Wired Magazine writer Brian Solis coined the phrase ‘Digital Darwinism’ as “the phenomenon when technology and society evolve faster than an organization can adapt.” He notes that the fabric of every company “is strained due to internal and external influences” and that the leaders of today’s businesses must ensure that the processes and systems support their adaptation to digitization. Those who fail to adapt will fail to survive.
Digitization needs to happen in many parts of the organization, and in many ways to support the overall company mission. Within finance, for example, this can be seen in billing and AR systems that link to customer accounts and the “quote to cash” cycle, or implementing an enterprise resource planning (ERP) system that links the GL, supply chain and other systems. In these instances, we are talking about translating information into data where it is portable across silos and geographies, accessible to users who can interact with it in on their own terms, and trustworthy—born of good processes, with integrity and relevance.
For FP&A, this opportunity for digitization is integrated planning—optimizing business performance by connecting an enterprise’s planning capabilities. Those capabilities reside in the processes and systems as Solis mentions, and I would humbly add a third location to his notes, the human expertise to interface with and convert that data back into information and ultimately to insight.
Data has been called “the oil of the 21st century” because it can be harnessed to power businesses and create new opportunities. But data cannot produce value in isolation; bringing the potential of data to fruition requires additional elements. We need skilled people to analyze data and make it meaningful, and to design the processes that align people and help information flow. We also need the tools to manage the vast flow of information flooding us every day. Only by aligning each of these elements to the purpose of integrated business planning can we adapt and thrive in the digital world.
FP&A often is the team charged with completing the expanded CFO mission. Finance is an independent arbiter of company performance that also has an enterprise-wide view of the organization, including internal and external stakeholders, and that also has a validated, structured financial data at its fingertips. FP&A must drive its company forward by building a competitive capability in integrated business processes, within the context of data and digital transformation, to become adaptable and agile, or else face extinction. Successfully achieving this requires focusing on the people, processes and technology—the hallmarks of integrated planning.
To read more about this topic, including actionable ideas, download the AFP Guide to Building an Integrated Business Planning Capability.Bryan Lapidus, FP&A, is a contributing consultant and author to the Association for Financial Professionals. Reach him at [email protected].