How Can Finance Leaders Really Embrace Their Role as a Strategic Advisor, Connecting Business to Strategy and Data
Extracts from an interview with James Myers and Prophix – Click here to see the full interview on the Prophix blog.
Prophix: How can finance leaders really embrace their role as a strategic advisor, connecting business to strategy and data?
James: When I started FP&A Strategy Consulting, this was part of our vision. Historically, finance has always been very backward-looking, looking at how we performed in the last quarter in the last year, why are we missing our targets and things like that. But as the evolution of finance is changing, there’s more of a requirement of CFOs to start to look more into the future.
They need to understand what uncertainty there is and how they start to plan against that uncertainty. And we see that this combination of strategy, business and data is critical in being able to drive business forward.
So, just so I can touch on each one of these: Strategy is really divided into three areas. It’s firstly diagnosing the challenge or challenges that the corporation has, figuring out what are the big hurdles are that the corporation needs to overcome to be even more successful. Now, this is often very, very difficult. It’s easy to point out the challenges that your competitors have, but sometimes it’s very difficult to look inward and understand the challenges your organization is having.
Once you understand these challenges, then it’s using the guiding principles of the organization that have already been set out to figure out how to overcome those challenges. Now, this is typically done by a strategy organization, but the more that finance can get involved in the work, the better. Because finance has a lot of value to add to this area.
The third part of strategy is designing coherent actions to overcome the challenges. This is when it becomes critical for finance to be involved. What are the actions that the company is going to take to be most successful? Once you understand what these actions are and you’re able to drive those actions, they will end up in a plan or a budget of some sort. Or, even with finance working as a business partner to drive those actions throughout the company.
The second piece of the puzzle is the business. Once you’ve explained the actions that need to be taken to drive a strategy to overcome the challenges, it’s understanding from the business what their needs are. Not just defining what Excel spreadsheets they need or what dashboards they need, but really spending the time to define the problem statement of where their challenges are.
And once we’ve been able to understand what the real problem is, it’s sourcing the data and being able to interpret and build insight from that data that really helps to shed light on the problem and potential solutions. It’s important to get these in the right order: It goes strategy, business, then data. What we see a lot of at the time is people get hold of a whole bunch of data and then they push it down to the business, without thinking about what real problems they’re trying to solve.
When you get to the data part, it’s about providing insight that drives action. There’s no point creating a dashboard or a presentation that gives you a whole lot of data to share with the organization. You want to be able to have data that really provides insights that then provide a course of action. And then to complete the circle, once the organization and the finance team has gone through that process, they feed back into the strategy. So you can see how that cycle continues to go around.
Our vision at FP&A Strategy is to use technology to help FP&A teams combine strategy, business and data to become high performing business partners creating insights and driving value across the organization. I see this vision continuing to be as applicable now and in the foreseeable future as it was 10 years ago, and I look forward to continuing to help FP&A teams along this transformation journey.