Mobility moves FP&A function to the front lines

Steve Player explains why mobile capabilities are useful in the financial planning and analysis function, and provides four FP&A best practices.

At its best, technology does more than make business more efficient -- it creates new ways of doing old processes, which in turn make business faster and more impactful. That's what's happening in the world of mobile financial planning and analysis (FP&A). Four advanced practices can help your organization take advantage of these developments.

Steve Player

While mobile devices seem ubiquitous in business today, the use of these devices -- tablets, in particular -- is still fairly recent. In seminars, I often ask participants to raise their hands if they own Apple iPads. The response is generally a majority. I then ask them to keep their hands up as I count back the number of years they have had one. A few hands usually stay up when I pass four years, even though the iPad was released just over three years ago on April 3, 2010.

A recent Business Finance magazine survey that was sponsored by SAP and polled 155 C-level officers, senior finance executives and managers found that although iPads were the most-used tablets, there is also broad adoption of Android and Windows devices. Over 20% of respondents supported multiple technology types.

For planning and performance management, 57% of respondents said their senior management teams are currently using tablets, while middle managers are using tablets at the slightly lower rate of 46%. However, the rapid adoption of mobility should continue, as total senior management use is expected to expand to 85% and middle management use to 76%, according to the survey.

This increasing amount of mobile technology in the enterprise can drive key benefits for FP&A staff, because it enables them to provide greater front-line support for their respective lines of business. Moving to the front lines:

  • Eliminates the need for data translation.
  • Reduces time lags.
  • Improves communication by enabling direct discussions of possible scenario plans.
  • Provides opportunities to explore more options.

These mobility-enabled changes empower front-line planners to operate in continuous mode rather than in the traditional batch mode. Planning becomes much more like steering a ship -- an ongoing, constantly adjusting exercise that is always looking forward and making use of the best available information about your position, the changing business environment, competitors' actions, and whether your position is meeting previous expectations or needs to be adjusted. The goal is to create an FP&A function that provides more options faster, and with a higher likelihood of success.

Four ways to take advantage of mobility in FP&A

First, consider how to move FP&A into direct support of your lines of business. This reduces lag time, improves communication and enables planners to help explore options. It incorporates financial planning into the work of the teams solving the most pressing strategic and operational problems.

Second, transition to rolling forecasts using a consistent forecast horizon. A consistent horizon allows an organization to focus on consistent improvement instead of hitting year-end numbers that are often made at the expense of future operations. After all, real businesses don't stop at a fiscal year-end. Here, mobility enables FP&A to continually update operating plans and expected future results.

Third, shift reporting from monthly variance explanations to continuous monitoring. Traditional budget to actual variances are a leftover vestige of monthly batch-mode accounting. Mobility allows planners to freely roam and continuously monitor performance. If you have a problem or an opportunity, why wait? Seize the day and deal with it now.

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Fourth, implement scenario planning to know what actions you will take if significant events outside your control occur. These could be downside risks, such as environmental events causing supply chain disruptions (think of the 2011 earthquake off the coast of Japan that caused a tsunami, which shut down much of the Japanese nuclear industry), but keep in mind that you also need to plan for upside opportunities, such as key competitors becoming available for acquisition. To take action in either type of event, planners need to:

  1. Identify the key scenarios.
  2. Estimate the likely impacts.
  3. Locate key economic indicators that suggest the scenario is likely to occur.
  4. Develop playbooks of what the organization should do to respond.
  5. Look for opportunities and risks to become real.

Mobility can help you become faster at each of these steps. It's also important to be alert to the impact of multiple events occurring simultaneously. Remember, you do not have to be perfect, just faster than the competition.

The case for bringing mobility to the FP&A function was neatly summarized by Holt Cat CFO Paul Hensley. "We like mobility because it helps us better serve our customers," he said. Customers here are both internal customers, such as business leaders, and external customers being reached by operations. And that is the kind of innovative benefits that CFOs are looking for IT to provide.

About the author:
Steve Player is the founder and managing partner of The Player Group in Dallas, and the North America program director for the Beyond Budgeting Round Table.

This was first published in July 2013

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