spend around 40% of their time interacting with the business, and only 10% collecting data.