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How FP&A Technology Can Provide Certainty in Uncertain Times

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February 24, 2021

We all know that there will be more books than can be counted written about the COVID-19 pandemic and its effect on businesses. Ink and digital space is already being dedicated to what’s changed, what’s next, and what will never be the same.

But here’s the thing—it’s not over yet. 

And while it might be nice to read about the impact of the last dozen months or so after the dust has settled, businesses don’t have the luxury of nostalgia. They need to perform for their stakeholders now, even as the environment gets more uncertain. 

The truth is, the pandemic only shone a light on a trend that was already happening—that finance teams must leverage data to tell the future, not just report on the past. And when the future looks less and less clear, that is a tall order indeed. 

But don’t worry, smart companies are finding a way to fulfill the order using FP&A technology.

The challenge to FP&A departments

For a fresh perspective on what faces financial planning and analysis teams, I spoke with Brad Fisher, Vice Principal of Planning and Analytics at itelligence, a Workiva partner and global SAP service provider that offers implementation, hosting, and managed cloud services. It’s Brad’s job to use data for planning purposes, and I wanted to see if he thought the job could still be done in the murky world of 2021. 

itelligence works across industries so Brad’s insight was comprehensive. He spoke about what he’s seeing with his customers. 

“Technology is changing so fast, companies just can’t keep up,” Brad says. “What happens is that they can’t get the business value out of a lot of these new solutions, they are falling behind the market leaders and the market leaders tend to accelerate that gap.”

“There were more certainties for most industries in the past, so the modeling was easier,” Brad goes on. “You knew the things that were going to impact your business. Now you don’t. If you’re modeling 2021, 2022 right now, you certainly can’t use 2020 history as a baseline for how you’re going to create a model. So companies are challenged with how they create multiple models based on increased uncertainty. And you have to be able to do it quick because things change fast in this environment.”

 

 

The known knowns and the known unknowns

While the impacts of the pandemic can’t be fully realized yet, there are a few things that we can be reasonably certain. The change with COVID is different from a downturn in the market, which punishes businesses fairly evenly. Shutdowns and quarantines have had different effects on different companies. 

Brad speaks of two dynamics: “You have one set of customers who are really driving to deploy new technologies to keep up with the pace of demand. And then others are saying, ‘Wow, I’ve got to develop some new channels for my products, expand into new markets and the supply chain is a mess. What do I do with all that?’ So we’re certainly seeing a mix.”

“Our model for delivery will be much more remote. Customers will continue to be remote. The supply chain will certainly be different. I’ve got customers that had channels where they sold directly to restaurants and now they have channels to sell directly to grocery stores because that dynamic is completely changed,” Brad says. 

 

 

What is universal is a need for smart FP&A technology to help businesses assess their situations. Companies that used to run strategy scenarios around a 15% decline in sales must now game plan for months of almost no sales. Doing that effectively means creating a road map for a road that never existed before. 

According to Brad, his customers are looking to pull this off through partnerships. 

“My customers are looking for ways to report and forecast more accurately, give more guidance to the street, give the street confidence, and I see them leverage more technologies,” he says. 

The more things change...

 

 

“Historically, companies have looked in the rearview mirror at their financial results and done these very laborious, built-up, long-budget processes. That’s not going to work in the new norm,” Brad warns. “There’s still a lot of uncertainty in 2021, so it’s going to be imperative that companies can consistently report the health of the business to the stakeholders.”

Brad sees businesses turning to predictive analytics, machine learning, and rolling forecasts to mine their data for insight though he underlines the need to partner with solution providers who understand the both the capabilities of the technology and the business realities at play. 

“At itelligence, we have experience with the underlying ERP [enterprise resource planning] systems, the consolidations business process, and the tools SAP uses around consolidations,” he says. “Understanding the reporting process with Workiva just allows our customers to be able to get an end-to-end solution because we understand that technology stack and the data but because we understand the business process as well.”

 

 

The present environment offers an opportunity for businesses to kick-start a finance transformation that will benefit them in the long run. Manual processes and error-prone copy and pasting was outdated a few years ago and looks nearly irresponsible now. Instead of resisting FP&A technology, Brad suggests finance teams can use it to find peace of mind.

“By automating and integrating the moving of your consolidations data into the Workiva product, we can prove the data accuracy, we apply some controls around that, and quite honestly, it speeds up the process,” he says. “So when you’re doing a month-end close process, making journal entries and so forth, by being able to quickly import that data and see the results, it’s just a lot of value it adds to our customers.”

Taking the first step

Too many businesses have put off modernization for too long for a variety of reasons. Now, the health of the company is depending on the FP&A department’s ability to give guidance to its stakeholders. Brad says there’s no value in waiting. 

“It’s not going to happen overnight, but you have to start the journey,” he says. 

 

 

If finance teams are used to looking in the rearview mirror, as Brad suggests, now it’s time to stare out of the windshield. He implores professionals to ask themselves, “How do I sift through all this information that I have—the amount of information for every company is growing rapidly—and how do I sift through that using technology and serve up to me the things in my business that I need to pay attention to, whether it’s revenue or customer service or what have you? And once I see what those areas are, how do I use technology to guide me to what might happen? And once I know what might happen, how do I take my business acumen to replan what that impact might be on my financials? That’s a new dynamic for accounting and finance departments, who are used to sifting through reports to understand what has happened.”

Technology isn’t about replacing business expertise, it’s about enhancing it, helping learned professionals do their jobs better, make stronger reports, and see clearer. 

“It all comes down to giving good guidance, good forecasts,” says Brad.

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