Last year, AFP announced the formation of its APAC FP&A Advisory Council (FPAAC). The networking and advisory group meets three to four times a year to discuss best practices, common challenges and innovative initiatives in the Asia-Pacific region. We’ll be profiling individual members of the council every month. This month, Bryan Lapidus, FPAC, director of FP&A Practice at AFP, spoke with Hari Ramani, PT controller and reporting/analysis lead at Shell.
Lapidus: Let’s begin with your background and how you got into FP&A.
Ramani: To be very candid, my hatred for physics was what drove me toward finance. When I was in high school, we had to choose a set of specializations, and I wanted to choose anything that did not include physics as a class. There was only one subject left: accountancy and business commerce. However, even as a high schooler, I found the combination of economics and accounting fascinating.
So, where did I get into FP&A specifically? It was at the intersection of where you have the custodian of numbers as a finance organization, but the numbers do not mean anything if you cannot use them to make decisions. That perfect harmony exists in the space within FP&A. There is a part of FP&A that needs a specific format according to local and global regulations, but there is also a part that needs to look at the numbers in a way that the business can understand and make choices to deliver enterprise objectives.
The aspect of FP&A that excites and attracts me the most is that FP&A professionals are part quantitative, part business partner, part consultant and part leader. There are many facets to being an FP&A professional, and it allows me to play with everything I enjoy in this space.
Lapidus: Are there issues within FP&A that need to be solved?
Ramani: We sometimes focus too much on accuracy. FP&A professionals can get so caught up in the space of wanting to get numbers as precise as possible that they fail to focus on getting the story behind the numbers. When we are too comfortable playing with numbers and spreadsheets, we forget to step back and say, “Is accuracy to the last decimal that important, or is the story more important?”
Since there are so many facets to being an FP&A professional, we end up overcompensating by playing to our strengths rather than looking at the entire span of what we need to work on. We have the natural ability to be an integrator of many different parts of the organization because we receive the numbers from multiple areas, but we still tend to focus on dealing with them independently rather than bringing them together.
So, what can we move toward to get to that FP&A utopia? Recognize that it’s okay to not go into an extreme level of accuracy. Instead, take a broader view of the business and figure out how to play the integrator to deliver on business objectives. We need to be introspective enough to say, "What is the big picture here? How can I contribute more to that big picture?”
Lapidus: Sometimes finance professionals do not get rewarded for being the big picture integrator as much as they get dinged if numbers are wrong. What is your standpoint on that perspective?
Ramani: It is almost a chicken and egg contest. Accuracy matters but not beyond a certain level. Organizations are used to making sure that their forecasts are so accurate that they do not spend time checking the credibility of those plans. We need to start educating the people we work with that it is okay to not be fully comfortable with the numbers and to have to deal with a little bit of ambiguity because, for example, we all expected 2020 to go in a certain way and the pandemic completely upturned it. We must be prepared for a few outcomes rather than one specific plan that works with the inflow of detail.
Step by step, it is essential that FP&A professionals encourage their organization to be in a more accepting space. We tend to think, “If I let go of the one thing that I am good at, will I be respected for the things that I want to be good at?” It takes letting certain things go and having a conversation to explain why it is not as important.
Lapidus: People say finance is splitting itself into compliance finance and value finance. Compliance finance includes financial accounting, regulatory reporting, audit committee and closing the books. Value finance involves being an economic consultant to the business and bringing in modeling and quantitative views to unlock value. Do you agree with that?
Ramani: There are many different buckets within finance: the compliance and controllership aspect, FP&A, stewardship of the business, co-stewardship of the business and more. We have the centers of excellence that allow us to deeply develop expertise in certain areas that maybe do not need as much proximity to the business as other parts of the organization. However, there are parts that need proximity and need to step up in terms of partnering with the business.
Despite the many specializations, it is hard to understand the linkage between the various roles. All the units must work together, and artificial distinctions should not be made within the finance organization between those various parts. While the distinctions serve a purpose — to deliver finance in its entirety — organizations should not draw boundaries in terms of who does what. They need to focus more on making sure that the roles and responsibilities are clear.
Lapidus: There is a view that finance should be the owner of all the data. Do you think finance should have the best digital expertise?
Ramani: I have a slightly different perspective to the question that you asked. Your question is essentially asking, “Should finance be the gatekeeper of all data within the organization to enable the digital journey?” With that question, it is assuming that there should be one gatekeeper for all data. In an alternate viewpoint, data must be democratized and there needs to be multiple gatekeepers. Data is everybody's business, and different areas of the business need to make sure the data is correct and most useful for the organization.
The role of finance is to be the one group that has a unified view of the organization. The finance team must know what the goals of the business are, and what data is used from various parts of the organization to support its objectives. Finance professionals must play the digital integrator role rather than the data integrator role. What is the difference? Data integration brings data together to build a large data warehouse, and then analytics are run off of it. There are different departments in an organization that can take care of data integration. Digital integration, on the other hand, brings the minds and hearts together to say, “Here is how we are going to drive an integrated approach to digitalization.” The digital integrator is the hub in the wheel to bring the latest parts together and make groups start talking to each other.
For more resources and information on FP&A in the APAC region, visit AFP’s Asia-Pacific FP&A page.