Adaptive Insights founder and chairman Rob Hull headed down to Orlando, Florida, recently to host a panel at the annual conference of the Association for Finance Professionals (AFP). His very timely topic was “The three technology shifts that are changing the role of FP&A.” The subject appears to be a top-of-mind issue among finance professionals: The session attracted a standing-room only crowd.
Yesterday’s technology holds FP&A back
Hull kicked off the discussion by pointing out that FP&A core activities—planning and forecasting, reporting, and analytics—have traditionally been dominated by either the extensive use of Excel or by large legacy systems. Both ends of the spectrum, he noted, present big challenges:
Decreased productivity: Outdated, inefficient systems and processes force FP&A teams to spend too much time on low-value, tactical activities and prevent them from rich analysis and strategic engagement.
Ineffective collaboration: The sheer amount of time that FP&A teams spend on tactical activities—and responding to requests for information—leaves little time for collaboration with business managers. And what little time there is gets spent arguing over who has the right data, because there’s rarely a single version of the truth that everyone can agree upon.
“As a result, you aren’t collaborating around what you can do to seize opportunities, mitigate risks, or improve shortcomings,” Hull said.
Hindered decision-making: The lack of timely, insightful data results in decisions being made based on gut feel. Management teams don’t have the tools and data to create their own reports and analysis, so they rely on the FP&A team, creating more work for the latter and disempowering management.
Lack of ownership: Finance teams don’t want to develop budgets in a silo. Most are well aware that unless business managers feel like they own the budget, they won’t manage to it. Without ownership, execution to plan becomes very difficult.
“These challenges keep FP&A stuck in a role that’s very manual, reactive, and focused on financial details rather than the big picture,” Hull told the audience. “But major technology trends are helping transform finance into a more efficient, proactive, collaborative, and holistically focused strategic partner to the management team.”
Hull then got to the heart of his talk—that technology is shifting the finance function in three key areas:
1. FP&A has moved to the cloud
Many organizations have transitioned to cloud-based FP&A solutions that give them real-time access to data and enable collaboration across multiple teams and geographies—all with a single system. Such solutions reduce capital costs, because software-as-a-service subscriptions become an operating cost, not a capital outlay.
Moreover, companies can deploy cloud-based solutions quickly and widely. For example, panelist Kevin Bradshaw, finance director for Kindred At Home (formerly Gentiva), described how the home healthcare agency deployed Adaptive Planning and Adaptive Discovery division by division to 600 locations across 47 states over a one-year period.
“A cloud-based solution allows us to expand its use as needed and deploy it to remote locations without a lot of IT support,” Bradshaw said. “That’s a huge advantage. Also, we can very rapidly integrate historical data from newly acquired entities and roll it up into consolidated financial statements.”
Similarly, the University of Central Florida College of Medicine is in the process of rolling out Adaptive Discovery and Adaptive OfficeConnect. Even though the deployment is happening in phases, the software is always up-to-date with a cloud-based solution.
As panelist Steve Omli, the college’s director of finance and accounting, pointed out, “I’m never a version behind. We get cool new functionality, and no one at the university has to lift a finger to implement those new features.”
2. Data is easily accessible across the organization
The second shift is away from dependence on IT and toward a self-service model. The best cloud-based applications have intuitive interfaces that allow both finance and business managers to access the data they need, as they need it. This benefits both administrators and users.
“I used to rely on the IT department to get reports out of Hyperion,” Bradshaw said, referring to Kindred at Home’s legacy system. “Now, with Adaptive Insights, I’m much more efficient and have much less need to go to IT. I basically manage it myself.”
Self-service has increased engagement among non-financial users, Omli said. “My users are nurses and administrators,” he explained. “And now they can actually run their own reports. There’s much more ownership.”
Omli commented that his biggest challenge isn’t a technology one—it’s changing users’ behavior. “Even though executives have access to Adaptive Discovery, some still want to see printouts,” he said. “On the other hand, some department chairs are engaging more directly with the data.”
3. Analytics are pervasive
The panel also examined the shift toward “pervasive analytics,” where tools can integrate data from both financial and operational systems, resulting in a single source of truth that offers a much richer view of the business.
“These new technologies give management teams a holistic view of the data,” Hull said. “You can analyze the past and plan the future with the same interface and make rapid, data-driven decisions collaboratively.”
Added Bradshaw, “As the business identifies new analytics needs, our system is agile enough that we can create metrics on the fly and publish them to our audience.”
Toward more strategic FP&A
To close out the panel, Hull asked Omli and Bradshaw whether their FP&A teams were becoming more strategic as a result of these three technology shifts.
“It’s beginning to be true,” Omli said. “We have much more efficient processes and a single source of truth that allows us to produce new budgets much faster. It gives us more time to analyze the information and think strategically. And for the first time, we are really doing scenario planning and analytics.”
Bradshaw described a similar experience. “Our finance team has always been operationally focused, so the metrics were always there, but the new technology has made them much easier to access, and so we’re much more efficient. Plus, we have more trust in the data as a result of a single company view.”
Hull also asked what advice the panelists had for anyone considering implementing corporate performance management software or other tech solutions. The responses included: do it in steps, define your goal and the results you expect, and think about how you can drive adoption once the software is up and running.