Analytics

If you have been following this blog series, you know that I am a ‘people and process’ guy. I’ve discussed how we become so good at circumventing the process that those workarounds become the process. Keep in mind, however, that a workaround, by definition, is meant to be temporary. When you are stuck in the weeds of your daily tasks, it’s almost impossible to see that your process is askew. If that is the case, how can we recognize that it’s time to step back and rethink our planning and reporting process?

Based on my years of experience in FP&A practice and consulting, I’ve pulled together 5 signs that it’s time to rethink your process. Some of these can be corrected with minor tweaks to our systems while others may require a major overhaul.

Offline manipulation of data

This is a telltale sign that something is off. There are any number of reasons that we do this. I used to do it because my boss wanted a different number than my system-generated reports were producing. Note that I said different, not necessarily right. Oftentimes, we have multiple metrics and KPIs with the same or similar names, but different calculations. Maybe we want to back out a few GL accounts from a certain Revenue metric or we have a series of ‘one-time’ exclusions. (On a side note, that’s an interesting phrase. In my experience, those one-time exclusions are used many times…) It is easier to simply massage the data or create our own math in Excel to complete the task at hand. After all, I can justify anything with a footnote! We should, however, be challenging the intent behind these requests. Perhaps your reporting capabilities are limited and you use Excel schedules to standardize outputs. Sometimes we export data so we can marry it up with data from other systems and reports. At the end of day, when you manipulate data offline, you lose the power of your planning and reporting tool and you turn it into a basic report repository.

I’m sure you can think of many other reasons why you need to manipulate data offline.  I will argue that each of them can be solved with process or system changes. 

No standardization across your business units and functions

This is a big one for me. The lack of standardization and automation of technology and process makes it difficult to streamline your actions and to understand the root cause of an issue. I frequently heard, “Brian, we don’t do it that way. It’s different in my department . You don’t understand.” If you choose your metrics and processes correctly, that is not true. Management and FP&A must have the ability to drill from the macro to the micro. If I see a variance or issue on a report for my global rollup, I need to be able to drill all the way down to the store front or profit/cost center to see what the driver is. If every location is not using the same metrics, calculations, or account granularity, my analysis can be misleading. I love ranking and quartiling reports. By focusing on metrics at the individual locations, I can learn what works and what doesn’t work and then educate the front line on changes they can make that are working for their peers. This only makes sense, however, if you have an apples-to-apples comparison.

Keep in mind that while working towards standard processes, you must ensure you get universal adoption. Without that, you will find that people will revert to their previous methods and will ignore your new process (see the first sign above). 

Last-minute changes to your forecast or budget cause a frenzy of activity

I can still remember the feeling when my phone rang at 5:29pm the night before a big deep-dive review or Board Meeting. You know what I’m talking about. THE call. You finally completed running the last round of budget changes through your process, validated the numbers, copy/pasted all the charts and graphs and you are printing the books. “I’m going to get home for dinner tonight!”, so you thought. Your next call is home telling your family you will be late again because you have another long night ahead of you. It doesn’t have to be this way. 

The reason I dreaded that call was because we didn’t have a clearly defined, connected process that allowed me to make changes quickly and flow them all the way through my system to produce the requisite output. Instead, I knew the pain that was about to ensue. I was going to cobble together my financials and hope that I didn’t miss anything (which I often did). Your goal should be to have a rock-solid process such that you can make changes quickly and then seamlessly push them through. Easier said than done, yes. But, I know you can do it. We’re here to help.

Lack of integrated functionality within your legacy applications

Many times, we have disparate systems and processes across business units, geographies and corporate functions. The concept of a single source of the truth seems like a myth or fable. We may feel as if we are on a quest for fully integrated 3-statement reporting (P&L, BS, CF). The lack of integration is also a root cause for other items that I have discussed. Since our systems do not speak to each other, we export everything to Excel, The Great Aggregator. This leads to using offline schedules to generate reports which leads to a lack of data governance and control which leads to confusion at best and misdirection at worst. There are steps you can take today to improve this while you are working towards a longer-term solution.  Automation of certain items is easier than you think.

You do not have real-time, collaborative tools

Instant feedback is extremely important when timelines are tight and decision support is needed quickly. The pace of business today is so fast that collaboration is becoming a requirement. If you are still driving your forecast and budgeting process with Excel, you have an opportunity for improvement. Stop the proliferation of static Excel files that constantly get changed or broken. There are many tools that will allow you to become more collaborative. The answer to this doesn’t have to be the implementation of one of the planning, reporting, and analytics tools on the market today (although I highly suggest this route). I have seen collaboration accomplished with Google’s suite of products, Smartsheets, Box or other shared access products. The key is that you need a platform that allows you to be nimble and quickly react to changes on the ground. Enable each group to input their items and have them flow throughout the system so everyone sees the impact immediately and can approve or deny and create actions plan. Make sure to create a roadmap that charts your path from where you are today to that future state where you have a planning, reporting, and analytics solution that can provide instant gratification, feedback, and ease of use. 

Did any of these signs strike a chord with you? Most of us probably see these in everyone else’s process around us.  But guess what, others may these signs in your planning and reporting process. As we approach the start of next year’s budget season, set aside some time to question the steps you are about to take. Perhaps it is time to rethink your process.

Read more posts in Brian’s FP&A Done Right Series:

FP&A Done Right: Creating a Shared Vision Between Finance and IT

Why, Why, Why, Why? – The Hallmark of a Great FP&A Practitioner

Guest blog post from Adaptive Insights: How to Improve Cross-Team Collaboration

I have seen the extremes of the Finance/IT relationship during my career as an FP&A professional. When I first started navigating the Finance space, any and all systems were ‘owned’ by IT. That’s simply how it was. There was this love/hate relationship between the two and we each thought of the other as a necessary evil. We learned to live together but there was this constant tug-of-war over the constraints of the project management triangle; time, cost, and scope. As Financial systems became easier to administer and Finance professionals became more tech savvy, the pendulum shifted and we started to move ownership of certain financial systems to the Finance team itself. I hired technical resources in my team to manage and build my systems since I could control things better that way. Finance began to own the planning, reporting, and analytics systems, but IT still owned(s) the source systems (GL, P2P, AR, FA). I am ok with this.

Planning, reporting, and analytics systems are forward looking and, as such, do not have the same regulations as the other systems. In FP&A, we need to be free to make quick changes and create “what-if” analyses to our hearts content without constantly going through the proverbial “red tape”.  (To be clear, as I’ve pointed out in past blogs, data governance is still very important and this is not the Wild West.) The collective “we” do not have the same luxury with our systems of record, however. Those need to maintain the rigor and tight controls that exist today and, oftentimes, our IT organizations are better suited for that. While I am comfortable with the division of responsibilities today, I feel as if we have separated the two functions too much. In the extreme cases, I have seen this create a disjointed approach to IT initiatives. As Sebastian Grady points out in CFO’s “How to Build a Strategic Relationship with the CIO”, it is very important to create and foster a shared vision between Finance and IT, so you can work with each other rather than against each other. “Finance chiefs and IT leaders should be jointly responsible for aligning technology opportunities with business strategy,” commented Grady. He also speaks about forging a relationship with IT and being “the bridge to a contextually rich CEO/CFO/CIO relationship.”

This should extend beyond the CFO and CIO. Think of this as the CFO’s team and the CIO’s team. FP&A lives at the intersection of the C-suite offices and we are uniquely qualified to forge those relationships. Make sure you take the requisite time to get to know your peers in the other functional areas.  Partner with someone on that team and shadow them during their respective busy time so you get a clear picture of their responsibilities. Once you have that understanding, which only comes from intellectual curiosity, you can work together to align technological initiatives with business strategy. In your quest to drive profitable growth, make sure to stay abreast of new technologies that can help make this a reality. Work directly with your CIO to make sure that the latest IT proposal provides a solid ROI while achieving overarching strategic business goals at the same time. 

Later in the article, Grady discusses how to “flip the IT roadmap on its ear.” He describes how Finance and IT can work together to create an IT roadmap that supports your business strategies and goals. There are some interesting examples in there that are thought-provoking and worth the read. None of those examples will work until you bridge the gap between the functional areas and recognize that you are stronger together. That shared vision must be rooted in mutual respect and “…a joint understanding of financial and technological strategies…”  Once again, clear, concise communication wins the day. 

Read more blog posts in the FP&A Done Right Series:

Why, Why, Why, Why? – The Hallmark of a Great FP&A Practitioner

Guest blog post from Adaptive Insights: How to Improve Cross-Team Collaboration

FP&A Done Right: “That’s the Way We’ve Always Done It!” — Challenge the Status Quo