|| What do I bring

64. What do I bring

• enable better decision making through effective forecasting
• financial control analysis converted into digestible insights and recommendations
• rate vs volume
• assumptions vs decisions
• translates into available levers decision-makers can pull
• Self-service access to data through the latest and greatest software application has always sounded compelling. Taking the additional step enables stakeholders to focus on running their business or function, leveraging credible insights and recommendations to make better decisions, ultimately improving business performance
• Alignment with enterprise priorities and the questions stakeholders need answers to
• Relevance and linked to performance drivers and levers
• Context outlining the big picture and organizational interconnectedness
• Clarity through simplification and visual articulation of findings
• Support outlining sources and approaches to provide credibility
• To maximize effectiveness, business planning processes need to result in plans and budgets that drive organizational focus and alignment around choices and priorities. Everyone needs to be included and working off the same playbook. Strategic priorities should cascade into operational priorities, and enterprise priorities should cascade into business unit and functional priorities, where responsibility center leaders are fully empowered to own their plans. Finally, choices need to be fully reflected in both long-term and short-term financial plans so that execution can be measured
• Example Business Review Agenda: 1) External Trends & Developments a) Macroeconomic Updates b) Industry Updates c) Competitive Updates d) Customer / Supplier Updates 2) Operational Review a) Enterprise Business Review Scorecard b) Enterprise Priority Status Scorecard c) Enterprise Financial Review d) Business-Unit Review i. BU [A] ii. BU [B] iii. BU [C] e) Functional Review i. Function [A] ii. Function [B] iii. Function [C] 3) Special Attentional Review a) SAR Scorecard b) At-Risk Performance & Initiatives c) Emerging Opportunities d) Business Cases & Post Audits e) Insights & Recommendations
• As Peter Drucker once said, “you can’t manage what you can’t measure.” Establishing priority goals and objectives is only half the battle – stakeholder accountability is essential to delivering outcomes on plan, and regular business reviews are a proven method to measure performance and progress. Effective business reviews require all accountable executives to be in attendance and ‘present’ with a clear and consistent agenda serving four core purposes: 1) Provide a regular progress report 2) Review insights and recommendations 3) Drive accountability 4) Create a culture of collaboration and problem solving
• Future of Finance value proposition
• It’s the aspiration for most FP&A professionals to evolve from a support function to a true operating partner. To achieve this, FP&A teams should focus on serving three core purposes that enable enhanced decision-making to drive business performance. First, facilitate full stakeholder focus and alignment around strategic and operational priorities. Second, drive enterprise-wide accountability to performance against goals and progress in delivering objectives. Third, create clarity and transparency into business performance drivers through the power of facts, data, and insight.
• Redefining FP&A as an Operating Partner Evolving from a support function to an operating partner requires FP&A professionals to break away from the status quo, and think differently about how the role adds value to the business. ❑ Traditional FP&A: Through foundational planning, budgeting, modeling, forecasting, reporting, and analyzing, traditional FP&A has always been effective at informing which questions decisionmakers should be asking. ❑ Enterprise Analytics: With effective data extraction & transformation, descriptive, predictive, and prescriptive analytics generating rich insights, the answers to decision-makers questions become accessible and actionable. ❑ Fortune 500 Management Systems: Creating a culture where the right things get done right requires performance goal & objective setting, action plan development, business performance & progress reviews, special attention reviews, and accountability scorecards. FP&A redefined at the center of these three capabilities will not only enable FP&A to emerge as a true operating partner, but will also create a new systematic way to manage business performance – a system where focus, alignment, accountability, clarity, and transparency are at the forefront of decision-making
• Insight Creation The last few years have seen a considerable rise in software solutions intended to make data “selfservice” for executives. However, what busy executives are really looking for are distilled insights and recommendations, delivered by credible strategic partners. Through proactive collaboration and analytics, producing actionable insights and recommendations that drive clarity and transparency into performance drivers should become a core focus for all FP&A teams
• Working Together Organizational focus and alignment starts with a business planning process where everyone is included, and choices and assumptions are supported by quality insight. Strategic choices should cascade into enterprise priorities, which should further cascade into segment and functional priorities. With plans set, establishing regular business reviews drives accountability by serving as a recurring forum to review actual performance and progress while instilling a culture of collaboration and problem-solving
• Collaboration is the Path to Strategic Partnership Questions are one of the simplest and most effective ways to develop stakeholder partnerships. Ask the right questions to build your own context and inform what should be analyzed. Answer the questions stakeholders have with facts, data, and insight. This simple “ask-answer” recipe will become the foundation for a credible relationship where finance is thought of as a strategic partner. Additionally, it’s important to build an enterprise perspective – regular touchpoints with stakeholders spanning all business units and functional areas will maximize the value of collaboration.
• Lever Analysis Focus Areas Example questions lever analyses can answer: Growth: ❑ Pricing: Which products have the least elastic demand and can best support price increases? ❑ Volume: Will a decrease in prices improve volume sales enough to be a net sales improvement? ❑ Mix: Which products should we be focused on growing to improve both net sales and margins? Profitability: ❑ Pricing: What is the expected impact to gross margin if we change prices? ❑ Variable Costs & Expenses: What variable costs & expenses can we reduce to improve our contribution margin? ❑ Fixed Costs & Expenses: What fixed costs can we reduce to improve our operating margin? Cash Flow: ❑ Operating: How do we decrease our working capital requirements to improve our operating cash flow while we grow? ❑ Investment: What is the net cash flow impact to growth accelerating capital expenditures? ❑ Financing: How much runway do we have if we take on debt financing?
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