As chief financial officers battle tough economic climate that demands companies to look continually for opportunities to improve business performance, they are in dire need to leverage analytical information to make strategic decisions that maximise shareholder value.
Most Finance departments spend their time gathering and verifying data rather than analysing it.
Amid these challenges, finance solutions provider Revelwood says Financial Planning and Analysis (FP&A) solutions play a vital role as it offers a set of business processes and applications that streamline and enhance enterprise planning, reporting and analytics.
Revelwood says while most understand the power of FP&A solutions, many companies do not consider that FP&A projects are cross-functional, collaborative and require simultaneous changes to people, processes, culture and technology.
Because of this, more than 40% of FP&A initiatives don’t live up to original expectations or even fail outright.
Revelwood enumerates ten steps for successful FP&A solutions:
1) GET AN EXECUTIVE SPONSOR.Every FP&A project relies heavily on the support of an influential and determined executive sponsor. Bottom line, FP&A demands strong leadership. An executive sponsor can directly influence the culture of an organisation and essentially steer the success of the project.
2) DEFINE THE REQUIREMENTS. Revelwood says the most important step with respect to a successful FP&A implementation could be the preparation needed beforehand. It is critical to define requirements internally before engaging the partner and before the project starts—not on-the-fly, when the project is in motion. If requirements have not been clearly defined, it is imperative to take a step back and identify how to approach an FP&A project within the company. Launching an FP&A implementation on time and within budget is directly correlated to clearly defining requirements in advance.
3) PHASE THE PROJECT. Financial Planning and Analysis is more than just a budgeting or reporting tool. The purpose of FP&A is to provide the data, both historical and projected, to a company’s management team so that strategic and tactical decisions can be made with the best supportive information. The management team should understand the nature of the processes and systems associated with this and clearly communicate their vision of FP&A within the company.
4) TAKE OWNERSHIP. One of the important, non-technical aspects of making an FP&A implementation successful is taking ownership of the project. Ownership starts at the analysis and design (A&D) sessions and progresses through the lifecycle of the project. Although there is an initial dependence on the implementation partner for knowledge of the software, application and project development, an immediate and ongoing transfer must occur while the consultants are still working on the components and phases of the project. This allows you to move along the learning curve and eventually develop a firm understanding of all the components in production.
5) COMMUNICATE THROUGHOUT THE PROJECT. Establishing a plan for formal and informal communication is a fundamental requirement for running a successful FP&A project. Ongoing project communication creates user buy-in, keeps people in the loop and improves efficiency of the overall project.
6) INVOLVE IT. FP&A projects are most often initiated, managed and owned by the Finance organisation— especially in cases where the technology solution is relatively easy to own and maintained by business users. Revelwood says this is a good thing since Finance owns the business process (budgeting, planning, financial reporting, etc.) and the data, and thereby has a sense of ownership of the system itself. However, it is critical to recognise that the IT organization should be considered a valuable business partner in helping ensure the ongoing success of the solution.
7) IDENTIFY AND TRAIN THE VARIOUS USERS. The importance of training for an FP&A project’s success cannot be overstated. Having spent the resources to purchase, develop and implement an FP&A system, inadequate training can derail the entire process.
8) STAFF THE IMPLEMENTATION TEAM WITH CARE. When starting an FP&A system implementation, it is important to feel comfortable with the consultants who are assisting in the design and creation of the system. It is even more important to ensure that the team within your organisation is properly chosen for the development, maintenance and administration of this system.
9) CLOSE THE LOOP ON THE PROJECT. There should be a finite beginning and end to the project. When the end is near, measure results, close the loop and take complete ownership from the implementation partner. Ensure goals were met, projects were successful and that ROI can be calculated. Discussing and documenting what worked and didn’t will also be helpful for future projects. Talk about future requirements, new ideas and improvements to the system. Think about where to go next.
10) CHOOSE THE RIGHT PARTNER. Knowing how to select who will implement your FP&A solution can have a significant effect on the success of your project. Start by exploring the differences between the software vendors, general purpose consultants and implementation partners that specialise in the technology you have selected.
