You often read about one of the biggest business challenges: different business units working in silos. Business partnering is considered one of the means for overcoming it. Last week I found an excellent example of a solution. I joined an FP&A Board meeting organized by FP&A Trendsand sponsored by Michael Page, AnaPlan, and Page Executive.  During the meeting, a large group of CFOs of large multinational companies discussed the definition and approach to Integrated FP&A (Financial planning and analysis). Me, I am not a CFO, I am a data management practitioner. Two topics draw my attention because they both were directly related to data management.

These two topics were:

  1. The role of data in ‘Integrated FP&A’.
  2. The key steps in the implementation of Integrated FP&A.
The role of data in ‘Integrated FP&A’.

The participants of the FP&A Board were asked to specify in one word their vision on FP&A integration. The most striking for me was that about 30% of answers were related to data. These answers included such phrases as ‘data integration’, ‘data quality’, ‘data availability’, ‘one source of truth’. These phrases are present in daily conversations of data management professionals. The fact that top finance professionals consider data as one of the key success factors in FP&A shows a growing understanding of the role of data in overall business success. This was the first example of great potential business partnering between finance and data management.

The second one was even more exciting.

 The key steps in the implementation of Integrated FP&A

The participants worked in small groups to create a presentation of their vision on some topics related to Integrated FP&A. I joined the group that worked out the key steps in the implementation of Integrated FP&A. During the discussion, I explained my vision on the role of information and data in the business lifecycle that has been published in my books (The Data Management Toolkitand The Orange Model of Data Management) and a few of my articles (‘FP&A from Einstein’s perspective’ and ‘FP&A and the three-headed serpent’). At the same time, while explaining my vision, I noticed that I was actually describing a method of implementation of data management in any company. To my great excitement, my group decided that this approach also matches the key steps required for the implementation of Integrated FP&A.

So, let me briefly show you this 6-step approach for building Integrated FP&A.

Figure 1. Building Integrated FP&A in 6 steps.

 

Step 1. Specify the vision and ensure buy-in of top-management
The key business value of the Integrated FP&A is the support of the decision-making process. First, the company should understand which key business decisions require improvement. This is also the main ‘selling point’ to get the support of top management in this initiative. Clear expectations will assist to specify a feasible scope of the initiative. Decisions are made based on information.

Step 2. Specify the required information
Management at different organizational levels would require different information to support their business decision. The system of KPIs could be one of the main deliverables of Integrated FP&A. A clear understanding of information requirements is one of the important steps and success factors for the PF&A initiative. For specific information, relevant data should be gathered and delivered.

Step 3. Define and deliver required data
Finding and delivering required data often costs time and requires much effort of data management and IT professionals. The limitation of data delivery to the scope of required information allows optimizing the scope of the Integrated FP&A initiative. From the FP&A perspective, data represents business drivers. The definition of the key business drivers is the exercise that requires combined efforts of data and FP&A professionals. To transform data into information, data transformation process should be optimized.

Step 4. Optimize data and information value chain
Data and information value chain is a set of activities that support the transformation of raw data into meaningful information. Data integration and aggregation are examples of data transformation. These two types of data transformation may be the most important for Integrated FP&A. Data transformation should be supported by relevant business processes.

Step 5. Optimize business processes
Business processes describe actions and deliverables that people in different departments across the organizations should perform to achieve the expected results of Integrated FP&A. This is an important step also to set up a proper collaboration between different FP&A business stakeholders and partners. In this step, communication and business partnering come on the scene. Only when information and data requirements, along with the required processes are specified, it is time to identify which systems can support the Integrated FP&A.

Step 6. Specify required system support
There are two common mistakes often made in IT-related projects. The first mistake is to choose the system prior to the clear specification of business and data requirements. Any system is only a container of data and a ‘smart calculator’ that processes data into information. You don’t need to buy a Mercedes to buy groceries at the shop next door. The same is the case with systems. You should first clearly understand what kind of functionalities you require. It will allow you to optimize resources spent on the implementation of Integrated FP&A.

The second mistake is thinking that IT owns the project and is accountable for the success of the initiative. The IT function can only support business and finance departments in delivery of results. Business is accountable for a clear specification of the scope and expected deliverables. Business should be the leading force in the implementation and testing process of any business-related system.

 

The two topics discussed above show the excellent opportunity for closed collaboration and business partnering between data management and FP&A.

It would be very interesting to get your professional opinion on your experience with respect to the Integrated FP&A and data management implementation. Please share your thoughts in the comments section below!