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Finance, FP&A

4. How to achieve step changes in productivity and efficiency in FP&A?

In the fourth piece in our short series about the benefits that digital financial transformation brings to enterprise planning, we look at how connected planning improves the productivity and efficiency of FP&A teams.  

While many companies have made significant progress in driving down the overall cost of their finance function over the past decade, according to the latest figures published by the American Productivity and Quality Centre, a benchmarking and advisory organisation that has been tracking such metrics for decades, those in the bottom quartile still have costs two and a half times that of the top performers, (1.8% of revenue vs. 0.7% of revenue). These figures show that for many organisations, improving the efficiency of their finance function is still work in progress. But even those companies falling in the top quartile should not be complacent. In addition to the increasing compliance workload, businesses expect their finance team to provide timelier, relevant and accurate information that leads to better decision making. And providing such value-adding decision support without a commensurate increase in headcount is quite a challenge, especially as asking for extra headcount is hardly likely to be career-enhancing move in the current economic climate.    

Low cost finance teams use cloud solutions

Clearly automating laborious, spreadsheet-based, planning processes with more flexible financial systems helps to improve productivity and reduce costs. What’s more, research funded by Financial Executives Research Foundation and recruitment specialist Robert Half shows that top quartile companies with the lowest cost of finance already make far greater use of cloud-based solutions. But simply migrating your existing stove-pipe FP&A applications to the cloud, could involve multiple subscriptions and leave you with exactly the same integration headache you had when they were all on-premise.  

connected planning with anaplan

This is an alternative. Anaplan provides a cloud-based planning and modelling platform that enables organisations to automate planning, integrate data, and drive dynamic real time updates to a myriad of different types of financial and non-financial processes, across finance, sales, marketing, workforce (HR), and the supply chain. This is despite the fact that they may frequently be working on differing time horizons and at vastly different levels of granularity. Connected planning, as our colleagues at Anaplan label their unique offering, brings together all of these previously separate processes so users from across the business can collaborate around real-time models that share a single data set with enterprise levels of access rights and security.     

The flexibility of the Anaplan platform means that companies implementing Connected Planning can start by addressing their immediate pain points before growing their deployment across their business. It could mean starting out with financial planning, then addressing revenue planning before integrating various aspects of sales planning, perhaps by deploying and tailoring Anaplan apps for territory and quota management processesAlternatively, it could be that the most pressing needs are entirely within the finance function, and that might mean connecting revenue and expense planning with profit and loss statement forecasting, and then balance sheet, cash flow and capital expenditure forecasting, before growing the deployment out into other business functions.   

Think of connected planning as a series of interlinked cells in a honeycomb, each planning model delivering a superior solution for the particular business function, but connected to the next cell to enable data sharing and collaboration.  And just like a honeycomb, it’s the cellular structure that gives the overall structure its strength. Ireally does not matter where you choose to start; where you go next and at what level of granularity you wish to work at. The intelligent data structure and the ease of modelling in Anaplan means deployments can be rapid and iterative, building a connected planning solution that is uniquely tailored to the needs of your organisation. 

connected planning delivers tangible improvements in productivity and efficiency

Analyst group, Forrester Consulting recently conducted a Total Economic Impact™ (TEI) study to examine the potential return on investment (ROI) that enterprises may realise by implementing connecting planning solutions using the Anaplan platform. Prior to Anaplan, customers typically used various packaged and homegrown legacy solutions in conjunction with a plethora of supporting spreadsheets, often containing sensitive financial data that were circulated by email, resulting in very poor security. Consolidating individual business unit information typically required considerable manual effort leaving customers with slow, disjointed processes, silo-ed information, poor collaboration with other business units and distinct lack of insight.  

The quantified findings of Forrester’s study are impressive. These are just some of them 

  • 50% reduction in data aggregation and forecasting processes, which for one respondent meant savings of 2,700 hours ever quarter in the global finance team, worth more than $1.4 million to the organisation over a period of three years. 
  • Halving the time it takes to consolidate and forecast a pipeline for a sales team of 1,000 employees, saving 7,500 hours of manual efforts each quarter. 
  • Considerably reduced development and update costs, as users were able to maintain their own models with an average 95% reduction in the amount of outside IT support required, saving one customer over $1.5M annually. 

In addition, there were numerous unquantified benefits. Respondents reported that connected planning resulted in more accurate forecasting, and that having one version of the truth meant business users had better visibility into discrepancies and were more able to home in on the underlying causes of variances, resulting in better informed decision making.  There were plenty of other less quantifiable benefits too, with demand planners who were using Anaplan reporting that their ability to provide rolling forecasts to their suppliers improved their working relationships and meant their orders tended to be prioritised over organisations that typically provided less accurate forecasts of future demand. 

Integrating previously disparate planning processes, even those solely within the finance function, onto a single platform such as that of Anaplan, to deliver a connected planning solution, clearly minimises the data integration workload and  reduces FP&A process cycle times. Both result in improved productivity and efficiency and ultimately lower costs for the finance function just like we promised in the title.  

But that’s not the whole story. Faster cycle times mean decision makers get their information sooner and more frequently, and because it includes more detailed insight, it is more likely to inform their decision making. Doing that means more value is being delivered too!   Read our white paper Connected Planning: The Key to FP&A Transformation and find out how you too could soon be delivering more value without additional resource. Now that is career-enhancing.  

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If you’re interested in seeing how Anaplan can improve Finance efficiency of your business, don’t hesitate to contact us.  We’ll be able to answer all of your questions and explain the processes we use to bring cohesion and effectiveness to financial planning and analysis.

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Finance FP&A

Steve Benham

Steve's passion is to help finance departments become genuine business partners, transforming them from corporate historians into fortune tellers, so that CFOs become relied upon for insights into the effect of decisions on future profitability. Steve qualified as an accountant with PwC and spent 15 years of his early career in CFO roles, before forging a career in cost management consulting, spanning over 20 years. Steve has implemented large cost management projects and developed deep expertise in key sectors including Airlines, Utilities and Manufacturing. Prior to establishing Profit& in 2016, Steve was a Director in PwC Finance Consulting and Cost Management Practice Lead in Vantage Performance Solutions. Steve also led Consulting Practices for Cost Management in technology firms including SAP, Business Objects and ALG Software.

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