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Building a World Class FP&A Team

Jotham-Lane-director-Carlson-Management-Consulting

Jotham Lane, Director

Now that budget season is over, it’s time to reflect on the effort taken to complete the task and to challenge the status quo. For many financial planning and analysis (FP&A) professionals, it can be a grueling and rote activity as described in my previous blog post, Avoid the Budget Season Blues.  If your company still has a spreadsheet-based budgeting process, your FP&A team likely spent a lot of time on the following:

  • reconciling data to prior period reports such as P&L by cost center
  • keying in or copying/pasting data for analysis
  • writing formulas in Excel
  • using pivot tables
  • reviewing and testing to eliminate errors and validate results
  • consolidating multiple spreadsheets from various cost centers (watch out for those formula errors!)

There is significant opportunity cost associated with spreadsheet planning not only in the time it takes to budget but also in not fully leveraging the business acumen and capabilities of the FP&A staff.

All of these skills are required in the majority of FP&A positions but it begs the question, “Do they add value to the organization?”  Generally speaking, they do not.  In my previous roles in corporate FP&A, I found the process to be a time drain that diverted me from more fully impacting the business for the better.  There is significant opportunity cost associated with spreadsheet planning not only in the time it takes to budget but also in not fully leveraging the business acumen and capabilities of the FP&A staff. In my experience, finance professionals would prefer to focus on analyzing the numbers and providing answers to more strategic issues.

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Avoid the Budget Season Blues

Adaptive-Insights-Platinum-Partner_03It’s that time of the year known in finance circles as budgeting season. Unfortunately, for many finance teams still using spreadsheets, it can be a time of dread, stress and frayed nerves. Dwight D. Eisenhower famously said “Plans are nothing: planning is everything”. That is certainly the case with spreadsheet-based planning as, according to research on the subject, 60% of budgets are already obsolete by the time they are completed. We can chalk that up to the ever-changing nature of business and the rigid nature of spreadsheets. But what if plans were actually meaningful? What if the planning process was an opportunity to get everyone to sing from the same sheet of music and get aligned with company strategy? Rather than singing the budgeting blues, finance teams can hum happily through the planning season. That is certainly the reality for many companies who use Cloud-based corporate performance management solutions. The issues of spreadsheets are already well documented and in fact there is even an organization dedicated to spreadsheet risk called the European Spreadsheet Risks Interest Group. You may wish to read about some of the spreadsheet horror stories they have collected over the years.

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