We are pleased to welcome an expert in Financial Planning and Analysis (FP&A), Mr. Anders Liu-Lindberg, as a guest to the Jedox blog. Mr. Liu-Lindberg is a Senior Finance Business Partner at Maersk and co-author of the book “Create Value as a Finance Business Partner.” He is also a finance industry blogger on LinkedIn with more than 33,000 followers. Over the next few weeks, we’ll be sharing a blog series by Mr. Liu-Lindberg that focuses on how FP&A is changing in a rapidly evolving global marketplace and how you can help elevate the value your finance department provides across your organization.
In a large scale survey by a global firm, CFOs named Financial Planning & Analysis (FP&A) a top priority to transform and derive more value. This is no surprise because FP&A is on the rise, driven by CFOs, to become more strategic and a value-creating partner to the CEO.
The business needs more from Finance
The increasing demand for agility is changing all businesses, either as part of their effort to lead or to stay competitive. Market forces compel the change away from top-down, control-oriented hierarchies to flexible systems that highlight responsiveness, inclusiveness, and risk-taking. Our business partners, including the CEO, do not have time for a lengthy budget process and outdated forecasts because the market is moving quickly. They are demanding quick financial closes, rapid interpretation of the data, and insights that they can convert to action. These insights need to be data driven and combined with business judgement. If Finance cannot supply that, they will look elsewhere for solutions.
In addition, finance needs to work in tandem with the company’s digital plans. Digital leadership is deployed throughout a company, creating an IT strategic plan including data management practices. Finance needs to be a part of that plan to have inter-operable systems and information that relate to other parts of the enterprise, as companies with better digital strategy outperform their peers.
The CFO needs more, too
This existing need has pushed the CFO into action. If executed well, the CFO becomes a strategic business partner while maintaining the traditional finance role as the steward of corporate capital and championing the company over business unit domains. Change needs leadership to be successful, and the CFO is the logical sponsor of a Finance transformation.
With an overall goal of harvesting insight from data in a shorter time frame, here is a two-step process to realign finance:
First, increase efficiency across the board. CFOs still retain the mandate for financial control, including reporting and compliance, but simply keeping the books clean is no longer enough. CFOs need to deploy technology to free up people to move into the analysis and insight positions in FP&A. This will require some retraining, as accountants, auditors, and others move to new roles, bringing deep technical expertise with them.
Second, the CFO needs a framework to design the FP&A team of the future, a road map for investments in people, identifying the right technology, and designing the right processes. We will address this framework in an upcoming blog post which will set the tone for the future of FP&A.
FP&A needs a new mindset
A new door is opening for FP&A, where opportunities are abundant to make an impact in the company. It starts with the right mindset for FP&A, which will be the topic of a deep-dive in an upcoming post in this series with views from different practitioners. The days of sending around spreadsheet templates and linking the subsidiary sheets into a master model are over. FP&A requires efficient financial processes and acumen that support our vision, combined with enabling technology and the skills to use it. These technical skills will only carry us halfway; we need the interpersonal skills to be effective partners who know our partners’ business and earn a seat at the table. The benefit for all three stakeholders is a transformed finance function that can plan continuously, reallocate resources quickly, increase decision velocity, and build agile operations.
Now is the time for each stakeholder to step up and take the reins. The role of FP&A in business is evolving and the future of finance in a digital marketplace is waiting. Are you ready to help your organization step up and lead the way?