How more fertile and better nourished the soil, how easier for FP&A to have impact

Posted by  Amrish Shah

What is this article about?

FP&A (sometimes called Management Accounting, Business Control etc.) is the business facing part of finance. This means they are providing an essential “business” service. Whilst the challenges to FP&A have been well documented around access to good quality data, leveraging better technology for more powerful analytical ends and cutting across internal finance silos, relatively little has been documented about the environment that FP&A works within. And how that can help FP&A have more impact or less.

Why is it important?

Pressure on business is growing, with pretty much every sector seeing significant increases in complexity and uncertainty. This demands an increase in the quality of decision making and execution and learning based on feedback loops. This is the essential service of FP&A. Contrast this with in the past where the FP&A service was likely limited to merely Management Reporting. Now it matters more – there is a clear connect between setting expectations and playing a part in making it happen.

What are the key considerations?

Changing expectations is not enough, the new expectations have to crystallise to reality. It’s like planting a new seed. Nourishing it toted on is barren or fertile.

A fertile soil for modern FP&A to have impact has, in my experience, some or all of the following:

  • A service delivery based on reporting to adding strategic value – demands a level of discomfort in business to accept a strong voice and opinion from FP&A;
  • From decision making from just gut/experience to more data driven – demands a data and analytic culture and investments;
  • From post rationalizing (looking backward) to scenario building (looking forward) – demands accepting uncertainty and risk and tolerating these;
  • From a safe and certain mindset (controlling to confirm) to an acceptance of calculated risk mindset (controlling to learn) – demands embracing failure as something not to be penalized;
  • From short term (targets) to longer term rolling (strategic) perspective – demands focus on the things that matter;
  • From low expectation (not really part of team) to accountability (integral part of team) – demands a holistic, integrated approach;
  • From a cost to a profit centre – demands a move away from just ROI to would you pay for the advice externally;
  • From information is power (esp. numbers) to transparent communication linking numbers to future positive outcomes and realistic risks – demands a level of trust in organization
  • Bullets v cannonballs

Are there any critical success factors?

The challenge of change from one culture or environment to another is not to be underestimated. As intention is always easier than action. So what can FP&A do to encourage this broader culture change in the organization that will result in it having a bigger impact?

For one, continually improve the “product” of FP&A. Learn to be experimental, test, try and re-iterate but focus on the core elements of the service and its delivery.

Secondly work on change management. Therefore, learn to become good change leaders and agents. And remember that changing perspectives, whilst a critical first step, is always easier than changing habits.

Third, take (more effective) ownership of moments where governance of key resource decisions are being made (in other words: the planning & control cycle). These are the moments where the opportunities are there to help shape how the organization changes its perception and approach to performance management.

Fourth, remain vigilant for examples of over complicatedness in organization decision making. Look, for example, in places where many people can say no but no one seems to be able to say yes. Find ways to get this complexity on the table and make it transparent.

Fifth, lead by example when it comes to learning – use both premortems and post mortems on areas of significant investments or complex change projects.

And last but least, don’t be afraid to communicate and market successes in the improvement in both the FP&A service but, critically, on crediting the conditions that have allowed that success to happen.

Can technology and digitalization play a role in the solution space?

This is more about leadership than technology per se. But technology and digitization are forcing organisations to re-invent, which in turn adds pressure for culture to evolve. Because the way of having to do things in such an environment is different in order to go beyond mere survival. Therefore, both forces can act as another positive push force for FP&A to set out the necessary conditions to support its drive towards an enhanced service. The key implication, however for FP&A is that they can help by being at the front of these two forces themselves.

A final word

I hope in this article to have shown that for FP&A to continue to re-invent itself and become what the organization wants and needs it to be, a change in the organization culture and environment is also necessary in many cases and hope to have illustrated what some of those elements can look like and how FP&A themselves can help support such a change.

Amrish Shah

Amrish Shah, of Indian origin, born in Africa, a British national and now residing in The Netherlands, is a seasoned and senior finance leader with over 20 years of financial management experience in international organizations. Some of the companies he has worked for include Unilever, O'Neill Group, Staples, Royal Wessanen, Kao and he is currently working in a senior FP&A transformation capacity at EndemolShine.

A qualified Management Accountant with CIMA, he has held regional finance leadership positions since 2001, based out of The Netherlands. He has held both staff and line roles, managing teams of up to 40 people. He has a clear belief in the value of finance at both strategic and operational levels to the organisation and is passionate about, amongst others, organisation decision making, organisation culture, high performing teams, leadership in general, organisation and finance transformation, change management and talent management.