David Gold, VP for planning, appraisal, and reporting for Royal Dutch Shell’s Upstream business, recently spoke with AFP as part of a case study that examines the organization’s decision to move high-level FP&A analyses to shared service centers.
This case study was part of a new survey from AFP and APQC that examines where FP&A stands in the organization, and whether FP&A teams being encouraged to look ahead, or if they are they still encumbered with the mundane and routine work that has been expected from them.
ROYAL DUTCH SHELL
Over the last five years, Gold said, Shell has been reorganizing the Upstream way that finance support to the business is delivered. As part of this reorganization, Shell is moving many FP&A-related activities like analysis and reporting from various parts of the Upstream business-to-business operations centers in finance and data operations.
Shell has long-lived assets and a complex planning process that contrasts with commodities that change earnings and valuations on a daily basis. Upstream FP&A’s largest process is the annual planning process, an endeavor that begins before the previous year’s plan is finished and takes more than a year to complete.
“A large part of our business value in Upstream comes from delivering complex projects and there’s a lot of engineering assessment that goes on as detailed plans are put together,” Gold said. Price assumptions and implications for other markers and margins are then aligned across the Upstream and Downstream business, ensuring that the plan is coherent and consistent across the business at different price levels.
Gold also spoke to the importance of strong change management for FP&A: “Meeting this challenge doesn’t require only system changes, process changes and data changes. It requires changes in behavior.”
For example, Gold said, FP&A once had a culture of constant rework in reporting and analysis. Looking for behavioral change in this context meant encouraging FP&A professionals to do their best work on the first pass and moving the work up the chain immediately after. “We’re not going to have multiple reviews any longer. You’ll only see it at this point before it moves on,” Gold said. Making this change requires strong modeling from leaders, showing how things can be done in simpler, streamlined and more effective ways.
The full case study is available for download here.
David Gold will be featured on the complimentary, members-only AFP Virtual Roundtable on July 18 when we discuss “Building an EPM Roadmap.” Signup here.
For more details on the Preparing for the Next Level of FP&A study, including survey results, a white paper, interactive findings, and industry data cuts, can be found at: www.afponline.org/nextlevelofFPA