The 2016 AFP Annual Conference in Orlando focused heavily on the concept of finance as business partner. There is no question that finance has a unique view of the organization, able to quantify and, if effective, qualify how contributing systems intersect and contribute to the body. Business partnership contributes toward a worthy goal.
Throughout the conference, the question I came back to repeatedly was, “What if operations isn’t interested in having a partner?” What then? After all, they get a say, and in most organizations, their opinion is the one that counts. How can finance contribute meaningfully to a company’s success, despite being considered merely support, using only traditional finance and accounting tools?
Prime the pump
Before even beginning to think about business partnership, we must be absolutely clear on our primary goal. Why do we want a more substantive role in the first place? We want competitive advantage for our companies. We want to give our customer unmatched products, services and experiences, usually at the lowest cost. We want to turn a vision into reality. What is your company’s vision? Internalize it.
Once properly aligned on the truly important outcome, we must be equally clear on why we want this. This is critical: clarity of purpose will give us the fuel to drive toward the ultimate aim. If becoming a business partner is actually important, then having the correct frame and mindset will orient our actions toward this—but be clear, it will be a byproduct of our focus on the primary goal.
Having spoken about frame, let me turn briefly to mindset. We’ve all heard that accounting is science, and finance is art. So let us consider ourselves artists. As noted earlier, finance sits in a position uniquely qualified to see the big picture, the entire body of the organization. However, if you, personally, were scheduled to undergo some surgical procedure, would you want the procedure determined and orchestrated by an artist, or by a surgeon? Operations is the business’ surgeon. Be clear on this.
A company would be ill-served to have finance function as a filter for every decision. Rather than filter, finance should serve as guardian. Do not expect operations or management to seek your counsel. Instead, strive to bring them insight—educate them on financial consequences, warn them of threats, alert them to opportunities.
Fortunately, once we have the proper frame and mindset, we need look no further than the fundamental tools of accounting and finance to learn more about the business, serve effectively as guardian, develop into genuine partners, and most importantly, win.
Back to basics—budgeting
Budget oversight may not be as glamorous as the latest business intelligence analytics application, but it reaches into nearly every facet of the organization, and can set the foundation for ongoing and meaningful connection. The process is ours, so it had better be sharp. Be sure the process, process owners, communication streams, deliverables, and deadlines are clearly defined, communicated, and adhered to. While finance owns the process, operations should own the output, and is more likely to if we give them superior budgeting tools.
One area where an artist’s brush can outperform a surgeon’s scalpel is in P&L budgeting. Seeing the various groups in relation to the whole allows us to bring relevant players together to create a more realistic plan. Don’t isolate your tender and capture team from your project execution team; bring them together. While you’re at it, invite procurement to the planning sessions. Each party will walk away with a better understanding of where the company is headed, how it will get there, and their particular role in the coming victory.
Whatever your industry and company dynamics, consider your particular business cycle, and work to create a unified team from the individual components. Maybe you need engineering in the room, maybe marketing, maybe HR. Get them together, and once you do, listen more than you talk. When necessary, guide the discussion by asking questions. Done correctly, it will put operations at ease while helping you gain more insight about the business. A question to regain focus is, “How does this relate to our strategy?”
Department or cost center budgeting gets finance into the nuts and bolts of the business, and we have multiple roles to play with department managers. At times, we should serve as an advocate. Other times we should offer counsel or be the voice of reason. Done elegantly, with discretion, this will be seen rightly as advocacy. Similar to orders and sales budgeting, be sure to ask, “How does this support our strategy?” The strategic plan is our north star. Refer back to it often.
Patrick M. Brown is manager, finance & analysis, Prairie State Generating Company.