“Make something people want and sell that, or be someone people need and sell you.”
– Ryan Lilly

Currently, the development of FP&A is a much discussed topic. But before thinking how to change the current FP&A practices, we need to understand why an FP&A function is needed in the first place, and what value it brings to business.  I have already discussed the challenges with FP&A optimization in one of my previous articles. Now I would like to go a step further and discuss the value proposition of FP&A. In order to get some new insights, I will use the business canvas model, which originates from the area of Business Architecture.

Although this technique is originally used to analyze the whole business in general, I have found that it works perfectly for FP&A separately as well. So here are the 10 main lessons I’ve learned from it, and I hope you will benefit from as well.

Using the business canvas tool to assess FP&A business value

Business canvas is a tool that can be used to business building blocks, and will help you assess them. At the same time, it can help you realize who your key business partners are. Usually, the tool is used for the analysis of the whole business, but in this case we will only apply it to FP&A.

The analysis is made by filling in each box, moving from right to left, and from top to. By doing so, you analyze what you (as an FP&A professional) are really doing to keep your customers satisfied. Let’s make such a journey together and develop our common vision. The content of the example is developed in collaboration with Larysa Melnychuk, Managing Director at FP&A Trends Group.

 

 

Customer groups
You often use the word ‘customers’ to signify external customers. But in this particular case, you might first think of an internal customer, those who you deliver your FP&A product to. At first glance, these are managers on different organizational levels, including the strategic and operational ones. In the example above, we only took these functions into consideration. Although in your case, you could include external stakeholders, such as shareholders, authorities, public etc.

Value proposition
Let’s agree on the definition first: in this article, by ‘value proposition’ I mean a product or a service that is offered to customers to satisfy their needs. This can also be translated into one of your key questions: what can you offer your managers that would look valuable in their eyes?  And you know, that we are not talking about reports themselves: it is your expert assessment of the information that can be found in the reports, your advice, and your support for decisions they have to make!

Customer relationships
Think in what form your customers would prefer to receive your expert advice. It is highly probable that this is a level of collaboration that still needs to be established. If you want to ‘sell’ your professional opinion, it is you who will need to initiate and maintain effective business communication.

Key supplier
These are people who supply the resources that you can then use to deliver your value proposition. But, what are your key resources? It is data from all your business stakeholders, the delivery of which is supported by the IT function. Be careful not to put all business units from your organizational structure in this box, but only the ones who are actually responsible for the information you need to receive.

Key activities
Think simply of the tasks you need to do on the daily basis in order to be able to deliver your value proposition as a result. Try to zoom out. Could it be that your main activities and core capabilities are planning, budgeting and forecasting? Or is there anything else?

Key resources
Think of everything that enables you to perform your key FP&A activities. In our version of the table, we have entered ‘business partnering’ as one of our key enablers. Your advanced professional knowledge is also part of the resources. You should also think about such business capabilities as financial analysis, advanced analytics, data delivery as a result of proper data management, corporate performance management techniques, etc. These enabling capabilities might be delivered by other business functions in your company.

Channels
You use certain channels to reach your customers. And yes, we really entered ‘meetings’ three times, this is not a misprint. We did that to stress that real face-to-face communication is far more valuable and effective when it comes to exchanging information and opinions, reaching mutual understanding and conquering your influencer status. Of course, reports, dashboards, email and other types communication should not be excluded, but use them only to deliver information. Your professional opinion and advice should always be delivered in person.

Cost structure
In order to deliver your value proposition, you will definitely need to cover the cost of your key resources. In the end, the cost structure will contain all of your resources, not only the key ones. In the table, we have entered the most essential costs, including professional staff and supporting IT systems.

Revenue streams
This topic is the most tricky one. We all understand that FP&A does not generate direct revenue. What it does generate is all of the additional revenue earned as a results of correct and timely business decisions. And you are among those who have made all of this possible!

 

What’s next…

This though experiment has reached its end. The example of the canvas was an illustration of how you can use this technique in your own FP&A practices. Now it is your turn to finetune all what was discussed according to your company’s ways, and make an input into this discussion. In one of my following articles, I will show you how to use this techniques for further elaboration, so keep in touch!