Data-driven decision making.
It’s trending but it’s not trendy, and it’s certainly not going away. The process of discovery, interpretation and communication of meaningful patterns in data is the backbone of any data-driven decision making, but it’s not the common pathway for most FP&A professionals.
Uncommon Data and The Common Problems It’s Causing
Getting back to traditional FP&A (analysis) issues, let’s explore more deeply the most common problems organizations have with financial data.
#1: Excessive Data Availability is Paralyzing
Accounting data, just like data in almost any other context, is a beast that you end up spending a lot of time manually fighting with in order to get any value from it.
As a business grows, so does its data. Sources increase, input from individuals increase, goals, objectives, and the metrics used to track them increase. Demands and questions from businesses grow louder as the opportunity for human error rises.
Finance teams tend to get stuck in the world of spreadsheets and struggle with fragmented information. Each department has its own spreadsheet and software. Then, once or twice a year, you’re in a mad rush to reconcile all of this and figure out what you did wrong – or what you must do to pass an audit or do your taxes.
#2: Expectations Don’t Meet Reality
Data excess leads to data management complications and questions about the integrity of the data. Seemingly simple questions that a finance department should be able to answer quickly can take many hours or days to figure out when the process requires multiple platforms, exports, data sorting, editing, blending, pivot tables and analysis.
And as soon as you’re able to answer one question about the numbers, someone asks you another and you’re going through the same information and same steps every single time. And your decision-making is still based on past numbers. Frustration and impatience grow on both sides.
#3: Month-End Closing Opens Up Endless Issues
Is the process of month-end closing a rat race at your company? After manually inputting data from your ERP, HR system and accounting software you’re finally ready to export, combine and check for human error before you can even report on it. If any variances are found it’s back to the drawing board and before you know it, it’s taking the whole month to close the books only to start over again for the next month.
Traditional management and reporting of data take such an excessive effort that month-end closing can bury teams that could otherwise be leaned on for analysis, insight and timely recommendations.
#4: Organizing the Past is Prioritized Over Planning for the Future
Accounting has traditionally been a backward-focused practice, prioritizing past data rather than future possibilities.
This was helpful when compliance was the foundation of success. Past data could illustrate the successes and failures of a business so if a bank needed information or a business was looking for investors, they could put their best and most accurate foot forward.
What did the future look like in this world? The past but with padding. As change becomes the norm, businesses can no longer rely on the past to predict the future and CFOs are planning for multiple scenarios with resources and goals in a near-constant state of flux. Past data is not the key, it’s just one piece to the puzzle.
#5: Roles and Responsibilities Are Changing
Business owners are broadening the scope of what they expect from finance and accounting professionals. When making decisions, business leaders are asking for detailed forecasts, plans, and analytics.
They need them quickly. They want them formatted simply. They need to be accessible by everyone. They need to be clear. Did we mention they need them quickly?
Once a back-office position, accountants are now relied on to be the glue between departments, connecting the dots and then arranging them beautifully.
#6: SAAS Tools and Platforms and Operating Systems – Oh My!
Not everyone is buried under shoeboxes of receipts and Excel sheets. Many businesses have invested in modern tools and platforms to automate processes and free up their teams for more complicated data management.
But multiple systems add a new layer of complication. Not all tools play nice with one another, and integration is not always possible. Multiple systems are typically not managed or even used by the same people – creating new silos that did not exist before. Some tools are chosen for personal preference, but if that person prefers to leave, the company has a completely new problem to address.
#7: Traditional FP&A Data is Only Scratching the Surface
Traditional FP&A is superficial in nature. Reports answer specific questions. If new questions arise, you no longer have the granularity of information needed to pivot, analyze and offer insight or recommendations.
Business and financial executives aren’t the only ones who need a deeper level of granularity. There are many end users who need to make data-informed financial decisions, but traditional FP&A without financial analytics doesn’t give you a view into the data.
Unless you have a real-time dashboard that can be manipulated in real-time, you can’t drill down to find an answer.
There is a Dynamic Solution for our Common Problems
Together with our partner, Onebridge, Anders CPAs + Advisors has created an open-access white paper as a resource for financial and accounting professionals who are actively doing the work of modernizing FP&A methods and teams.
Alongside a discussion of traditional FP&A and the future of FP&A we include real-world examples of companies like yours that have put the new FP&A roadmap into action.
Download our Next-Generation FP&A White Paper
Teams using the traditional FP&A model are still accomplishing a great deal that is vital to the business. Imagine how much more effective they could be given the support and tool set needed to stop spending all their time managing data. Need help making the transition? Let’s talk.
This is the third blog post in our series on the Future of FP&A. Read our first two posts, Traditional FP&A is Failing, What’s Next? and FP&A Hindsight Is 20/20: What Lessons Can We Learn?.All Insights