Finance Leadership

Three Keys to a More Effective FP&A Effort

What’s the first reaction of most business leaders when they realize it’s budgeting and planning season? For many, the response is likely not suitable for all audiences. The complaints are what you would expect: the process takes too long and ties up too many resources, the effort to pull all the data and information together is inefficient, it’s too much of a numbers exercise, it doesn’t reflect what’s actually happening in operations, the plan is already dated by the time it’s published.

Based on CFO surveys produced over the last ten years and beyond it seems that Finance leaders have been forever striving for that elusive goal to become a better partner / trusted advisor to the business. The unending quest begs the question: is the goal actually achievable?

Frequently, the desire to accomplish the vision is not enough to offset the effort required to actually realize it. The reasons vary: more immediate priorities emerge, everyone is exhausted from the annual planning and budgeting exercise, Finance doesn’t have budget for technology investments, etc.

While cost constraints are an all-too-real obstacle, the basic resistance to moving forward typically stems from a perceived lack of expected, tangible benefits. It is ingrained among finance types (myself included) that there must be a tangible ROI for any project and qualitative benefits, albeit real, are discounted heavily.

Still, Finance leaders can achieve real benefits by beginning the journey now. It is an ongoing process that starts with a clear goal and focused on the quantitative: what tangible improvements should you expect from an effort to strengthen Finance’s role in the business?

There are three key areas that Finance leaders should explore to unlock greater value from their teams without requiring significant technology benefits: Determine business goals and select a model that correlates costs with value and is scalable, Greater productivity through improved processes and enhanced data standards, and Optimize existing capabilities before investing in new. Pursuing these endeavors, when coupled with targets for related operational metrics, will produce lower labor costs and increased productivity.

1. Organizational alignment – determine business goals and select a model that correlates costs with value and is scalable

Contemplating an organizational redesign is discussed often but changed little in Finance unless business, such as an acquisition or dire economic circumstances dictate a change. Even then, the focus is not on best fit from an operational perspective, but how to quickly take out the most costs.

Rethinking the finance support structure should evaluate the following, in order

  • What is the business vision and how can finance be structured to optimize value?
  • How can a reorganization reduce costs?
  • What is the risk from standing pat?

Our instinct is to lower costs and, from a practical standpoint, cost reduction should have a high priority when reorganizing. However, the first priority should be how finance can provide greater value to the business. For finance to move forward in the eyes of its customers, that means being truly integrated in the business decision-making process and placing the strong players in senior finance roles. To offset any potential increase in costs, some of the activities typically handled by the local finance resources should be pushed out to the business or to lower cost resources. All too often, much of the time is spent by the finance team running down data and generating reports. Given the significant investments companies are making in easy-to-use analytics tools, today’s operational management teams are capable, with a little training, of performing their own basic analysis.

Alignment of resources and roles is an often underutilized aspect of organizational change and is an especially ripe opportunity for companies that have experienced sustained growth. After a few years, finance is populated by resourceful, jack-of-all-trade types. There is value to that type of employee from an operational perspective – he or she can do anything that’s asked – but they are limited in terms of providing additional incremental value due to time constraints. Creating or leveraging more specialist roles will further the opportunity to enhance value while shifting routine or laborious tasks to lower cost resources will reduce costs and increase productivity.

Centralized operations, from outsourcing to shared services and Centers of Excellence, have matured significantly in the last decade and can drive down costs beyond the transactional roles historically pulled out of the business. Overseas capabilities have moved up the strategic scale into reporting and FP&A activities as staffs have gained valuable experience in finance over the years.

2. Greater productivity through improved processes and enhanced data standards

Process improvements by themselves are not the low hanging fruit they once were. Companies that have focused on growth will still have opportunities to streamline processes and lower costs but if they are still in growth mode there is typically not an appetite for it. The focus currently on process is leveraging new technologies such as robotics to automate processes and contain costs while improving quality and increasing scale.

However, combining an effort to address both data issues and improve processes will provide benefits to most companies without the technology investment. So many inefficiencies Finance faces today are caused by data problems – limited governance, multiple versions of the truth, manual adjustments to accommodate reporting requirements. Conducting a data assessment to standardize usage and terminology is a good first step to reduce the questions about data quality, while a regular review of reporting requirements can lead to streamlined reporting and greater self-service. Addressing those concerns creates further process improvement opportunities to reduce cycle and turnaround times, reduce the “churn” in Finance from so much Excel work and re-work, enable more time on value-added analysis and reduce costs wrung from inefficiencies.

3. Systems investments – optimize existing capabilities before investing in new

The technology strategy with respect to Finance should start with an understanding of the current systems constraints. This requires a determination of how current technology is enabling finance processes. Processes change over time – through growth, changing business environment, shifting strategic goals and objectives – and system rigidity results in overrides and workarounds, extending cycle times. Re-evaluating systems requirements in light of current and projected business requirements will likely uncover ways to increase automation and eliminate unnecessary tasks.

These changes by themselves will not automatically result in a higher value Finance team, but improving the alignment of finance support to the business and removing the inefficiencies that have built up in systems in processes over time will free up your employees to provide greater services to the business.


Companies tend to rely increasingly on a shrinking set of core users with deep institutional knowledge of systems to provide data as ERP systems age.  These are the people who have experienced the shifting business strategies that result in new reporting requirements and  key performance metrics, organizational shifts and transformations that require significant changes to queries to capture data needed to report on results.  Less than robust data governance programs compound the problem, making the finance user community limited in terms of its ability to provide timely information to leadership.

These changes are more challenging to overcome until an ERP is replaced because the requirement to align reporting, data and other informational needs within the core systems involves a significant investment.  In these instances, making smaller investments in supplemental technology will achieve improved performance and a big lift in the value provided by Finance to the business.  Data visualization tools have exploded in recent years because of the capabilities they bring with limited investments.  Increasingly, other analytics tools are emerging that would provide more robust insight beyond what an ERP can provide.