Advances in predictive and analytical software are facilitating a huge competitive advantage for many companies who recognize the value of using big data to look into the future. But, for many organizations, analytical transformation remains out of reach, largely due to a business culture that’s become risk-averse following the failure of historic technology investments to deliver the transparency needed to drive a successful strategy.
The World Trade Center Amsterdam and the Cercle de Lorraine Club van Lotharingen in Brussels welcomed some of the brightest minds in financial planning and analysis (FP&A) to discuss this very topic at both cities’ second FP&A Board roundtables, organized by Larysa Melnychuk, FP&A, managing director of the FP&A Trends Group.
Advantages of FP&A analytical transformation
Both sessions welcomed Thomas Lundell, director of FP&A and business control (EMEA) at NetApp, creators of innovative storage and data management. In a case study, Lundell detailed his personal and corporate business journey in transforming FP&A through technology investment.
Lundell believes there are two key advantages to undertaking an analytical transformation for FP&A, both of which will require buy-in from leadership. “First, it improves the speed and quality of decision-making,” he explained. “Business is increasingly dynamic and fast-moving. Business executives need to make large-scale, complex decisions within reduced timeframes. Going through an analytical transformation will enable FP&A to provide both predictive and prescriptive analytics that will enable executives to make better and quicker business decisions.”
Second, undertaking a transformation enables FP&A to create an integrated business plan that links up all the functions within the organization. “By going through an analytical transformation, FP&A can move from doing traditional budgeting and forecasting, to creating integrated business plans that link investment allocation with business unit strategy,” he said.
Discussions at both events broached the matter of how analytical technology can tick the wish lists of many senior FP&A professionals, including:
- Fully integrated business planning
- Empowering business partners to become the real owners of their strategic inputs
- Maintaining agile and relevant projections in dynamic, fast changing markets
- Automating traditional budgeting and forecasting processes to free up resources to look into the future
- Access to real-time data around business ‘wins’ and ‘opportunities lost’
- Long-term business planning
- Risk modeling and mitigation
- Zero-based budgeting
- Converting top-down planning into success
- Driving ‘stretch’ to facilitate growth.
Both groups also addressed the challenges to adopting analytics transformation, which continue to obstruct its advancement even within some of the largest, most successful businesses in the world:
- A lack of investment in analytics technology
- A lack of investment in professional development to help attract, develop and retain the best talent with the right-mindset
- FP&A staff buried in day-to-day accounting tasks, restrained by legacy processes and systems now ripe for automation
- Rigid business thinking
- The absence of a universal business appreciation of technological capabilities
- Encouraging business partners to ‘speak the same language’
- Inability to turn insights into action.
Regulatory changes such as the arrival of International Financial Reporting Standard (IFRS) 9, whose enforcement has been delayed until January 2018, may also be fostering a reluctance to prepare.
Treating data as a strategic resource is vital for success; how ownership of that data is structured is no less important. Imagining a different world and reorganized business model, which can better meet the demands of a digital age, may for some organizations prove a prerequisite to the transformation journey for FP&A.
All business partners should have a natural vested interest in their businesses data resources through both individual inputs and strategic output, but who should be the custodian of that data? General consensus leans towards those who can apply science to the data. FP&A offers the financial acumen, the grounded approach to forecasting and the hard and soft skills required to benefit the business at large.Anne-Marie Rice is director EMEA for AFP.
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