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FP&A Done Right: CFOs See a Bright Future for the Remainder of 2021

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This is a guest blog post from our partner Workday Adaptive Planning, examining trends and data presented in a PwC Pulse Survey of finance leaders.

As CFOs look ahead to the remainder of 2021 and beyond, a new survey finds them increasingly optimistic about their organization’s economic prospects.

They are interested in the growth of the digital economy, lasting shifts in consumer behavior, and the prevalence of work-from-home arrangements. Finance leaders are also looking to grow their influence within their companies and are keen to learn how to navigate staffing challenges.

A PwC Pulse Survey of 182 finance leaders from Fortune 1000 and private companies, along with other C-suite executives, finds many CFOs pivoting from a defensive posture to expecting a boost from shifts spurred by the COVID-19 pandemic.

Mostly sunny outlook

As the pandemic accelerated trends on a large scale and enterprises sought to adapt to ever-changing realities over the past year, CFOs are looking to increase their influence within their company—and doing so more efficiently.

CFOs’ top priority for the finance function in 2021 is to establish finance as the business partner across the enterprise (47%). While driving deeper collaboration among functional business partners isn’t a new goal for finance, the pandemic has been a catalyst to expand the level and access of these partnerships. CFOs’ second-highest priority is automating processes using intelligent automation (41%).

In the meantime, economic optimism is high. Nearly half (46%) of respondents polled in March 2021 anticipate high growth from the rise of the digital economy, while 36% predict moderate growth. They also expect high growth from pandemic-related changes in consumer behavior (34%) and the work-from-home trend (21%). When it comes to their views of the U.S. economic recovery, a whopping 81% of CFOs express optimism, a higher percentage than other C-suite leaders (76%) polled.

CFOs are also hopeful about their own company’s performance, with 87% of them forecasting growth over the next 12 months—a significant leap from positive poll responses in September (25%) and October (28%). Now, the pessimists are in the minority, with only 4% expecting lower revenue, down from more than half (51%) who held that outlook six months ago.

Yet the optimistic sentiment is tempered by an increasingly challenging regulatory environment (31%), tensions between Washington and Beijing (27%), and global trade and tax policy (26%). Nearly a quarter of respondents (23%) identify inflation as a high risk.

Finance leaders driving change

Finance leaders are thinking about more than just balance sheets, with top priorities including such considerations as advancing goals for diversity and inclusion (D&I), increasing investment in compliance functions, and revising enterprise risk management practices.

With an eye on the future, CFOs are thinking about hiring, developing, and diversifying their workforce—even as 93% identified the availability of talented job candidates as critical. More than 60% of CFOs say their organization plans to boost D&I training, and 51% anticipate an increase in reporting D&I data to internal stakeholders.

While the economic impacts of the past year had a high profile, the pandemic also took its toll on employees’ well-being, emphasized the importance of mental health, and brought to the forefront environmental, social, and governance (ESG) issues. Against a backdrop of the U.S. recovering from the crisis, 69% of CFOs identify better reporting of ESG issues among their top two priorities—recognizing that those factors and related disclosures will continue to receive more attention from investors, customers, employees, and other stakeholders in the future.

The evolving business considerations around ESG factors have also created the need for a way to measure and manage them. Most CFOs acknowledge the challenge, with 68% saying that identifying frameworks, material issues, and metrics to focus on are a priority. The shift comes as large institutional investors and the Securities and Exchange Commission have sought to improve disclosures from companies.

Looking at internal processes, CFOs also cite the following as priorities: communicating to the board and audit committees on progress (63%); implementing technology, processes, and controls around reporting (63%); and establishing ownership of ESG reporting (62%).

CFOs say producing investor-grade ESG information (60%) and demonstrating value to stakeholders through ESG reporting (60%) are among their top concerns, while identifying appropriate talent to build and maintain their company’s ESG reporting programs is cited by 58% of respondents.

Finance leaders are confident in the U.S. economic recovery and more so in their own organization’s prospects for the coming year, but they are also aware that the road map requires organizational adjustments in a variety of areas. Uniquely positioned to provide enterprise leadership, CFOs have recognized the growing importance of working across departments, utilizing technology to improve efficiency, establishing and developing nonfinancial metrics, and hiring and retaining talented employees.

This blog post was originally published on the Workday Adaptive Planning blog.

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FP&A Done Right: 3 Pitfalls to Avoid with Rolling Forecasts

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This is a guest blog post from our partner Workday Adaptive Planning, detailing three mistakes you don’t want to make with your rolling forecasts.

It’s not just meteorologists who can get forecasting wrong. If FP&A pros don’t take a thoughtful approach to establishing rolling forecasts, they can hit some unexpected stormy weather along the way. When that occurs, you run the risk of forecasts ending up, well, not being forecasts at all. They morph into updated versions of the annual budget as opposed to dynamic tools for creating visibility into the opportunities and challenges on the horizon.

Here are three pitfalls to avoid as you work to get the most strategic value out of forecasting and generate buy-in and momentum with your leadership team and business partners.

Pitfall #1: Don’t use the year-end as the stopping point

Let’s start with a driving analogy. Rolling forecasts should act like your headlights, providing steady and consistent visibility for what lies ahead. Too often, however, rolling forecasts become simply budget updates—which end up being the equivalent of driving so fast that the visibility provided by your headlights becomes increasingly limited.

The most common way organizations fall into this trap is by using the end of the year as a stopping point for forecasting. That may work in the first quarter, but by mid-year your forecast faces a hard stop in six months. And, of course, by the end of the third quarter you have a forecast that offers only three months of visibility.

When you’re forecasting with year-end being the stopping point, you’re just engaged in the process of determining if you are going to hit the year-end numbers that were established in the annual budget process.

The trouble with this approach is that it often encourages business partners to provide numbers and projections that are focused on “hitting the year-end numbers” as opposed to what is actually occurring in the business. With true rolling forecasts that don’t have an established endpoint you encourage transparency, because the focus is on assessing what is truly happening in your business and the market so you can plan and react accordingly. Not only that, but you can also generate a consistent long-range view to aid in better decision-making.

Pitfall #2: Know the difference between forecasts and targets

Forecast and targets are sometimes viewed as interchangeable. They’re not. In the simplest terms, a target is where you want to go, while the forecast continually tracks where you’re headed. In the ideal world, forecasts lead neatly toward your target. In the real world, a forecast represents the ever-changing dynamics of your business and the marketplace.

If you start viewing forecasts and targets interchangeably, you run the risk of facing mounting pressure to adjust the forecast to hit the target—regardless of other factors that might be cause for a course correction—or making decisions that help assure the target is still in your crosshairs.

If you separate forecast and target, you can then have much more robust conversations about what the business is doing to make the adjustments needed to where you want to go. That gives you a much richer, more robust planning conversation than you’d have otherwise. If you keep the definitions straight in your mind, you’ll avoid this pitfall, and really get to the heart of what you’re really planning to do and the risks you’re trying to run.

Making this distinction helps unleash the power of rolling forecasts. You can emphasize that the long-term focus is on the target, but that the nimbleness of a rolling forecast helps assure you will ultimately hit that target.

Pitfall #3: Don’t throw in the kitchen sink

With forecasts, it’s often best to keep it simple. The biggest problem often is that FP&A teams include too much information, thinking that, by putting more and more detail into the forecast, they can really nail it down.

In reality, adding too much detail leads to two pervasive problems that ultimately can undermine your forecasting success. First, it requires much more work for your FP&A team and business partners. Second, handling more data and information increases the chances that your forecasts will miss the mark or be error prone.

For example, the more drivers you include, the more things you must look at, the less time you have for analysis. So if you have hundreds of drivers, you’ve got to spend hours and hours—80% or more of your time—gathering up the data, leaving precious little time to do any real analysis.”

Some experts recommend the 80-20 rule: Aim to spend 80% of your forecasting time on analysis and generating insights, and 20% on collecting data. The only way to effectively do that is to simplify and only rely on the key drivers and data points that will 

This is a guest blog post from our partner Workday Adaptive Planning, detailing three mistakes you don’t want to make with your rolling forecasts.

It’s not just meteorologists who can get forecasting wrong. If FP&A pros don’t take a thoughtful approach to establishing rolling forecasts, they can hit some unexpected stormy weather along the way. When that occurs, you run the risk of forecasts ending up, well, not being forecasts at all. They morph into updated versions of the annual budget as opposed to dynamic tools for creating visibility into the opportunities and challenges on the horizon.

Here are three pitfalls to avoid as you work to get the most strategic value out of forecasting and generate buy-in and momentum with your leadership team and business partners.

Pitfall #1: Don’t use the year-end as the stopping point

Let’s start with a driving analogy. Rolling forecasts should act like your headlights, providing steady and consistent visibility for what lies ahead. Too often, however, rolling forecasts become simply budget updates—which end up being the equivalent of driving so fast that the visibility provided by your headlights becomes increasingly limited.

The most common way organizations fall into this trap is by using the end of the year as a stopping point for forecasting. That may work in the first quarter, but by mid-year your forecast faces a hard stop in six months. And, of course, by the end of the third quarter you have a forecast that offers only three months of visibility.

When you’re forecasting with year-end being the stopping point, you’re just engaged in the process of determining if you are going to hit the year-end numbers that were established in the annual budget process.

The trouble with this approach is that it often encourages business partners to provide numbers and projections that are focused on “hitting the year-end numbers” as opposed to what is actually occurring in the business. With true rolling forecasts that don’t have an established endpoint you encourage transparency, because the focus is on assessing what is truly happening in your business and the market so you can plan and react accordingly. Not only that, but you can also generate a consistent long-range view to aid in better decision-making.

Pitfall #2: Know the difference between forecasts and targets

Forecast and targets are sometimes viewed as interchangeable. They’re not. In the simplest terms, a target is where you want to go, while the forecast continually tracks where you’re headed. In the ideal world, forecasts lead neatly toward your target. In the real world, a forecast represents the ever-changing dynamics of your business and the marketplace.

If you start viewing forecasts and targets interchangeably, you run the risk of facing mounting pressure to adjust the forecast to hit the target—regardless of other factors that might be cause for a course correction—or making decisions that help assure the target is still in your crosshairs.

If you separate forecast and target, you can then have much more robust conversations about what the business is doing to make the adjustments needed to where you want to go. That gives you a much richer, more robust planning conversation than you’d have otherwise. If you keep the definitions straight in your mind, you’ll avoid this pitfall, and really get to the heart of what you’re really planning to do and the risks you’re trying to run.

Making this distinction helps unleash the power of rolling forecasts. You can emphasize that the long-term focus is on the target, but that the nimbleness of a rolling forecast helps assure you will ultimately hit that target.

Pitfall #3: Don’t throw in the kitchen sink

With forecasts, it’s often best to keep it simple. The biggest problem often is that FP&A teams include too much information, thinking that, by putting more and more detail into the forecast, they can really nail it down.

In reality, adding too much detail leads to two pervasive problems that ultimately can undermine your forecasting success. First, it requires much more work for your FP&A team and business partners. Second, handling more data and information increases the chances that your forecasts will miss the mark or be error prone.

For example, the more drivers you include, the more things you must look at, the less time you have for analysis. So if you have hundreds of drivers, you’ve got to spend hours and hours—80% or more of your time—gathering up the data, leaving precious little time to do any real analysis.”

Some experts recommend the 80-20 rule: Aim to spend 80% of your forecasting time on analysis and generating insights, and 20% on collecting data. The only way to effectively do that is to simplify and only rely on the key drivers and data points that will provide clean and accessible forecasts.

The end result will be rolling forecasts that you can readily create and update—and that your business partners can easily understand.

This blog post was originally published on the Workday Adaptive Planning blog.

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FP&A Done Right: Overcoming Obstacles to Collaboration in the Office of Finance

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This is a guest blog post from our partner Workday Adaptive Planning, highlighting how to better improve collaboration in the Office of Finance.

As the role of CFO continues to become more strategic and collaborative, CFOs are expecting their teams to follow suit. As such, many finance leaders are requiring their teams to broaden their understanding of other functions and pushing them to communicate and collaborate more effectively, both internally and externally. According to our studies, collaborative work now consumes a significant portion of the finance team’s week.

The limitations of legacy tech

One of the primary obstacles to better collaboration is outdated technology. With many finance departments still relying on email and spreadsheets to drive their reporting process, collaboration is a time-consuming, frustrating task.

Think about this common scenario: A report identifies a variance and is emailed out to multiple stakeholders for review. This triggers a massive email chain of variance queries, change requests, and edits. Soon you have multiple versions of the spreadsheet existing on different computers. Which one is the right one? And if it’s not saved on the server, who can access it?

Of course, the other issue is accuracy. How does anyone know whether the numbers in the spreadsheet are correct in the first place? Manual-driven processes are susceptible to errors like entering data in the wrong cell, messing up a formula, or adding an extra digit by mistake. As stakeholders copy and paste information into spreadsheets and email them along, you lose the ability to easily track who is entering data or verify where that data originally came from.

The role of nonfinance managers in financial reporting

When some finance departments talk about collaboration, they think about ways of making it easier to collaborate within the department. While that’s important, true collaboration means making it just as easy for nonfinance managers to be able to access and make changes to a report.

Going back to spreadsheets, often the finance department works to get the report perfect before sending it off to an operational manager for review. If the operational manager adds a last-minute update, it can require a massive amount of work to incorporate, review, and verify.

While accurate data is obviously the top priority, something else to consider when collaborating with nonfinance managers is data visualization. Even after you have all the numbers together in a report, a spreadsheet can be difficult to interpret and understand. A report is only as good as the action your team can take from it; to improve collaboration, you must improve both access and understanding of the data.

The 3 steps to making reporting collaborative

If you wish to make your reporting a more collaborative process, here are three keys to keep in mind:

Step 1. Access
Instead of static spreadsheets and email, it’s critical to move your reporting process to the cloud using smart financial reporting software like Workday Adaptive Planning. Because it’s accessible through the web, all your stakeholders can work from the same set of numbers at the same time without confusion or delay. And since you can control and track at the user level who has access and who enters data, you can greatly increase transparency and accountability throughout the reporting process.

Step 2. Ownership
In addition, Workday Adaptive Planning can automatically import data from both your financial and nonfinancial systems. This not only saves time and reduces errors, but it also takes all your data out of departmental silos and brings it together to give your entire company a single source of truth to work from.

Step 3. Understanding
Once you’ve automated data collection, you can focus on delivering insights. Workday Adaptive Planning lets you easily distribute board reports, slice and dice management and financial reports for specific departments, and drill down into the details. Because it’s connected to all your systems, you can also easily create real-time, visually appealing dashboards that give nonfinancial managers instant insight into their department’s performance.

Collaboration is integral to today’s finance initiatives

The marriage of traditional accounting and analytic skills with interpersonal communication and collaboration skills reflects the changing face of today’s finance team and leaders. Data alone is not valuable to today’s organizations. But the ability to aggregate, align, and interpret company-wide data that guides corporate performance continues to separate the traditional from the modern CFO.

This blog post was originally published on the Workday Adaptive Planning blog.

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FP&A Done Right: 3 Ways to Improve Collaboration with Colleagues Outside of Finance

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This is a guest blog post from our partner Workday Adaptive Planning, explaining how to improve collaboration between the Office of Finance and business managers.

Many companies suffer from poor communication and collaboration between financial and nonfinancial managers. Operating managers don’t have sufficient input or buy-in to the financial planning process, and they aren’t educated about how their decisions can influence overall profitability. For its part, finance isn’t able to offer real performance insights that might truly help managers improve their results.

Instead of working closely together to plan and forecast, finance and business resort to negotiations that can involve high levels of conflict. Why is this, and how can it be changed to strengthen collaboration between finance and the business—and therefore transform FP&A?

Drowning in metrics, measurements, and spreadsheets

First of all, companies sometimes flood managers with measurements and metrics, too few of which effectively help managers understand and improve their performance. Too much measuring can add cost and complexity to an organization.

Secondly, spreadsheets continue to dominate planning processes in most companies. While spreadsheets work well for individual productivity, they cause problems when it comes to sharing and aggregating. Finance gets bogged down in low-value-added work—such as formatting and troubleshooting spreadsheets—and can’t provide useful service to business managers.

Meanwhile, business managers waste time managing to budgets instead of managing their business. They often don’t get the information they need, when they need it, from finance. Instead, they’re deluged with data, metrics, and reports, much of which provides little value.

Furthermore, many planning systems are designed and implemented by finance and are seen as irrelevant by business managers. The result is lack of buy-in and enthusiasm.

Clearing the decks for useful analysis and true collaboration

Finance can make room for higher-value work for both themselves and managers by leading the way to less detail and complexity, simplifying internal systems, and reducing the amount of time managers spend producing counterproductive reports and analyzing too many measurements.

In so doing, finance can provide effective decision support and performance insight that can truly help managers improve their results, making finance a real partner rather than an adversary. Here are three best practices that will help you make these changes.

1. Continuous planning

First, replace detailed annual planning cycles, which take too long and result in a budget that is already out of date as soon as it is complete. A more effective planning system is a continuous process, focused on rolling views that look 12 to 18 months ahead. These continuous plans should enable managers to respond more rapidly to emerging events and trends and to changing business environments.

Replacing the annual budget with a rolling forecast can save huge amounts of work, freeing all managers to spend more time on value-added work. It will also improve the relationship between finance and business managers, as finance will have more time to provide better service.

2. Move from monthly variance reporting to KPIs and dashboards

Most companies manage through annual budgets and use monthly variance reporting as the primary feedback mechanism for managers. But monthly variance reporting is too slow and fails to reveal underlying causes of problems.

What is more effective is fast feedback of financial results, summarized and shown as trends and moving averages. KPIs should act as a management dashboard. They should provide managers with early warning signs when problems are brewing and action needs to be taken.

Defining measurements is just the first step. “The next step, and perhaps the hardest part, is to set in motion a cadence for the management team to know and really understand performance through KPIs so that they can use that knowledge to make the right decisions.

These KPIs should be few in number and appropriate to the level of management. A small number of key metrics should be reported daily and weekly. KPIs should provide a fast, high-level view of what is happening today and what is likely to happen in the short-term future. Moving to KPIs in this fashion will not only provide true value to managers but will also lighten the reporting load for the entire organization.

3. Deploy cloud technology that provides fast, relevant information, enabling collaboration

Finance can use technology to provide a performance management system that delivers what managers need—fast, relevant information. Avoid investing in complex IT systems that consume valuable time and money without providing reasonable value.

Instead, implement a dedicated system that employs cloud-based technology to enable unlimited numbers of managers to work together on driver-based forecasts, which are automatically aggregated at every level. This system should also have tight integration with data from other enterprise systems, so that it serves as the primary performance management system.

Why wait?

By implementing these three best practices, your finance team can transform itself and your company’s performance management practices. Your finance team can move beyond simply being effective at financial management and scorekeeping, and instead become a trusted and integral member of the strategic management team. And finance can offer real performance insights that can truly help your managers improve their results.

This blog post was originally published on the Workday Adaptive Planning blog.

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FP&A Done Right: 3 Strategic Skills for FP&A Leaders

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This is a guest blog post from our partner Workday Adaptive Planning, recommending strategic skills for FP&A leaders.

You stay late to meet your deadlines. You triple-check your reports to keep them error-free. You turn around one-off requests at the drop of a dime.

But you still haven’t gotten that big promotion.

That may mean there’s a disconnect between the work you’re doing and the work your boss would like you to do. Research from Robert Half Management Resources has found that finance leaders want FP&A professionals who can look beyond the bottom line to see the big picture. A study found that 86% of CFOs said strategic thinking abilities are important for accounting and finance professionals, with 30% of those reporting that these skills are now mandatory.

And this demand is only expected to increase. In one popular Workday Adaptive Planning survey, CFOs predicted that the time spent by the FP&A team on strategic tasks will double—to as much as 50%.

To show that you’re ready to take on more strategic responsibilities, start by demonstrating that you can make smart decisions. Developing these three skills will help you highlight your potential—and get picked for the next promotion.

1. Study Every Angle

Strategic thinkers plan by identifying several potential paths forward and weighing their likely outcomes against each other. And according to another survey of ours, 48% of CFOs said that, during a market contraction, finance teams provide the most strategic value by planning for multiple scenarios.

That means FP&A professionals who can identify, model and analyze how different factors could impact the company are more likely to stand out as problem solvers. The right software can help you quickly create projections based on potential risks and opportunities on the horizon—and identify actions that could help your company meet its strategic goals. This type of proactive planning can give you the ammo you need to make well-informed recommendations when it’s time for your boss to make the next big decision.

2. Create Compelling Visuals

When making a presentation to your CFO or board, don’t make your numbers do all the talking. Data is an integral part of the conversation, but it doesn’t tell the whole story. Leaders need you to explain what metrics really mean.

Data visualization can help you cut through the clutter and deliver comprehensive, easy-to-digest analysis. And this is exactly the kind of presentation executive teams crave. According to published reports, 31% of CFOs indicated that improving visualization skills would help FP&A teams represent data more effectively.

Learning how to create visuals that explain variances, period-over-period performance and sales projections will help you deliver the wow factor that will put you in the leadership pipeline.

3. Build Bridges

Sometimes, sitting down with people from other departments is all you need to gain a fresh perspective or uncover a new approach to a common problem. And this type of collaboration is what execs are looking for from their finance team.

According to an off-cited EY report, when CFOs were asked about their top goals for the finance function over the next five years, 95% listed improving business partnering with other units as either critical (58%) or a significant priority (37%)—making it by far the most popular priority.

But collaboration doesn’t have to happen around a table, looking atspreadsheets and a whiteboard. If the company’s data exists in a centralized repository, collaboration can happen virtually. Different teams can drag and drop figures into sharable reports that others can comment on in real time, making it easier to get leaders the fast feedback they need to make more informed decisions.

FP&A needs to put itself in the business leaders’ shoes. Anticipate their needs, and creatively look for ways to add value by providing insights and unique perspectives, improving the efficiency of key activities and introducing frameworks, models and structure to enable these business leaders to better plan, manage and run their operational areas.

Grow next-gen FP&A skills

Modern finance teams are more than number crunchers; they’re key partners in support of a company’s strategic vision. But not every new hire (or, frankly, finance team member) is going to have strong strategic acumen from the start. That’s OK, as long as CFOs and finance leaders are willing to nurture those skills with hands-on coaching.

It’s one thing to hire someone and then give them a list of functions they’re responsible for. It’s another to really check in on them, give them guidance, help them avoid certain potholes, and really help them bridge any gaps. Starting early with leadership training, having team members give presentations to strengthen their communication skills, and emphasizing one-on-one coaching sessions over classroom trainings can all be effective ways to build up skills that stretch beyond classic FP&A duties.

Above we presented the top 3 skills that will help you highlight your potential. In closing, we present the top 8 skills needed in FP&A teams, according to a leading publication for finance professionals:

1. Strategic and critical thinking

Automation technology frees you from the manual work and allows you to have more time to think about data critically and strategically.

2. Communication

To be successful, an FP&A professional needs to ask questions, listen objectively to various viewpoints, consider the information at their disposal, and respond appropriately to various stakeholders across multiple communication channels.

3. Tech Savvy Data analytics

New technologies can benefit your organization in various ways. To recognize them, you need to develop an enthusiasm for new technological advances and intellectual curiosity about what’s coming next. Being a tech savvy finance professional gives you a competitive advantage.

4. Technical accounting and finance skills

Undoubtedly, FP&A professionals must be skilled in their areas of expertise. You need to continue working on your education by learning new aspects of the professional.

5. Innovation

Automation will require finance professionals to be innovative and creative when it comes to solving business problems. This is one of the ways to contribute value to your organization.

6. Anticipating and serving evolving needs

Modern FP&A is not only about mastering skills in data analysis. You will need to recognize emerging requirements around you.

7. Leadership

Finance does not work exclusively with numbers. If you have emotional and cross-cultural intelligence and empathy, it will be easier for you to understand the needs of those around you. There comes a time when finance must be the reassuring voice and visionary.

8. Collaboration

Cross-functional collaboration is playing a major part in the overall success of your organization. FP&A professionals need to learn how to work with colleagues who have other skills. Their expertise and specialties can help finance develop the big-picture ideas. It is also important to keep working on your virtual collaboration and management skills.

This blog post was originally published on the Workday Adaptive Planning blog.

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FP&A Done Right: Is Your Planning Process Hindering Decision Making?

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This is a guest blog post from our partner Workday Adaptive Planning, explaining how and why you should foster a culture of planning.

Long planning cycles. Short-lived plans. Siloed efforts. Hard-to-find errors. And never enough time for strategic analyses.

Do these FP&A issues ring a bell?

They should, if your planning processes are largely manual and mostly spreadsheet based, and don’t lend themselves to collaboration or version control.

An over-reliance on spreadsheets and legacy on-premises applications constrains the organization with rigid, siloed planning. These legacy planning environments are inflexible and brittle, prevent collaboration, and fail to deliver insights that drive decision-making.

Often, finance leaders are not even aware of how manual processes such as the gathering and consolidating of data, cumbersome email-based communication, and complex report creation put a strain on finance resources—a strain that keeps the finance team locked in low-value tasks. And while markets, revenue targets, and costs constantly move, old-world planning processes hinder related planning and reporting and slows decision-making to a crawl. Leaders either don’t have numbers they trust or don’t have the insights needed for agile decision-making.

Create value in all corners of the organization

Opportunities to grow are exceedingly challenging in a highly competitive and increasingly global environment. CFO research surveys typically characterize their corporate innovation efforts as highly successful. The success rate is low because getting the people, processes, and data all moving in the same direction can be difficult. To create value in all corners of the organization—sales, marketing, operations, and HR—everyone needs to fully engage with the planning process.

A siloed, spreadsheet-based approach leaves operational leaders in the dark and keeps business planning out of sight. Stakeholders don’t know where they are falling short; they can’t manage what they can’t see. While traditional planning functions on a rigid schedule (e.g., monthly), business operations are incredibly fluid. No business leader should be forced to wait until the month-end report is generated to make a decision. A finance team’s inability to provide insights in a timely manner hampers decision-making across the organization.

It’s no wonder that forward-thinking organizations are opening their eyes to a more effective and efficient way to plan—modern planning. Companies that adopt a modern planning process are better prepared to identify and take advantage of growth opportunities and operate more efficiently. Modern planning is collaborative, so you can plan as a team, and it’s continuous, so you can rapidly adapt to change.

Fostering a culture of planning

Instead of complex legacy applications and hordes of spreadsheets strewn across the organization, competitive organizations leverage cloud-based planning solutions to respond proactively to an ever-changing marketplace. Enterprise performance management solutions that integrate planning with source ERP, CRM, HR, and payroll systems offer a single version of the truth that fosters a culture of planning built on trust and real-time data.

Forward-thinking finance organizations recognize that planning will no longer suffice in a real-time, data-centric environment. The days of building elaborate spreadsheets to forecast the business trajectory—only to put them away until the next planning cycle—are fading quickly, at least at companies that want to remain competitive. A new modern planning model is emerging, centered around cloud-based tools to build accurate planning models faster, reduce errors, foster collaboration, and drive better decision-making. As stakeholders are more involved in the planning process, they’re gaining greater trust in the data. Leading finance organizations are using modern planning to:

  • Free up finance time and capacity
  • Improve the accuracy and integrity of finance and accounting data, plans, and reports
  • Accelerate cycle times for critical finance processes like month-end close, operational reporting, planning, and what-if analysis
  • Enhance collaboration with business stakeholders

In short, these finance organizations are leading with insights to drive business decisions and, in the process, elevating the role of finance to be more strategic.

Change starts at the top

Modern planning requires a cultural shift, but the rewards make it worth the effort. It can be difficult to get people to move from the comfort of their familiar spreadsheets to cloud-based collaborative planning tools, and the change has to start at the top.

The key to successfully transitioning to a modern planning model is thoughtful change management, wherein all parties understand the value of centralized planning tools and how they can contribute. When everyone takes ownership and knows how they are expected to add value, innovative planning, analytics, and performance measurement engage more people—including sales, marketing, operations, and HR—in the process of planning, moving away from the old, static models of the past.

The true payoff of modern planning is realized when everyone is working together on a continuously updated plan that incorporates fresh, valuable, and trusted data.

Tomorrow’s winners will be the most agile

In summary, modern planning means business agility. And business agility means organizations like yours can think fast, move first, and change rapidly, while maintaining control and stability. It means you can understand not only what’s going on but also how you could respond and what effect your actions would have.

It enables you to meaningfully digest the new volume, variety, and velocity of data by capturing it all in a single, intuitive, integrated environment, and surfacing the critical information you need to make decisions.

It brings your whole business together by broadening participation in planning and strategy to improve both day-to-day operations and your understanding of the overall dynamics of your business.

It’s continuous and company-wide, supported by a platform that’s easy-to-use, fast, and powerful. That makes it easier to model complex scenarios, link together operational and financial plans, monitor executional results, analyze past and current performance, and drill down into (or roll-up) fine-grain reporting from any area of the business.

The world isn’t going to slow down, and markets aren’t going to get less competitive. In the long-term (and probably before then) business agility isn’t going to be just a nice-to- have, or even a significant differentiator.

It’s going to be the deciding factor between the businesses that survive, and the businesses that wish they had.

This blog post was originally published on the Workday Adaptive Planning blog.

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FP&A Done Right: Volatile Business Conditions Require Agile Planning

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This is a guest blog post from our partner Workday Adaptive Planning, explaining how to lay the groundwork for business agility.

Manual, spreadsheet-based planning may have worked well enough in a more predictable age. But today? Not so much. Volatile conditions demand a smarter approach to financial planning and analysis (FP&A), and more and more finance professionals are discovering that legacy planning processes don’t let you go there.

It’s not that spreadsheets aren’t great—we love them. But, let’s face it, spreadsheets break down if you’re trying to rely on them systematically to gather data from across the organization, roll up departmental plans, or do complex, collaborative planning.

Even traditional market forces have proven challenging to companies relying on old-world technologies and approaches. Technological advances, ever-increasing customer expectations, and smarter, data-driven decision-making put pressure on finance teams to find new ways to operate with agility.

But how do you plan in a way that allows you to respond to such events, from the predictable to the unlikely?

The answer begins—and ends—with a modern approach to planning.

Why old-world planning is a disadvantage

The traditional planning models finance teams relied on for decades aren’t just a questionable choice in times of disruption—they can leave your business at a grave disadvantage. Businesses hampered by outdated planning processes are often left scrambling to react to changes while more agile competitors outpace, outperform, and outmaneuver them. Look around you: The companies that are performing well at this minute have pivoted—sometimes substantially—in a matter of weeks, sometimes days. Their business agility has become their defining attribute for success.

It’s safe to conclude that many of these agile businesses aren’t weighed down by manual, episodic, and siloed planning. Rather, they’ve likely embraced a more modern approach to planning—planning that’s collaborative, comprehensive, and continuous. These businesses consistently minimize risk, maximize performance, and create competitive advantages because their planning empowers greater business agility.

The difference between static and modern planning can be stark. Legacy planning tools are typically bogged down by versioning headaches and siloed, instantly perishable data. In contrast, modern, strategic planning models allow teams to broaden planning data beyond finance, pulling in real-time operational and transactional data fromERP,HCM, and other slices of the enterprise stack—all to make better, data-driven decisions quickly.

Laying the groundwork for business agility

As many companies recognized even before the current crisis, agility is a business imperative—and this more modern approach to planning is the key to achieving it. These three milestones will get you started on your journey to achieving a new way to plan.

1. Assess the status quo

Before you map out where you’re going, you need to understand where you are. Take inventory of the current state of your company, more specifically the business planning obstacles keeping you from implementing a more modern and streamlined planning environment. More than likely, these obstacles will pertain to people, processes, or technology, or some combination thereof.

Assessing where you are means getting granular.

  • What do your current business planning processes look like?
  • How long does it take you to create a budget? A forecast? An annual plan?
  • Where are opportunities for improvement?
  • Who are your planning stakeholders?
  • What technology do you have in place, and how well is it serving you?
  • What data challenges need attention?
  • What are the bottlenecks?
  • What could be automated that isn’t?
  • Are there any opportunities for automated data integration?
  • What are you lacking in workforce planning?

Answering questions like these will help you get a clear sense of what you’re working with and where you can improve.

2. Get organizational alignment

Being a change agent is no easy task. That’s why you’ll need to recruit a savvy senior-level advocate to help champion planning as a worthy and necessary cause. Along with your senior advisor, you’ll need a task force representative of other departments outside of finance, including operations, sales, and HR. Don’t forget to include IT to help you navigate technology needs and coordinate various data sources.

The next move is to align these key people with the business agility cause you’re championing.

How? Build a business case.

You can do this by quantifying the impact that the organization’s current status quo has on the company. What are manual processes and bottlenecks costing your business in time and money? What opportunities are passing you by? Conversely, what would those measurement strategies and KPI models look like if you implemented a modern, or active planning model? Try to unearth more nuanced ROI measures—for instance, how cutting budget time in half could give your people more time to run critical what-if scenarios—to really drive home the meaningful change that a modern agility planning model would bring.

Once your team is in place and your pain points recognized and quantified, you can map out a plan for your initial project. Consider focusing your initial effort on a function within finance so you’ll have control over the rollout. Develop a multi-phased plan that clearly communicates goals, a concise and actionable plan, and the key metrics for your KPI model. The ability to effectively communicate the why behind this initiative will help secure any executive buy-in you need for the how. A comprehensive and well-thought-out plan will go a long way toward achieving that.

3. Expand across the business

As noted above, there’s a strong case for beginning the rollout of your new planning model in finance and focusing on low-hanging fruit to bring early and easy wins. You’re motoring along, mapping projects, tracking and communicating progress, analyzing KPI reports, and making necessary tweaks. Once a rhythm and familiarity are in place, broaden your scope beyond finance. Initiate planning projects that engage HR, sales, or marketing. This is where you begin to extend the use and impact of modern, company-wide planning.

The key in this phase is to strengthen cross-departmental communication and collaboration. Don’t fall into the trap of relying on your technology or tools to do the heavy lifting. It will be easier to realize and maintain success with regular stakeholder one-on-ones, identifying lessons learned along the way, uncovering opportunities for more ingenuity and improvement, and communicating success and congratulations when they’re warranted.

Doing this will help elevate the role of finance to a strategic force within your organization by orchestrating planning throughout the business. Finance will no longer be known primarily for gathering budget numbers and issuing reports. Instead, your business will look to finance to drive the change and innovation needed to not only weather times of uncertainty, but to thrive in them.

These three pillars lay the groundwork for creating a more agile planning environment—one that will help you plan for what’s coming, whatever that may be. With this foundation and the insights we’ll share in subsequent blogs, you’ll be much better equipped to map your way forward into that tomorrow.

The bottom line

It’s never been easier to define the main driver of business success. It comes down to how fast your business can identify and proactively respond to change. But if your business is mired in static planning —characterized by long planning cycles, immediately obsolete plans, siloed efforts, and hard-to-find errors—it won’t be operating with maximum speed or agility.

This is doubly true in today’s fast-paced, data-driven world. Businesses hampered by outdated planning processes are often left scrambling to react to changes while more agile competitors outpace, outperform, and outmaneuver them.

Wherever you are on your planning maturity journey, the tasks here will help you expand and accelerate business agility by:

  • Creating a new kind of planning mechanism that’s distributed, inclusive, and optimized for your strategic objectives.
  • Empowering finance to continuously deliver insights that help the business course-correct. To power better, faster decision-making in ever-shorter cycles based on rolling forecasts and real-time (and eventually, predictive) data.

The truth is, building a continuous one-to-one alignment between your strategic vision and your operational reality isn’t easy. It’s something very few businesses can claim. You won’t get there overnight and you will face hurdles.

But it only takes a few small steps in the right direction before momentum starts to build. Before long, those steps will amount to a giant leap forward and significant competitive advantage as business agility accelerates exponentially.

This blog post was originally published on the Workday Adaptive Planning blog.

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FP&A Done Right: 3 Steps for Selecting your KPIs

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This is a guest blog post from our partner Workday Adaptive Planning, explaining how to identify the most appropriate KPIs for your organization.

Now more than ever, companies that are unable to adapt or pivot easily to adjust to changing market conditions don’t just risk falling behind. They risk their very future.

But business agility isn’t something you can implement overnight. It takes a modern, multifaceted planning environment—one that isn’t weighed down by static, legacy planning processes characterized by spreadsheets, siloed data, outdated annual plans, and stale historical snapshots.

Today, forward-thinking CFOs and their FP&A teams understand the need for nimble, data-driven financial modeling powered by cross-departmental collaboration and encompassing a panoramic view of the business—one where planning happened not just within finance but throughout the enterprise. This is the definition of modern approach to planning.

And it’s exactly what businesses need right now.

In a recent blog, we outlined the three key steps that help you lay the groundwork for a modern planning model within your own organization. To realize the full potential of that groundwork, you’ll also want to engage a series of key initiatives that will amplify your ROI and increase the velocity of business transformation. Here we look at the first of these: identifying your critical KPIs.

When everything is important, nothing is important

When everything is deemed critical, how can you be expected to prioritize? It’s impossible to effectively plan or make decisions quickly when it’s unclear what is truly driving business success. Bring those mission-critical KPIs to light, however, and you can quickly get everyone aligned around them.

But before homing in on these metrics, it’s imperative to step back, take a look at the entire organization, and recognize that performance is tracked differently in each department and team. Your core KPI model should take into account different flavors of measurement strategy across departments, recognizing the metrics that weave through multiple departments. This will help ensure that planning is collaborative and comprehensive, and that tracking progress and reporting means the same thing to all the players involved. The biggest plus in all of this? This shared measurement strategy establishes company-wide ownership and direction.

To help you isolate your organization’s KPIs (and ultimately to plan better), consider these three steps.

1. Partner with operational leaders to uncover their mission-critical KPIs.

Rather than try to guess what functional leaders care about, take the time to sit down with those key stakeholders and walk through how they define success. What does their measurement strategy look like? How do they currently track and manage their own progress? What are their data sources? Whom are their reports important to? Do they use specific language or terminology that might mean different things to people in other departments? Be as thorough as possible in fleshing out their measurement strategy and any processes they have in place to support it.

2. Keep it simple.

People can get caught up in attempting to adhere to KPIs that aren’t easily tracked or aren’t even truly indicative of performance. Avoid establishing complicated processes or adding new, hyper-focused metrics to the mix. Yes, your goal is to maintain accuracy, but you need to balance it with minimum resistance. The last thing you want is to get lost in data and complicated algorithms, forcing you in the end to have to manually follow up with gatekeepers when the time comes to pull a report.

3. Establish a reporting system.

After isolating the necessary KPIs, you’ll need to set up some workflows around reporting. What are the tools you need to access and generate a KPI report? Are these tools accessible and easy to use for all stakeholders? What are the bottlenecks, and who are the gatekeepers holding back the flow of KPI reports? Ensure your reporting operations are accessible, easy to use, and accurate enough to give you a true snapshot of your organization’s progress—without data overload.

This blog post was originally published on the Workday Adaptive Planning blog.

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FP&A Done Right: 5 Ways Dashboards Empower The Office of Finance

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This is a guest blog post from our partner Workday Adaptive Planning, exploring how to unlock hidden opportunities with dashboards & analytics.

Visualizing data is often the fastest way to identify trends and patterns that lead to insights and better decision making. That’s because the simple clarity of visualizing data via interactive dashboards can reveal hidden opportunities that likely would have been missed in more traditional analysis and sharing of data.

Here are five ways dashboards can help identify valuable insights that may have been overlooked in the past.

1. Dashboards encourage company-wide planning (or xP&A)

Simply making dashboards accessible to stakeholders throughout the organization represents a huge win in itself—and a significant step toward breaking down silos. Yet beyond that, increasing the number of people who have access to data presented in digestible formats exponentially increases the chances of those aha moments occurring. The production floor manager will surely have a different perspective than the CFO. When that perspective is informed with accessible data delivered via a dashboard, the stage is set for new efficiencies and improved productivity.

2. Dashboards show instead of tell

There’s a reason the phrases “go through the numbers” and “eyes glaze over” are often uttered in the same sentence. Traditionally, delivering financial information has largely been a one-way conversation with the finance team presenting mundane reports and data downloads. With the exception of the number crunchers in finance and accounting, many business partners get lost or disinterested when presented with a number or data overload. Dashboards avoid this challenge by elevating the data to the next level and using graphics and visualizations to clearly show data in formats that provide key context and clarity. When data gets presented in highly visual and familiar formats, business users can often quickly see challenges and opportunities that otherwise might have been missed.

3. Dashboards offer customized views for different thinkers

Different people consume information in a wide range of ways. Some may be more comfortable viewing data presented in standard bar, column, gauge, area, and doughnut charts. Yet others benefit from data presented in more engaging or interactive formats. Workday Adaptive Planning dashboards feature data visualization that includes funnels, dials, waterfalls, bubbles, histograms, radars, and Pareto charts. Users across locations and on any device can view data in the formats that connect with their unique way of learning and thinking.

4. Dashboards are ever-present

Even finance pros and business leaders who are adept at extracting insights from traditional reporting face the challenge of locating reports once they are filed away. And once people find the report, they have the time-consuming process of checking if the data is still accurate. Conversely, dashboards are continuously available via a wide range of devices with data updated in real time, assuring users that they are working with the latest available information. So if conditions change or a new opportunity arises, easy-to-access data visualization is there to support decision-making and reveal how an opportunity may be quickly leveraged.

5. Dashboards are inviting and simple to use

The simple power of dashboards is that they are easy to use and invite users to experiment, explore, and discover. By eliminating the complexity barrier, the odds of uncovering hidden opportunities expand dramatically. Ultimately, dashboards create the opportunity for self-service analysis for everyone. That allows any user to perform drilldown analytics, create period-to-period comparisons, and explore iterative what-if analyses that can effectively identify issues that need immediate attention while also identifying trends that could be leveraged through sales and targeted marketing efforts.

This blog post was originally published on the Workday Adaptive Planning blog.

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