By Tom Phelps
Does this sound familiar?
Analytics: “We show average dollars per customer has declined year over year.”
Marketing: “We show average dollars per customer has increased year over year.”
Analytics: “What numbers are you looking at?”
Marketing: “We pulled data from the consumer data platform.”
Analytics: “We pulled data from the sales data platform.”
Marketing: “And our customer view is for 2-year actives. And we used gross sales.”
Analytics: “Oh, our customers are for 1-year actives. And we used gross sales less coupons.”
And the conversation and an hour of your life in another meeting continues.
Inconsistent measurements and disjointed systems are common pain points for many companies; as are lack of organizational alignment and having multiple planning tools. That is why Financial Planning and Analysis is becoming increasingly important. As more and more data become available, more and more companies are seeking to leverage data to reduce waste and grow profitability. Knowing what is and is not working and having standard views of data throughout the organization are critical for businesses, especially now as the impact of COVID has only intensified challenges.
Over the last two years we have seen dramatic shifts in consumer purchasing, significant disruptions in the supply chain, unprecedented constraints from the labor market and volatility of wholesale and retail prices. Accurately forecasting financial performance has never been more challenging and has never been more important to keep brands on course. Indeed, there is little room for error in todays’ marketplace. That is why by 2024, Gartner estimates that 70% of new Financial Planning and Analysis (FP&A) projects will become extended beyond the finance domain and into other areas of enterprise planning. This approach will require new cloud-based solutions that ensure the alignment of processes across an organization; which, in turn, will enable greater visibility, accountability, flexibility and scalability while still offering the transparency and control required.
Imagine how much better your company could operate if all business sectors looked at data from the same source and in the same way. Corporate leadership, cross-functional teams, insights teams, strategic planning committees and other groups would have a unified/shared view of the KPIs and would spend less time reconciling performance and more time driving growth and minimizing risk.
Modern financial planning solutions provide for:
- Greater efficiency with data integration and automation
- One version of the truth
- Improved accuracy
- More flexibility/agility
- Stronger/faster actualization
- Increased visibility, accountability and governance
- Cloud based multi-user enablement
Like everything else, financial planning evolution is not a start and stop project. Wherever you are on your corporate journey, there is always room for improvement. But where should companies start?
Here are the 5 basic steps in building and delivering a new FP&A roadmap:
- Document current state processes and requirements
- Identify process and system gaps
- Develop high-level solution roadmap
- Gain alignment on future state solution vision
- Create a plan to execute
Even with a clear outline, the starting point for next generation FP&A is constantly moving as the market changes and vendors and software providers continue to enhance their offerings. Organizations, however, need to prioritize FP&A and need to include the discipline as part of their long-term strategic plans. Leadership, like all other business initiatives, should add these activities to their dashboards, investing, measuring and scaling their practices accordingly.