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Can traditional finance teams keep up with the changing expectations and demands that have only accelerated since COVID?
The answer is a hard no. There’s a freight train headed toward financial teams, regardless of industry. But most organizations are so caught up in the day-to-day that they don’t have time to look up and see it coming.
In Part 1 of this two-part blog series, we explored four of the seven signs that your company needs to rethink the way you do FP&A (financial planning and analysis).
In this part, we’ll dive into the other signs. Then we’ll tell you what you need to do to solve the problem.
The fifth difficulty you might face as a finance or accounting professional is that your business leaders are increasingly broadening the scope of what they want from you.
They tell you what’s valuable to them are things like forecasts, plans, analytics, all of which help lead to better business outcomes in the future.
Your forecasting and planning are based on pre-pandemic rules. And you have little knowledge of analytics.
Worse, you can’t get answers to broader questions with only historic financial data. For you to adapt to get those answers and tell the entire story will require a huge shift.
Because of the pandemic, you’re dealing with uncertainty on a scale never seen by modern-day financial teams. There are so many variables, like volatility in the supply chain, escalating costs of raw materials, labor challenges, transportation issues, and shifting consumer demands.
How can you empower your executives to make better business decisions about such things when you don’t even have access to data about those factors?
The answer? You need to expand the types of data being analyzed to provide intelligence that can answer your business questions.
You need sales data, operational data, non-financial data, and external data. There are all those variables, pressing situations, and questions that need to be solved.
Your job is literally changing. You can no longer operate in a silo and be that back-office function. Now you must collaborate with other parts of the business.
You probably have access to one or two data sources, but the other data sources might be things you don’t even know you can measure yet. Or maybe your operational data has never been linked with financial data. Simply getting access to the data you need is a problem. No wonder it’s a challenge just to keep up.
And it’s probable that no one in your business has experience of this nature to tell you how to make these changes. We understand because these are the very difficulties we help our clients navigate through.
For companies who do have access to other types of data, they often contend with the issue of different systems having different tools for reporting or visualization. We still find a lot of reporting is done out of Excel for non-enterprise businesses.
But say you have three or four core systems that are distinct. The ERP is separate from inventory management, which is separate from CRM, and if you have Salesforce, you have their separate reporting.
There is no strategy on how to do reporting consistently because this setup simply evolved over time. You might be using Microsoft Power BI in one system, but you invested in Business Objects to sit on top of SAP, and maybe you’re still using Excel in other areas. Then someone joined the team and added HubSpot. And so on.
That’s how things happened. There wasn’t a holistic approach and no single way of looking at data in your organization. It’s because no one knew we’d be in our current state today. That’s why systems are siloed.
But the problem remains that you have these vastly different worlds you’re working in and trying to pull together, and it’s not easy. You’re afraid to mess with that tenuous balance because any change could collapse the whole structure like a house of cards.
It’s understandable why being able to use data holistically to drive decision making seems so far away. But it isn’t.
Another pain point you might feel is that the analysis you get with traditional FP&A is superficial in nature. You have a report that answers a specific question or set of questions. If another question arises as someone reads the report, you don’t have the granularity of information you need.
You can’t drill down to find an answer, which you could easily and instantly do if you had business intelligence dashboards like Tableau or Power BI. If you were able to do all those things, that’s what next-generation FP&A (where the A means analytics) would look like.
For example, if you’re looking at sales, you might only see a region. In traditional reporting, you don’t have the ability to look at a product category in that region, the salesperson, the components that go into making the product. Every time you need more information, it takes more time to solve using your current process.
Business and financial executives aren’t the only ones who need a deeper level of granularity. There are many end users who need to make data-informed financial decisions. What you need is FP&A with financial analytics that gives you a view into the data.
Just as we thought remote workforces were a far-away (or a maybe-never) thing, but were proven wrong, the same goes for next-generation FP&A.
The woes of your traditional FP&A world, all the signs described here, can and should be a thing of the past.
If some scenarios we described resonate with you, you can see that you’re not functioning as effectively as possible or providing the data your company is looking for now. What’s missing in each situation is data-driven decision making.
Looking to the future, if you stick with the way you work now, how will you perform your financial planning? How will you do forecasting? How will you identify efficiencies? How will you cut costs or get benchmarking information?
Staying with traditional FP&A threatens your ability to grow. You need access to operational and external data sources, and the scope of your current process and setup won’t allow it. But the solution requires more than that. It’s about thinking differently than you have in the past and opening your mind to the possibilities. That’s the most difficult change – to recognize that the way you’ve always done it won’t work anymore.
What's the Solution?
Next-generation FP&A is the solution. That means you must do two things.
First, ensure you have the infrastructure to get your team out of spreadsheets and into a system where all your data is being reconciled together and pulling into a single source throughout the year.
Second, choose a way to visualize your data in real time using a consistent tool (this will differ according to your organization). Using a visualization tool will move you from pulling reports every quarter to seeing your finances every day in real time. Imagine that.
The big benefit is that you’ve identified where the data is, you’ve pulled all your systems together, you’ve gotten the data cleaned up and in one place, and you have visuals showing you insights throughout the year. Now more people will have access to data that will actually drive decision making.
You can add advanced analytics tools to audit your finances systematically throughout the year. Or they can look for aberrant patterns to detect fraud or identify problems before they become issues. Is that going to help you provide value to your business and speed your process? Absolutely.
The freight train is headed your way. If nothing else, investigate what you’re up against by downloading our whitepaper, “The A is for Analytics: Navigate Data and Analytics to Enable Next-Generation FP&A.” You’ll learn exactly what to do to simplify your life and how to provide more value through data-driven decision making.
Authors:
Onebridge and Anders CPAs + Advisors partner to help organizations make smarter business and financial decisions based on organization-wide data.
Onebridge comes with vast data, technology, and analytics experience. Anders offers decades of business and financial advisory expertise. Combining expertise helps our clients get to their goal state much faster.
