Last week, the London FP&A Club held its sixth meeting and examined the thorny issue of specifying a financial planning and analysis system. Presenter Michael Coveney, a consultant with STW Consulting, shared the 10 capabilities users should look for. Additionally, club founder Larysa Melnychuk updated the more than 30 attendees on recent advances in AFP’s Certified Corporate FP&A Professional credential, which held its first beta exams last month.
Coveney, a veteran of 32 years with software group Comshare and latterly Infor, has a vast knowledge of available technology systems in the marketplace from Cognos TM1, Hyperion and SAP to Anaplan, and a plethora of other vendors. “The purpose of FP&A systems is to help manage business processes—covering resources, workload and outcomes—in an unknowable and uncontrollable environment in order to achieve the organization’s purpose,” he said.
Basic FP&A system building blocks
Coveney identified the 10 essential features that financial professionals should look for before ordering a new technology system or upgrade.
- A multi-user database: This should be accessible to all who need it and the database should be multidimensional in nature to align with your organization. It should also be able to time-shift so that, for example, it can cope with a six-month delay if a marketing campaign is delayed without requiring data re-entry. Other ‘must-haves’ include flexible, relational database capabilities that can make links and accommodate big data in your IT architecture set-up, to enable customer sentiment to be mined and predictive capabilities to be maximized.
- Security: You should be able to restrict data access to certain people at certain times, and ensure a secure operating environment that is accessible, yet protected.
- A model builder: A modeling capability is essential when specifying an FP&A system as you must be able to run test scenarios, accommodating hierarchical and non-hierarchical organizations and situations. Decide which type of organization you are beforehand and how your sales department relates to procurement, delivery, treasury and so forth.
- Business rules: You need to be able to enter and run business rules so that data can be ordered and made useful, with percentages, ratios, summations and other presentational tools. “It is no good being told that C27 relates to F29 on an Excel spreadsheet: still prevalent in the industry by the way—when this doesn’t tell anyone, not in the know, anything useful,” explained Coveney.
- Data acquisition: Extracting data and transposing it into the FP&A technology system from anywhere should always be possible, alongside typing data in and other matching and loading capabilities.
- Financial application intelligence: A new system is of little use unless it can help make your life easier as a finance professional. That means it should be able to cope with currency conversions, intercompany allocations and work out the correlations between them.
- Presentational tools: These should be in-built so that you can present static and dynamic reports to the board with charts, grids and graphs harnessed to good effect.
- Data/user control: This functionality is important so that workflows can be controlled. It should be possible to send a budget submission for approval and for it to be locked, approved and amended as required, and for master planning documents to be easily controlled.
- Collaboration: On a similar theme, notes, alerts and comments should all be possible during document formation. Indeed, if a true dynamic budgetary approach is to be incubated at a firm, with profit alerts and due payment warnings encouraging cross-departmental collaboration, then collaborative tools are essential.
- User access methods: The web, mobile, and veteran but still popular Excel spreadsheet formats, should all be built into your computer system in order to enable easy user access and flexibility.
“All FP&A systems should have these 10 components ideally, but not all will,” concluded Coveney, “It’s up to you to build out systems yourself, so that you get as many of these capabilities as possible—there is not a single ‘off-the-shelf’ solution.”
In order to get the best technology system to support your FP&A function, Coveney added eight key system mapping requirements that finance professionals seeking extra tech support should use as a checklist. He advised that any FP&A system should be able to:
- Monitor business processes and how they contribute towards business goals
- Provide back up to actual results, to establish the relationship between workload and resources
- Track forecasts and the detail behind the numbers
- Use business relationships to create driver-based budgets
- Assess the impact of change
- Use analytics to validate forecasts and budgets
- Link budgets to strategy
- Implement a continuous approach to planning.
“Once all eight requirements have been built into your processes and mapped to your technology system, which is specified with the 10 aforementioned capabilities, then you will truly be in a position to do continuous budgeting,” said Coveney. “Remember, the key point is, you need to be able to mix metrics and profit and loss (P&L) data dynamically. The system is not worthwhile otherwise.”
Claire Delicata, who was an FP&A director for Costa Coffee until January 2014 and is now an FP&A contractor, was impressed by Coveney’s presentation. “Clearly, Michael’s background with Comshare and latterly Infor, plus his experience working on treasury and finance projects, is very relevant and he’s a knowledgeable guy,” she said.
Regarding the AFP Certified Corporate FP&A Professional credential, as was mentioned by Melnychuk, Delicata said that it was hard for her to comment—having not seen last month’s beta exams—but she’d be interested in viewing the website. "The AFP certification could fill a specific FP&A gap and potentially be useful as a hiring tool for juniors, especially as I am not aware of any other organizations presently offering training in the FP&A segment," she said. "I can see it being a useful benchmark next time I am looking to hire staff.”
Dan Andrew, treasury manager at the Towers Watson consultancy, commented: “It was an excellent evening and covered all the things you should be looking for in a technology system, which is what I wanted. It wasn’t a sales pitch, but rather a useful checklist.”
More on the AFP Certified Corporate FP&A Professional credential is available here. This article originally appeared on gtnews.