Mention financial planning and analysis (FP&A), and people imagine finance professionals offering to advise (via copious reports), helping to steer the business (via scenario planning), and becoming a single source of financial truth.
The pandemic challenged these views, says Deloitte’s latest CFO Insights. The report argues that the traditional roles remain; how FP&A professionals achieve their outcomes will change with data management playing a significant role.
Just ask Sally Wang, senior manager for global controlling at Otto International. Her team helps the international sourcing company operate in 26 global locations and manage around 1,400 employees. The company also audits factories, with over 1,000 in the portfolio, and has joint ventures with Melcosa, OAGN, and Scan-Thor.
When the pandemic came, the company’s senior management increased the frequency of forecasting. “Due to the uncertainties, even placed orders can be canceled. Or there could be issues in production due to the lockdowns or issues with the shipment of the goods, even though the goods are ready to ship. These issues made the management nervous,” says Sally Wang.
In the past, Sally Wang and her team created comprehensive forecasts around two times a year. During the pandemic, the FP&A team prepared forecasts every month. “At the very least, we need to give an update of the business situation,” she adds.
The monthly forecasts helped the company to course-correct and implement measures to conserve cash and control finances better amid uncertainty. To achieve this frequency, the company needed to break down the silos and collaborate as a team on crucial data.
Broader and deeper
The ability to deliver reports faster comes down to having data and a platform that makes it easier and secure to share.
Deloitte’s whitepaper highlighted three post-pandemic trends that require FP&A teams to get a better handle on data: a sharper focus on modeling, “a thirst for raw data,” and insights from the field instead of aggregated data and higher demand for the integration of external data.
Lingo Wang, general manager of Asia at Cubewise, adds that FP&A professionals essentially “have to deal with more data than ever.” Beyond financial data, they need to examine operational, sales, inventory, production capacity data, human resources data.
Deloitte notes that FP&A professionals need to go “broader and deeper.” Data resolution and granularity will be critical.
To achieve this, companies need to coordinate data sharing across the organization. “You need to collaborate much more closely with all parties to get their input in time,” says Sally Wang.
Thankfully, Otto International deployed Cubewise’s IBM Planning Analytics powered by TM1 application years before the pandemic.
The new platform brings together financial reporting, financial planning, headcount reporting, headcount and staff cost planning, KPI dashboarding, Customer Booking reporting, Sourcing Volume reporting and makes it easier to prepare reports. Cubewise also helped to reconcile data with Otto International’s parent company.
The enhanced financial reporting features simplified data integration. It allowed Sally Wang to import data from their source system daily from multiple source systems with different mapping complexities, even from a new company created anywhere in the world. Waiting for the month-end for data submission from other business units soon became a thing of the past and sped up their month-end closing.
TM1 also streamlined headcount reporting, standardizing it for each business unit. Previously, differing standards made reporting headcounts a headache. Now, decision-makers can view the data in multiple dimensions easily.
Otto International also used TM1 to simplify the planning of employee movements. It allowed the planners in different business units and profit centers to communicate, release and accept employee movements (avoiding double counting), and simplify employee cost planning (e.g., being paid in different remuneration packages and currencies). Meanwhile, the headquarters can reconcile the staff cost using each business unit’s local currency, allowing the HR team and Finance teams to plan more efficiently.
Crisis-ready and data-driven
Since TM1 went live five to six years ago, Otto International’s finance team doubled the number of reports built.
“Most importantly, most of them are built by their Finance team, not by their IT or consultants. The flexibility and ease of use in deploying reports are just not matchable by any other systems but TM1,” claims Lingo Wang.
So, when the pandemic hit and Otto International’s FP&A team had to create more reports faster, they were ready.
TM1 was proposed initially by someone not in FP&A but supply chain analytics. “He is not a professional accountant but has some background in supply chain management. So, he tried to modify the code that helped us get a daily image of the sales data. We then built our report to include the image for the manager so that they can see it directly from the system and so they do not need to come to us,” says Sally Wang.
The effort to drive information transparency and TM1’s ease of use (even for non-FP&A professionals) empowered Otto International managers to make quick decisions on the ground. In turn, it reduced the FP&A team’s workload. With fewer questions asked (since the reports are already available), they can focus on analysis.
“A common platform is important. [The TM1 platform allows users to] write their comments so that we know what happens in their business when it comes to turnover. Or we can immediately understand what happened after negotiations or discussion meetings with suppliers and customers. This allows us to be forward-looking in our business and also get closer to our business,” says Otto International’s Wang.
Otto International is not done yet. The company is looking to make data-driven decisions easier with visualization. Deloitte notes that visualization can help decision-makers “see and manage by exception” more rapidly, iterate scenarios even faster, and rapidly understand the likely impacts.
“We think it is important for the senior management. And that is our focus for the coming year,” Sally Wang adds.
It also brings the FP&A team a step closer to becoming a business partner.
TM1 in the article refers to IBM Planning Analytics powered by TM1 product, as well as all the related components.
Winston Thomas is the editor-in-chief of CDOTrends and HR&DigitalTrends. He is always curious about all things digital, including new digital business models, the widening impact of AI/ML, unproven singularity theories, proven data science success stories, lurking cybersecurity dangers, and reimagining the digital experience. You can reach him at [email protected].
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