Strategy Adaptive Insights, a Workday company

2020’s Ultimate Guide to FP&A Best Practices

Sponsored by Adaptive Insights, a Workday company

With annual plans put to bed, now is the perfect time to reconsider the way you’ve been budgeting, forecasting, and reporting. Finance pros share their challenges heading into 2020.

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A new year brings lots of promise and potential. And because we’re kicking off a new decade, 2020 seems brimming with both. 

With your annual plan probably put to bed, now is the perfect time to reconsider the way you’ve been budgeting, forecasting, and reporting. 

I recently had the opportunity to ask a group of FP&A professionals about their day-to-day reality. We talked about budgeting and reporting challenges, forecasting frequency, automating reporting, executive asks, and more. What became immediately clear was that regardless of industry or organizational structure, the success of your FP&A operation boils down to your ability to plan collaboratively and respond quickly to changes. 

Finance professionals looking to elevate their games might consider focusing on a handful of critical, yet very attainable, best practices. These are proven elements of an effective planning process that I’ve either observed directly in my 20-odd years in finance or have seen implemented by high-performing organizations that recognize how modern planning is the key to achieving operational agility.

Push planning beyond finance

In business, everybody plans. That includes Hannah in purchasing, Sameer in logistics, and Dan in marketing. A modern planning environment has to accommodate these nonfinance business partners. But for planning to be company-wide, it can’t live in static spreadsheets with endless versions (“Final_final3.xls”) stuck on my laptop or trapped in inboxes across departments. Business partners in any role should be able to access real-time data presented in ways that are relevant to each user. Stakeholders from HR, marketing, sales, and finance must be able to add necessary expenses, update budgets, and ensure the plan accurately reflects the current state of the business. True collaboration is only effective if the information served up is relevant and makes sense to that user.

This isn’t about allowing unfettered access to every business partner or burning time and resources to train everyone to be finance analysts savvy enough to navigate the entire model. Instead, your planning environment should be permissions-based, allowing users to see what they need to see and update only the fields pertinent to them. This lets them bypass the drudgery of sifting through endless rows of data they don’t need or you having to explain allocated rent. Defined and tailored permissions allow for participation across the business while keeping the office of finance firmly in control of planning. And best of all, it will keep them from painting your templates with a rainbow of nonsense colors. (Why do they feel compelled to do that?)

These are the capabilities that engender a sense of company-wide ownership for the numbers and a shared investment in the success of the plan, regardless of role or department, while empowering FP&A professionals to do more than chase endless revisions of spreadsheets.

Keep data current and accurate

For a company to harness the full potential of its future, it has no choice but to be powered by real-time data. Historically, finance has reported on what has happened, because it was hobbled by tools that took a rearview-mirror view of the business. But today’s office of finance must have the data it needs to accurately report on what’s happening right now—and the analytical insight to anticipate what will happen next.   

But can you get there with the tools you’re using today? While the spreadsheet still has a place in most organizations, it’s simply too static a platform for modern organizations that must make critical decisions quickly. Organizations that are looking to modernize their planning environment should evaluate tools that let them toggle between spreadsheet-style interfaces and more intuitive dashboards and reports. Some cloud platforms even provide plug-ins to inject real-time data into a local Microsoft Office document so you can hand off a report with confidence that it’s both accurate and understandable. (For those of you old enough to remember the 1996 FedEx commercial, think, “Point click ship, take a little lunch. Point click ship, play a little golf!)

Even better, infusing real-time data into your planning allows you to drill down into deltas and details, giving finance deeper insight into the story behind the numbers. And an integrated data environment largely eliminates the time-consuming task of “ticking and tying” your numbers and relieves the worry that some numbers might be wrong. (Who hasn’t sat in a meeting and spotted a number that you know is wrong, only to hope you can make it out of there before someone else notices it?)

Keep KPIs relevant

No matter what planning solution you end up using, be sure to take the time to speak the language of your business partners. Your planning environment will suffer otherwise.

Before you build your plan, meet with your business partners to understand the metrics that mean the most to them—the metrics they’re actually measured against—and build them into your model. (Their operational metrics will often be different from financial KPIs.) Query them on where their KPI data resides, and make sure your platform has the ability to automatically import that data into the planning environment. 

This further engages business partners in the planning process and helps them establish a sense of ownership over the plan and the numbers.

Simplify reporting with dashboards

In a recent FEI webinar in which I covered many of these best practices, I asked attendees about their most common headaches. Among the day-to-day challenges these FP&A pros faced, one of the most popular (or unpopular) was executive requests for one-off data pulls.

If that hits close to home, I’m not surprised. On-the-fly requests from the top often result in your team dropping everything to wade through dead data and crunch numbers quickly.  

There’s a fix for this. Modern, cloud-based platforms make it easy to build comprehensive dashboards that are easily understood by C-level execs and board members—and that cut down on the need for ad hoc, one-off reports. Some also provide drag-and-drop capabilities, so you can pull the elements you need and select chart styles (bar, pie, waterfall) that best represent the data into a single report that’s ready for the boardroom.

Whatever you do, make planning easy

If 2020 is the year to transform your planning environment, you’ll stand a far better chance of success if you can embrace a planning environment that’s simple and intuitive. An easy-to-use planning environment offers multiple benefits, including a far better chance of company-wide adoption and the not insignificant advantage of removing the office of finance as the middleman and gatekeeper for all planning transactions. 

When it comes to planning, you want to be viewed as an orchestrator, not an obstacle.

Don’t be afraid to embrace the future 

At no point in history has the office of finance had so many abundant technology resources at its disposal. Spreadsheets have served the finance function since the ’80s, but virtually none of the challenges shared by FEI webinar attendees will be solved by relying more on spreadsheets. They’re simply not flexible or collaborative enough to keep up with modern businesses striving for agility. Any tool that imposes manual, menial tasks on FP&A professionals will prevent those professionals from spending time on more strategic tasks, such as building revenue models for new products or services, calculating sales capacity by territory, or identifying the pieces of the business that truly drive profits.

Many finance organizations make the start of the new year their time to implement process improvements. Some of these will undoubtedly require new technology. If you’re in that boat, my advice is to think not just about what you’d like to fix in your FP&A environment today, but also consider where you’d like to take it years from now. Focus on achieving small wins that will lay the groundwork for larger, more substantive transformation as you move forward.

With the right processes and platform, you’ll find you can orchestrate instead of react, deliver quickly instead of drown in data, and be seen as an increasingly strategic part of the business.

After all, the next decade is already here.

Read Plan to Win—Achieving business agility in the age of urgency, a new book commissioned by Adaptive Insights.

The author, Tom Peff, is director of Finance at Adaptive Insights, a Workday company.