Is it a given that Finance should own Planning & Analysis?
Anders Liu-Lindberg
Leading advisor to senior Finance and FP&A leaders on creating impact through business partnering | Interim | VP Finance | Business Finance
This article is sponsored by Jedox. I am speaking at a half-day event at Microsoft Denmark together with COWI, Jedox, Accobat, and Microsoft on 15 September from 09:00 - 12:00 CEST. I will be speaking about my latest eBook "Welcome to Finance Function 4.0" and we will hear from COWI about their digital finance transformation and how they are elevating the influence of their finance team. You can sign up for the conference here and it's free to participate.
While initially counter-intuitive, it is a perfectly legitimate question to ask if Finance should own or have full control over Planning & Analysis across the company. Finance clearly has the expertise and strength around the P&L, but financials typically are a lagging indicator and don’t necessarily drive action and execution across a business.
Given that a company’s value chain is made up of activities executed outside of the Finance Function, surely if planning and analysis were conducted and managed across the business then the financials would look after themselves?
The case for Finance owning planning & analysis
Maybe so. But there are still many good reasons why Finance should conduct company-wide planning and analysis. Just to name a few examples.
Unfortunately, too many Finance teams still see it as their role to go out into the business and teach people how to work better with Finance. Traditionally Finance has largely attempted to impose its planning and analysis approach on other parts of the business.
However, this prescriptive style of management tends not to work if that’s all you ever do. Instead, Finance teams must get out there and engage with business teams, learn what they’re doing and demonstrate how Finance can help each part of the business in meeting their strategic goals. And it’s essential that this becomes a two-way flow of information.
xP&A is the approach to follow
For Finance to deliver here it needs to get much better at business partnering – and take advantage of the kind of operational capabilities and benefits made possible through the latest xP&A (Extended Planning and Analysis) thinking.
xP&A looks at the question of ’who owns planning & analysis?’ from a different perspective, recognizing that other business functions also have insights that they can bring to the FP&A discussion. It’s a customer-centric rather than a finance-centric approach.
Following an xP&A model means that the Finance team becomes actively engaged, not just reviewing the P&L but following up on business plans, looking at business metrics as soon as they are available, and helping operations to stay on target with their agreed strategic goals. It’s all about connecting the financial and operational planning cycles.
Adopting this kind of cross-functional collaborative approach can also unlock value for Finance. It shouldn’t really come as a surprise that a purely finance-led approach to P&L management only plays out well inside the Finance Function.
In contrast, xP&A actively seeks out ways that other departments can exchange expertise and share benefits - with Finance there to help drive the right strategic decisions across the whole company. Strategic choices have been made, and xP&A is all about working together to deliver on them. And if everyone is pulling in the same direction, surely it doesn’t really matter who’s driving the process?
The time for xP&A is now
But if Finance is to seize the opportunity presented as an xP&A-style collaboration it needs to move quickly. Gaining the trust of the rest of the business and fulfilling that key advisor role will require Finance to commit to its own transformation journey. This may be challenging, but it will ensure a solid foundation for ongoing xP&A initiatives.
To do this well though, Finance needs access to proper tools and platforms that can help them facilitate a consistent planning and analysis process across the company. This is where Jedox comes into the picture being a truly function-agnostic platform. It is just as well suited for sales operations planning as it is financial planning as an example. Hence, using this platform will be a major help for Finance in taking up its xP&A role of facilitating company-wide financial planning and analysis. Who owns planning & analysis in your company and have you started to adopt an xP&A approach?
For more articles in my collaboration with Jedox please see below.
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You can read a lot more articles about FP&A, Business Partnering, and Finance Transformation below. It all start's with “Introducing The Finance Transformation Nine Box”?where you set the ambition for your transformation. You should join the?Finance Business Partner Forum?which is part of Business Partnering Institute's online community where we will continue to discuss this topic and you can click here to follow me on?Twitter.
8 Changes For FP&A To Make To Transform Strategy?(part of a ten-article series about FP&As involvement in the strategy process)
All Successful Business Partners Are "Leaders"???(part of a five-article series where we unfold our business partnering capability model)
Should We Keep Talking About Business Partnering??(part of a 17-article series where we deep-dive on our business partnering framework "BP on a Formula" )
Everyone Can Adopt A Business Partnering Mindset?(part of a six-article series about FP&A Business Partnering)
From Business Partner To Working Within The Business?(part of an article series where I interview finance professionals about their careers in FP&A and Business Partnering)
Is Your Product Optimized For Value Creation??(part of a toolbox series where we look at what tools FP&A professionals should leverage to drive value creation)
How Business Partners Turn Analysis To Insight?(part of case study series where I interview business partners about how they drive value creation using real cases)
Anders Liu-Lindberg?is the co-founder, COO (Chief Operating Officer), and CMO (Chief Marketing Officer) at?Business Partnering Institute?and owner of the largest?group dedicated to Finance Business Partnering?on LinkedIn with close to 10,000 members. I have ten years of experience as a business partner at the global transport and logistics company?Maersk. I am the co-author of the book “Create Value as a Finance Business Partner” and a?long-time Finance Blogger?on LinkedIn with 60.000+ followers.
Account Executive at Anaplan Partner
3 年Where FP&A is administered by finance, with new visions of XP&A the ownership is a lot more distributed throughout the business. I've seen Finance leaders step back from overt control so that business departments are more in control of their planning, and finance takes more of a back seat guiding role.
I help business leaders and executives of fast-growth companies reduce operating costs in excess of ￡30m by leading and developing high-performance Commercial Finance, FP&A and Business Partner teams.
3 年I think the question is not ownership but effective collaboration where finance optimises planning through bringing its finance and commercial skills to the business. This is clearly finance partnering at its finest, but needs integration with FP&A to be effective. Finance should be a key driver across the enterprise but not the only driver to ensure optimal strategic success.
I help business leaders and executives of fast-growth companies reduce operating costs in excess of ￡30m by leading and developing high-performance Commercial Finance, FP&A and Business Partner teams.
3 年Is this a trick question?
Director - LMS Advisory, Advising SME's on Growth, Strategic Planning, Maximising Profit & Cashflow. Financial enabler. AI/Tech enthusiast | LMS | KeepMyBooks | WihseFP |Cerebiz |
3 年Being up to date with reliable and realtime data is key here, across all departments. It would not as be beneficial if the different departments are running at different speeds with different reporting timeframes. Other departments also have non financial KPI's that must be considered and learned by data driven finance professionals. If it can all be aligned, a Head of Finance synthesising multiple departments data and adding that to forecasts and planning would provide great insights to the CEO and board. Great points on the huge potential of xP& A Anders Liu-Lindberg
Senior Director, Data Management and Business Intelligence
3 年I agree with the concept of xP&A but the longer I stay away from my professional origins within FP&A Finance the less I think that planning should be owned by Finance. More and more I think that Financial Planning and Analysis is a subset of a larger exercise of analytical planning and analysis. It's a specialized niche yes, but, as with so many specializations, the mentality that results from the education, training, and work experience is too limited and fails to see the forest for the trees. There is an old joke about a person who sees an old man talking to himself about his lost keys and looking around under a street light at night. The person asks the old man, "so you lost your keys here?" And, the old man responds, "no, I lost my keys over there in the dark but the light is better under the lamp." Finance professionals are like this. There are a number of important factors that impact business performance, but finance professionals tend to only be comfortable with those factors that have been transformed into accounting data, so they ignore the rest.