How to Design a Post-Pandemic Office

How to Design a Post-Pandemic Office

Thoughts from Jeff Wuest speaking at the
2022 Inc 5000 Conference

Last week, SynFiny Advisors did a survey of our clients around the globe – spanning countries such as Mexico, Costa Rica, Panama, Peru, US, UK, Austria, Dubai, Egypt, Singapore, Japan, Philippines, and India (see data below). We have a broad range of global clients. We’re seeing that return-to-office follows the industry of our clients, regional customs, and whether the client is local/regional/global. There is no one size fits all when it comes to the office of the future. A large majority of companies are all following some form of hybrid model.

The question of returning, staying remote, or going hybrid has no one right answer. It is a case-by-case answer, and all three can be the best answer for a company. The policy needs to be consistent with the company culture and meet the needs of local employment customs. What does your customer service require? Returning is often best in companies that find it difficult to maintain client or customer service without the employees being close by. Hospitals or hospitality are a couple industries with that situation. Government contractors stayed in-office because they had to. On the other hand, working remotely is best for companies that can maintain client or customer service virtually. Consulting or financial services are a couple industries that come to mind with good remote working environments. Hybrid work is best for those companies which fall in the middle. The customer or client needs some regular on-the-ground service which is only done by employees in the office.

The nurturing of company culture is the most difficult thing to maintain with remote working. This is one of the main concerns our clients have with remote working – followed by developing new staff, connecting with employees for higher retention, and continuing to train the organization.

Best practices today in companies focus on ways to connect by establishing events with employees. Scheduled trainings, formal events, or an informal happy hour, and get-to-know-you lunch are great ways to connect and build relationships. Management team or business development trips are also a good opportunity to connect. In the past, we only did business travel to visit the customer or client, but now we need to add in the same focus for our employees. Face-to-face interaction has key value. The best companies are finding ways to keep the employees connected and have fun while doing it.

In large all-hands settings or one-to-one, spending time talking about your core values and principles must be a priority. The organization needs to feel inspired by the vision of where we are all heading and how we make a difference in the world. That’s what keeps the team excited about being part of a company. It unifies us.

Companies that fail to maintain a strong culture will find it more and more difficult to compete with those that have established this connective fabric. The best employees will find the “best places to work” and leave from companies that treat everyone like employee badge numbers. Eventually, culture will impact the top and bottom lines of the company.

There’s difficulty when a business leader wants their team to return to the office full time, but employees aren’t necessarily keen. I think the business leader that wants to force their organization to return will need to think long and hard about that decision. That leader needs to look at what competitors are doing and what the clients or customers need. To bring people back, the leader needs to make a business case about survival – share the data that show why coming back to the office is critical to company survival and then accept the consequence of high turnover.

In today’s world, whether you are fully remote or in-person, fast-growing businesses can quickly scale. The most critical thing is a culture that is resilient in the face of inevitable adversity, including the start-up pains of rapid change. What is your on-boarding process? Does it start with your mission, vision, values, and culture? These keeps people together in the best and worst of times. It is critical to find the business model that best delivers the client or customer needs. It also has to be fun – that is the key to any successful growth company – people enjoy the work and believe in what they are doing.

There are many debates about productivity with remote work. I believe the move to remote working should not change the KPI’s of your company. You need to establish targets and track accordingly. The fact you now work remotely should not impact those targets. If you see the move to remote work is negatively impacting the company KPI’s, a change is needed. PERIOD. There are ways to build employee engagement with the company – tell stories about the exciting business results, find ways to recognize and reward strong performance, celebrate key moments in an employee’s life, and make it fun!

Work Is Fun (And if it isn’t, you’re not doing it right.)

Work Is Fun (And if it isn’t, you’re not doing it right.)

We beat the odds and it was time to celebrate. So we did.

The chances that a start-up business will achieve $1 million in revenue are pretty slim. According to the government stats, only seven percent of the businesses out there are doing that right now. That’s only one percent more than the people who believe in unicorns. (Yeah, I looked it up.) What’s more, it takes between three and five years to prove out the typical business model. That’s a high-risk/long-term (possible) return if there ever was one. Woohoo! Where do I sign up?! (…said almost no one. Ever.) So when SynFiny landed its first $500,000 purchase order, it wasn’t just nice…it was a huge deal.

SynFiny holds a company-wide, quarterly meeting for all of our organization together. We review business results, discuss company goals and direction, engage in training & development — the usual stuff. Beyond that, though, we also make it a point to recognize our team members, celebrate success and have fun. It was right during our Fourth Quarter meeting of 2018 that Georg Schlangen — one of our North American Partners — landed the big fish. The half-million dollar engagement wasn’t just our largest to-date, it was a game changer that showed us just how successful our company could be.

I remember him walking into the courtyard of Arnold’s Bar and Grill in Cincinnati just after we got the good news. The entire company was yelling, cheering, stomping their feet and raising their beer steins to the amazing success of Georg and our company. The time, the place, the image, the feeling…they’re all burned into my memory where I’ll cherish them forever.

We settle too often. We find a job that pays the bills and we don’t hate. That’s not good enough. Our career needs to be a life calling. And a life well-lived is where passion and paycheck align.

Warren Buffet is one of the most successful people out there. He talks a lot about how very much he loves what he does — so much so that he “tap dances” his way to work. Now you don’t need to be Bojangles Robinson or Fred Astaire around the office. Some of your co-workers might find the racket distracting. (And let’s face it, Warren Buffett can get away with it because…well, who’s going to tell him to please contain himself?) But, if your work doesn’t put a spring in your step and bring you joy, find work that does.

Perhaps the most important thing about loving your work is enjoying the people you work with. Most of us spend more time talking and engaging with co-workers than we do our own families. If we don’t get along with them, the workplace quickly becomes unpleasant. Take an interest in your co-workers and become their friend. Let your attitude and comportment be a positive influence for them. Let your coworkers know you respect and appreciate them. If you do the hiring, employ people you like and who will fit in well with the team. A candidate might be the best salesman since Zig Ziglar, but if he or she is a toxic influence on team chemistry, you may risk your company’s future by hiring them. Hire people you want to be around.

The key to all this is knowing what you’re passionate about. Know what drives you and brings fulfillment to your life. Know what kind of people you like to be around. Know how to have fun at work and make sure that the rest of your team has fun, too.

That last part — our team having fun — may be the biggest reason we’ve done so well so fast. Our team was assembled with chemistry in mind. We acknowledge and honor our successes — even some of the smaller ones. At SynFiny, we celebrate when we send off a proposal. Potential clients have a huge range of consulting options, and we’re honored they included us in the RFP. Moments like that are to be treasured and enjoyed. They’re what makes our work fun, and that’s the biggest part of our success.

Know Who You Are

Know Who You Are

Your business will test you, but you can pass when you know yourself well.

The year was 1996, and life was good. I had a comfortable career with Procter & Gamble (P&G) working in my hometown of Cincinnati. And then came the opportunity that changed my life. P&G offered me an expatriate position in the former Soviet Union.

It was still the early days of modern globalization, and I had never been out of the U.S. In fact, I didn’t even have a passport. I didn’t know the language, and all I knew about Russian culture was pretty much vodka and Tolstoy. Virtually everyone I knew thought it would be a bad idea, and too much of a risk to take given my comfortable situation.

I jumped at the opportunity and spent the next 10 years living in Russia, Kazakhstan, and Ukraine. Turns out, it was one of the smartest things I’ve ever done.

Embrace uncertainty

It’s not unusual to be unsure about what we want in life and to not know exactly how we define success and happiness for ourselves. This uncertainty makes us less likely to take chances and accept risk in life. But taking chances and accepting risk are often opportunities for personal growth that aren’t otherwise easy to come by.

Fortunately for me, I knew myself well enough to jump on a life-changing opportunity when it was presented. Because I often do 360-degree self-assessments, I understood that I look at life as a series of possibilities for happiness. Certainly, the risk of uprooting my life and moving halfway around the world was great, but I knew myself well enough to know that the reward would be well worth it.

Know yourself

One quote that has always stayed with me is: “Life is not measured by the number of breaths we take, but by the moments that take our breath away.” It’s those breathtaking moments that give meaning to my life, and that’s why I knew that heading to Russia was the right choice for me.

In running your business, you, too, will be faced with major decisions about the future. Knowing your options is important, but so is knowing yourself. You know what makes you successful and happy. Let that be your guide when planning for the future.

For more information, please visit synfiny.com.

About The Author

Jeff Wuest

Jeff Wuest is a business strategist and visionary, and he helps companies to achieve extraordinary growth. Today’s environment demands the right blend of innovation, strategy, and risk-taking to define new opportunities, be first to market and lead the industry. Jeff works with leaders to push the boundary of what they think is possible, make big strategy bets without risking it all, and create an environment where they can achieve 10x growth. Jeff ’s expertise includes strategic planning, rapid market expansion and operational scaleup. He’s an entrepreneur with experience mentoring startups and emerging companies, as well as a strategic advisor to multi-billion-dollar corporations. Jeff has over 30 years of experience developing game- changing strategies across different industries, categories, products and services. His focus is helping forward-thinking leaders succeed with breakthrough strategy, execution and operations. Currently, Jeff is the CEO of SynFiny Advisors, a global business consultancy firm, which was recognized by Inc Magazine’s, Inc. 5000, and ranked in the top 500 of the nation’s fastest- growing private companies.

Backward Progress: For Better Results, Start at the End

Backward Progress: For Better Results, Start at the End

How goal-based planning can work for you.

It began with three friends sitting on a balcony in Panama talking about where they wanted to go in life. Sipping our gin and tonics on a warm summer evening, overlooking the beautiful Pacific Ocean, we talked briefly about things we had accomplished and what was going on in our lives. And then we started talking about the future.

Planning for the future

We quickly realized that what we all wanted to do was to create something new and unique with our lives. In addition, our particular collective skill sets had the makings of a promising business. We all had many years of experience with large global corporations but now was the time to use our entrepreneurial DNA to create something for the future. None of us had brought a laptop or even a notebook, so we used a cocktail napkin to sketch out a business plan. Once we agreed on our shared goals, we worked backward to develop the ideas and processes on which we’d build our business. In the future were the things we had a passion for in business–improving the way companies operate. The napkin still sits in our corporate archives.

So, the planning stages of SynFiny–my current company–didn’t begin with a tallying of our financial resources, running a detailed market analysis, canvassing the world of business for better ideas, or delivering a wordy PowerPoint presentation. It began with the final destination and developed from there.

Start where you want to go

Often in life, we’re told to start at the beginning–to focus on where we are before we even think about where we’re going. Often this is good advice. When it comes to business planning, however, sometimes the opposite approach works best: Start at the end and work backward. Visualize your goals and desired results. Then reverse-engineer your plan from where you want to end up.

When we’re taking a trip somewhere, the first thing we need to know is where we’re going. The same can be true in business. If we don’t have a clear idea of where we want to go, we’re inevitably going to waste time, effort, and who knows what other resources in getting anywhere.

Goal-based planning is a great way to keep your focus on what really matters: the results. With traditional, one-step-at-a-time plotting, it’s easy to get caught up in potential complications and difficulties. The planning becomes defensive and focused on defeating or avoiding obstacles. Next thing you know, your goals and dreams have been scaled back because of future problems that might not even happen.

To be clear, results-based planning is not about ignoring potential challenges. It’s about not letting the challenges become the focus of your plan or your efforts. It’s about creating and maintaining a positive, successful mindset that knows where it’s going and how to get there.

So, the next time your business needs a plan, don’t feel compelled to start at the beginning. Start at the end and see what happens.

 

For more information, please visit synfiny.com.

About The Author

Jeff Wuest

Jeff Wuest is a business strategist and visionary, and he helps companies to achieve extraordinary growth. Today’s environment demands the right blend of innovation, strategy, and risk-taking to define new opportunities, be first to market and lead the industry. Jeff works with leaders to push the boundary of what they think is possible, make big strategy bets without risking it all, and create an environment where they can achieve 10x growth. Jeff ’s expertise includes strategic planning, rapid market expansion and operational scaleup. He’s an entrepreneur with experience mentoring startups and emerging companies, as well as a strategic advisor to multi-billion-dollar corporations. Jeff has over 30 years of experience developing game- changing strategies across different industries, categories, products and services. His focus is helping forward-thinking leaders succeed with breakthrough strategy, execution and operations. Currently, Jeff is the CEO of SynFiny Advisors, a global business consultancy firm, which was recognized by Inc Magazine’s, Inc. 5000, and ranked in the top 500 of the nation’s fastest- growing private companies.

Design Optimal FP&A Org (1)

How to Design the Optimal FP&A Organization

How to Design the Optimal FP&A Organization

FPA1There is no company which can run systems, follow work processes, or implement policy without a fully trained and well-designed organization. Unfortunately, many times this is one of the most overlooked (after work process) areas of FP&A design.

  • The arguments for overlooking a well thought out organizational design are: The current organization can do the work if the CFO tells them to do it. It is merely a command from leadership, which will get the organization to jump into the new work process or tools.
  • The design of the organization does not have much to do with tools or work  process. There is no need to make substantial changes to the way the finance or other functions are designed. The functional leaders will request tools and work processes are designed around the organization.
  • It is easy to change tools or work process. If you make changes to organization, it will be too difficult and will risk a successful implementation.

The SynFiny Advisors’ Definition of FP&A

  • Critical value creation processes, which require a deep understanding of finance, modeling, data systems and processes, and accounting, all married to deep business knowledge.
  • Typically combines financial and non- financial data as required to create strategic and operational financial plans.
  • When done well, these processes are a clear competitive advantage and thus are viewed as critical by a firm’s owners and senior leaders.

Unfortunately, these arguments tend to put the organization in a no win situation. In the best case, the organization is able to use the tools or follow the work process but never leverage to create a step change in financial planning.   In the worst case, new the tools or work process become parallel to the prior ones causing, rework and distraction for the entire organization. In most situations, the projects need to be re- implemented to fix the outages, which distract the organization, drive significant project costs, and typically result in a sub-optimal financial planning design.

Background

In his seminal 1992 work entitled Organizational Culture and Leadership, Edgar H. Schein, Professor Emeritus in the Sloan School of Management at MIT, defined “organizational culture” as “a pattern of shared basic assumptions that was learned by a group as it solved its problems of external adaptation and internal integration, that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems”.

This definition helps explain why SynFiny focuses so heavily on organization when considering any type of financial planning redesign. Since organizations develop shared assumptions about the “correct and acceptable” way to complete any tasks, changes are open to rejection by the organization since they are seen as counter to the norm.

This resistance to adoption can manifest itself as an open revolt or a gradual reshaping of the change back to the original design leading to sub-optimized results from the FP&A project implementation.

It is for this reason organization is a key focus for FP&A transformation. The focus needs to be on culturally preparing the organization for change, while ensuring specific changes are implemented to create an effective and efficient FP&A design (driving adoption by the organization).

Design1

Work Process Design Begets Organizational Design

It is the definition and optimal design of who should do the work where most organizations fall short. Therefore, the first task is to document the FP&A work process so that you will clearly understand all activities required to complete a given outcome. These activities can now be regrouped to drive efficiency and effectiveness by assigning technical teams that own specific parts of the process as experts in those tasks.

To note, there are many AFP articles or papers written about creating or transforming FP&G work process. These documents will help to better explain how developing standard work process combined with the organization redesign will enable improved performance.

The chart below shows a high level FP&A- marketing budget work process. However, it also illustrates how best to segment the tasks into an improved organizational design.

Design2

In the organization design above, there are 4 main organizations responsible for the end-to- end work process.

The Leadership Team owns Orange tasks which relate to approval of marketing plans and budgets. These tasks should not be delegated to other organizations since the approval process triggers the entire work process. There is also an element of basic controls which requires key leaders to approve budget changes.

Marketing owns the Yellow tasks which relate to placing a purchase order, carrying out the marketing event and tracking their budget. These are focused on their business responsibilities or on the need to supply master data which only they know (e.g. requesting a purchase order).

Finance owns the Red tasks which relate to budget tracking, approvals and analysis. This allows Finance to truly play a leadership position by focusing on financial analysis to determine whether the investments optimize ROI and are aligned to the business strategy rather than collecting Marketing master data.

A Technical Team is available throughout the process to drive efficient and effective execution of the tasks.

What Does Technical Support Mean?

A Technical Team is a specialized group that is responsible for the handling of routine activities. As mentioned above, by documenting the work process the common activities can be regrouped. This regrouping process allows for these routine tasks to be identified and then scaled up by assigning them to a technical team who become very efficient and effective at them. While this step can be optional, it frees up capacity within leadership, marketing, or finance so these business leaders can focus on where they add the highest value.

The Path Forward… Assign FP&A Owner and Get Moving

Hopefully the examples above illustrate why the organization design is such a critical part of the overall creation or transformation of FP&A. The next steps are:

  1. Assign a FP&A project owner focused on organizational redesign
  2. Establish a working group from the FP&A team to better understand current culture issues holding back FP&A transformation
  3. Create an action plan to address the key cultural issues (may include working across business units or other functions)
  4. Develop the future FP&A organizational design (integrated with work process)
  5. Gain alignment within FP&A team and approval from C-level sponsors
  6. Reap the benefits of the transformation

Organization is important to the success of an FP&A process and by understanding it you can obtain better business and financial results.

About SynFiny Advisors

We value experience. Our advisors leverage decades of Fortune 50 experience in financial planning & analysis and shared services design and operations to deliver breakthrough solutions for our clients. This collective experience has been
distilled into a proprietary consulting methodology that enables our advisors to quickly apply their experience to the specific objectives of our clients, leading to faster and longer lasting value creation.

For more information, please visit synfiny.com.

ABOUT THE AUTHOR

Graham Cater

Graham Cater, founding partner, is an experienced Financial Executive with a proven track record delivering strong business results. In particular, he has experience working in or with all major regions of the globe. He has strong financial expertise across a wide range of areas such as Financial Analysis, Profit Forecasting, Accounting including the often- ignored area of Inter-Company Accounting. This is combined with real-life expertise on managing Corporate Risk at all levels of a Company. Graham had a 33-year career with Procter and Gamble where he worked in the UK, Spain, Russia, Venezuela and finished in Panama. During that time, he worked on many projects such Russia opening to private companies after 70 years of communism, implementing SAP across all of Latin America, relocating the HQ from Caracas to Panama City. He also a Global project on a complete transformation of the FP&A process from off-line Excel to on-line system driven standard forecasting cycles. He also led a Global project on implementing a structure of Governance Boards across the Company to help appropriately manage Corporate Risk. After retiring from P&G, Graham has joined SynFiny Advisors and has led the Global expansion from North America to all regions – Asia Pacific, Europe, Middle East and Africa and Latin America.

The Global Business Services Organization Design in More Detail

The Global Business Services Organization Design in More Detail

BDS1This paper addresses in more detail how we believe a Global Business Services organization should be structured in order to provide the best combination of cost, quality, speed and stewardship.

Background

When it comes time to actually create a Global Business Services (GBS) organization, how should it be structured? Should it be set up by Process/Service? By location? By function? We would propose a combination of these to allow the organization to deliver the best customer service possible, while also delivering the cost and stewardship benefits the company envisioned when it committed to creating a GBS organization.

The GBS Organization

As discussed in a previous paper (“The 5 Building Blocks to Creating a Successful Shared Services Organization”), we believe that in order to maximize benefits, a GBS organization should be global in scope and should include services from multiple functions, ie. Accounting, HR, Purchases, Facilities & Real Estate, etc. We also believe that because the GBS organization will have somewhat different goals than the rest of the company, and because it also needs to remain objective about what is best for the company in total, that it should be a standalone organization reporting directly to the CEO.

Within the GBS organization, we believe there should be 4 subgroups or reporting lines:

  • The Process/Service Owners
  • IT Support
  • The Shared Service Centers/Operations (with a front office and a back office)
  • Other Functional Support (HR, F&A, Purchases)

A simplified GBS organization structure would look as follows:

A Simplified Global Business Services Organization Structure

BDS2

However, within this structure there should also be a horizontal element for each Process/ Service. For example, if one of the services was Accounts Receivable, then there would be an Accounts Receivable Process/Service Owner, an IT group within GBS supporting the Accounts Receivable service, and a group in the Service Center carrying out the Accounts Receivables daily operations. The three groups should all work together to deliver the Accounts Receivable service with excellence, and be measured against a common set of goals.

The details related to each of the 4 subgroups are as follows:

A. The Process/Service Owners
This group will work closely with the Policy Owner, the IT Support and the Shared Services Centers to develop the optimum standard global work processes. Some of the process experts from the BU’s could be good candidates to become Process Owners in the new GBS organization. But it will be important that this person maintain an open mind on ways to continue to improve and evolve their process or service. They can’t have a mindset of “that’s how we’ve always done it” or “no if it’s not invented here”.

In picking people for these roles, it is important that they are: a) experts on their business process, b) have an understanding of associated Company policy, c) are linked with the people in the Shared Service Centers who will actually carry out the work, and d) stay close on-going with the BU’s who are utilizing the service or process. The Process Owner’s mindset needs to be that of someone in a service industry with multiple customers to please, ie. Corporate is a customer from a governance standpoint, the Service Center from an efficiency and effectiveness standpoint, and the BUs from an end user/ease of use standpoint.

One point of clarification: if there are multiple functional services within the GBS group and each functional area has a large number services, then there could be multiple groups within the Process/Service Owner area. For example, there could be an HR person who is responsible for all of the HR services and has a group of HR Process/ Service Owners reporting to him/her. Similarly, there could be an Accounting person who is responsible for all of the Accounting services with multiple Accounting Process/Service Owners reporting to him/her. Each of these functional service heads would then report directly to the overall Head of the GBS organization.

B. The Shared Service Center/Operations
This group will be responsible for executing the internal work processes, which are typically more transactional in nature. While it is helpful to understand the policy and the business context of the work processes, it is not required for this group (particularly the back office group, which is discussed later in this section). The primary focus is on understanding and executing the work processes with excellence.

This is also where the bulk of the productivity improvements are going to occur. Centralizing the work into the Shared Service Centers and moving to standard best practices will allow fewer people to do the work than previously in the BU’s. There are also additional synergies by having a few people dedicated to a process vs. parts of people spread across different groups. And there is the potential to drive further efficiency by prioritizing and scheduling certain work processes to better manage peak workload periods.

We would also recommend that the operations be structured with a front office and a back office. The front office is who the BU’s would interact with when they are utilizing the service. As such, it will be important for the people in the front office to have a thorough understanding of the back office as well as understanding the business’ needs. Ideally, they would build this business knowledge by spending some time actually working in the BU’s, i.e. 3-6 months. The front office should also try to share this business knowledge with the back office to help them in prioritizing their work. Strong communications is another critical skill for the front office roles, given the different groups they will need to interact with.

The people in the back office are focused on the internal work processes or transactions. As such, it is important that their mindset be similar to someone on a production line, where they are tracking their results, scorecarding output measures, and continually looking for ways to improve in terms of quality, cost and speed.

Because the back office roles are more transactional, it allows the work to be done from almost anywhere in the world. As such, a company can choose to move this work to a low cost location, either within their home country or in another country where the population has the appropriate language skills. Moving to a low cost country can lead to even greater savings, but it also may cause challenges from a customer service standpoint. The organization needs to weigh these trade-offs when making a decision on where to locate the Service Centers/ Operations.

Also, we would recommend that fewer Shared Services Centers are better than more. The absolute minimum a company should have is one Service Center in each region to manage time differences, i.e. one for the Americas, one for Europe, Middle East and Africa, and one for Asia. Again, though, the number and location of the Service Centers depends on the language skills required and how the Service Center locations align with the BU locations from a time zone standpoint, i.e. the Service Centers need to provide coverage throughout a normal BU working day.

Finally, the work that is most transactional in nature can be outsourced, driving even further savings. For example, there are companies that specialize in entering invoices into systems, processing payroll, or even running data centers. They can often do this cheaper and better because it’s one of their core competencies. When a company is moving to a GBS structure, they should always assess which work processes could be outsourced to offer the best combination of cost, quality and speed. However, if they do outsource, there still needs to be someone within GBS who is responsible for the results of the service, and someone who is responsible for governing the outsource provider, ie. invoices need to match the services delivered, address any missed SLA’s, etc.

C. IT Support
No matter what functional work is moved to a GBS structure, there will be a need for IT support to help drive standardization, support the systems, and enable future productivity improvements. We would recommend that these IT resources be dedicated to the GBS organization (in other words, they should report up through the GBS organization). If the reporting line is outside of GBS, there is a risk that other priorities could come into play and the IT support necessary to deliver all of the services with excellence will not be available.

Another reason it is important to have the IT Support group in the GBS organization is because over time it is critical that IT develops a deep understanding of not only the systems, but also the work processes. It is through this depth of knowledge that the IT Support will be able to take on a more proactive role in identifying opportunities to improve the performance of the service, or identify opportunities to add additional value, i.e. new services or solutions that don’t exist today. As discussed earlier, we believe the best way to achieve this is for the IT Support to be organized by service within their group.

One other comment on the IT Support group: the reason this group is separate from the Process/ Service Owners is because from a technology standpoint, the IT Support group needs to drive synergies. Said differently, they need the freedom to decide what technology platforms to use to drive scale, along with how best to leverage technology to deliver resiliency and redundancy across all of the services.

D. Other Functional Support
Since the GBS group is a separate, standalone organization, it will also need other functional support, such as Finance, HR, and if there is enough outsourcing, Purchases as well. The Finance part of this organization should be centralized and will help handle all of the budgets, assist in charging out any services, and also help with forecasting and long term strategy setting. Any Finance that is part of a service that is being offered to the BU’s should be in the Service Owner area. Similarly, the Central HR group is supporting all of the other groups within the GBS organization, whereas any HR services that are being utilized by the BU’s should be under the Services section of the organization.

Summary

Once there is agreement to create a GBS organization, the next step is to decide how to structure it so it delivers excellent customer service to the BU’s while also meeting its cost and stewardship commitments. We believe that within the GBS organization there should be 4 vertical subgroups:

  • The Process/Service Owners
  • IT Support
  • The Shared Service Centers/Operations (with a front office and a back office)
  • Other Functional Support (HR, F&A, Purchases)

These 4 subgroups should all report directly to the head of the GBS organization. Each subgroup will have their own area of expertise and characteristics to look for when recruiting and training people for these areas. However, across the Process/Service Owners, IT Support and Shared Service Centers/ Operations there should also be a horizontal link for each service. For example, if one of the services is Payroll, then there will be a Process/ Service Owner for Payroll, people within the IT Support group responsible for the Payroll systems, and a group in the Service Center/Operations responsible for running Payroll. All of these horizontal owners should be measured on how well the Payroll system is delivering against its cost, quality, speed and stewardship goals.

This structure allows the horizontal owners to focus on their respective service goals, and for each of the vertical organizations to drive greater efficiency and coherence within their respective functional areas. This combination will allow GBS to deliver (and hopefully surpass) the commitments that were made when the decision was made to create the organization in the first place.

About SynFiny Advisors

We value experience. Our advisors leverage decades of Fortune 50 experience in financial planning & analysis and shared services design and operations to deliver breakthrough solutions for our clients. This collective experience has been distilled into a proprietary consulting methodology that enables our advisors to quickly apply their experience to the specific objectives of our clients, leading to faster and longer lasting value creation.

For more information, please visit synfiny.com.

ABOUT THE PRACTICE LEADER

Larry Williams

With almost 40 years of experience in supply-chain, Larry Williams is a results-focused professional who includes people, tools, technology, controls, and operations when improving existing processes or developing new processes for an organization. When working with clients, he focuses on transforming an organization using strategic sourcing practices and best-in-class procure-to- pay practices to create value.

Larry has held a variety of engineering, project management, production management, purchasing-procurement, and accounts payable positions. Through this extensive experience, he has found passion in leading companies in establishing standardized work processes. As both a visionary and a pragmatist, Larry has designed and implemented innovative programs for various companies and divisions, including shared services, risk management, policy and compliance, acquisitions and divestitures, and organization design and performance management.

Larry is a certified black belt in Lean Six Sigma and received his Associate’s degree in Mechanical Engineering from Mohawk College in Ontario, Canada.

Importance of FP&A work

The Importance of FP&A Work Process & Design

The Importance of FP&A Work Process & Design

The key building blocks of any successful Financial Planning and Analysis (FP&A) end-to-end work process design is the creation of the future state process, alignment with C-level leaders to ownership over key steps in the process, and eventual roll out and implementation of the new work process to the broader organization.

The most effective and efficient FP&A end-to- end work process design is well synchronized and closely coordinated between the organizations doing the work, the system supporting the work, and the policy guiding the work.

The end result of a fully synchronized FP&A work process delivers best in class performance versus a company’s key competitors. More importantly, it ensures a company meets the long-term financial commitments to key stakeholders.

Net, the FP&A work processes tend to be a critical priority for C-level leadership.

The SynFiny Advisors’ Definition of FP&A 

  • Critical value creation processes, which require a deep understanding of finance, modeling, data systems and processes, and accounting, all married to deep business knowledge. 
  • Typically combines financial and non-financial data as required to create strategic and operational financial plans. 
  • When done well, these processes are a clear competitive advantage and thus are viewed as critical by a firm’s owners and senior leaders.

A Definition of Financial Planning & Analysis Work Process

Before delving deeper into FP&A work process, it is necessary to get grounded on the definition and full ownership and scope of the FP&A organization.

SynFiny Advisors defines FP&A work process as:

“The critical value creation processes, which requires a deep understanding of business fluency, finance, modeling, data systems and processes, and accounting. This typically combines financial and non-financial data as required to create strategic and operational financial plans. When done well, these processes are a clear competitive advantage and enable the delivery of long term financial commitments, thus are viewed as critical to C-Level Leadership.”

There are a number of critical company processes, which most FP&A teams fully own (or provide oversight leadership):

  • Strategic Planning – The development of the mid to long-term financial plans which support the overall strategic plans of the company. It is critical FP&A owns the strategic financial plans since the plans need to be closely linked to the short term operational financial plans.
  • Budgeting – Budget management and control is essential to penetrating and understanding the SG&A, marketing, or other budget- related spending by a company. This includes aligning the initial budget creation with the overall strategic and operational financial plans of the company.
  • Forecasting – The forecasting management and related control provides a reasonable but challenging profit, cost, or other P/L items forecast to senior leadership and business teams. The forecast may be required for a combination of internal and external use. This includes reconciling and explaining the forecast in regards to the overall strategic financial plan of the company.
  • Management Reporting – The creation of reports, which are easy to understand and use by senior leadership to visualize the dynamics of the business. The reports provide insight to the business (versus just sharing data). A useful report from FP&A is created with a “single number truth” mentality across functions to avoid debates on the numbers.
  • Financial Analysis – The translation of data into insights so business teams can make the right decisions, at the right time, and with the right level of understanding. This in turn translates into a key competitive advantage for the company.
  • Capital Planning – The process for determining the right level of capital investments into the business based on the overall financial strategy.
  • Business Modeling (e.g., New Ventures and Investments) – The linkage of business modeling into the overall financial strategy and planning process for the business. This may be an externally driven acquisition, divestiture, or internally restructuring of a business.

Of course, the processes above typically require other functions in the company to play a critical role. However, finance needs to play an overall leadership role given the importance of the FP&A processes in delivering both stewardship requirements and financial strategy commitments of a company.

The Importance of FP&A Work Process

The two areas of FP&A design that require the greatest focus are company culture and work process.

The rationale for highlighting these two areas is they both tend to create the majority of the financial planning issues when they are done incorrectly. Below is just one example of many potential issues from each area:

  • Company Culture – In many companies, there is a tendency to manage to a target (basis for gaining management commitment to financial expectations) versus providing a realistic update to a forecast (basis for understanding current state of the business and related approved investment plans). This cultural tendency leads to managing against a single number forecast (and creates the need to “plug the forecast” to ensure what is communicated to senior management is the “right number”). In many cases this tendency to deliver a specific “right number” versus updating the forecast based on business realities creates catastrophic forecast misses for a company. The separation of the target and forecast is typically one of the first changes required to improve overall FP&A for a company.
  • Work Process – For work process, there is a tendency for the C-level and senior finance leaders to think of FP&A work processes as a simplistic start and end date. The forecast, budget or analysis begins on any day of the month and then ends sometime in the future without regard for the critical steps in between. This overly simplified two-step work process is part of the reason FP&A data tends to be seen as a “black hole” since there is little transparency to the detailed steps required to transform “data in the raw used by accounting” into “data fit for use by the business.” The data is then further transformed or penetrated to provide deeper insights onto the status of the business. These insights may then be used to drive improved business decisions and can result in greater levels of sales growth or cost reductions.

Unfortunately, instead of focusing on the real issues, most companies immediately look to replace costly systems when a financial planning issue arises versus focusing on the real root causes. The root cause typically has little to do with the systems and more to do with a work process, organization design, or company culture. This position paper is focused on end- to-end process – but remember, organization and company culture also impact FP&A design work.

FP&A End-to-End Design

– Current to Future State

There tends to be a common belief in finance organizations that work process does not apply to their work with justifications such as: “A detailed work process may be fine for accounting or manufacturing but finance work is much more of an intellectual, flexible and mostly un-planned activity. There is no need to develop work processes around FP&A since it will only reduce intellectual freedom and management flexibility.” This line of thinking usually runs from the CFO down to the lowest levels of the organization.

To be fair, there is merit to the arguments made by finance leaders since the forecasting, budgeting and analysis processes are mostly art and some science. The intent of the FP&A work process redesign effort is to keep the best parts of the current finance planning process but add to it the rigor of a structured and better planned end-to- end work process.

There are large, companies spending billions and billions of dollars, which have little more than a word-of-mouth process when it comes to budgeting or forecasting. This does not imply forecast or budget controls are not in place, though at times this may expose a company to stewardship issues. But there is clearly an opportunity to drive efficiency and effectiveness in the financial planning process by driving more structured FP&A process planning.

The next process flows are simple examples of a pre- and post-FP&A work process redesign.

FP&A End-to-End Design – Current to Future State

Pre-FP&A Work Process Design

Post-FP&A Work Process Design

 

This is a relatively simplistic example of a work process related to requesting, approving and managing of a marketing budget. There are only nine steps in this work process, so it seems quite impossible to make this more efficient or effective. However, at least four of these nine steps need to be challenged and potentially eliminated or redesigned.

After a deeper exploration and understanding of this work process, there are a number of step changes and improvements to the current process. These changes eliminate 33% of the steps and make the process significantly more efficient.

The following changes can be made to this work process:

  • Approval of Internal Orders – The internal orders are master data fields in SAP that are used to collect event level spending in  SAP. For some reason, finance approved the creation of internal orders. Finance leaders approved the internal orders because “they always did it this way.” If management does not know why they are doing something it is easy to eliminate the step.
  • Finance Sent Actuals to Marketing – The roles and responsibilities are unclear between finance and marketing. Finance was playing a report generation function versus providing marketing return on investment analysis to the business. An automated report tool could be developed to send the actual data to marketing.
  • Marketing Sent Budgets to Finance and Finance Requesting More Funding – Finance believed their role was to both collect the budget updates and communicate the new budget requests during budget meetings. This work could be best done by the marketing function.

There was incremental work added to finance. The finance team was asked to provide more comprehensive marketing event return on investment (ROI) analysis. However, the benefit of greater marketing event analysis far outweighs the additional effort (and the organization was more motivated).

The Benefits of Redesigning FP&A Work Processes

The following chart shows the most mentioned FP&A work process issues mentioned by senior finance leaders during an American Productivity and Quality Center (APQC) survey from March 2012.

FP&A Work Process Redesign Addresses “8 of 9” Issues

The issues mentioned in the APQC study are consistent with the issues seen across most companies and industries today. Jeffrey Wuest, managing partner of SynFiny Advisors, confirmed during a recent APQC Finance Management webinar (10 Dec 2014, https://lnkd.in/ecWsvqp) that he has seen “similar FP&A process issues while working on transforming Procter and Gamble processes and other clients over the past couple decades.”

The redesign of the FP&A work process creates a number of key benefits:

    • Stewardship – The combination of reduced cycle time and increasing visibility of the financial plans will inevitably drive improved stewardship. Of course, this needs to be combined with the creation of policy, which is synchronized with the work process.
    • Spend Less or Avoid Overspending on Projects – When work process is combined with tool and organization design, the project has a much greater chance of success. Thus, projects will not overspend.
    • Deliver Higher Productivity – The elimination of unneeded work process steps will drive increased productivity or—when combined with organizational redesign—can create center of expertise capability in the technical financial planning creation. This can enable productivity in excess of industry standards from 1% to 3%.
    • Deliver Higher Quality – By creating more visibility to the work process, the providers of the key inputs will have better understanding of the use of their data. This will drive a higher level of quality in the data (or at least, provide more visibility to steps in the future). This increased visibility to the process will allow for data-based discussions with those functions whom provide low quality inputs to the process.
    • Improved Business Decisions – The elimination of unneeded steps in the process, causing greater visibility to input and output of data, and creation of expertise within all functions data will be easier to understand and utilize. Instead of simply sharing data, it will allow for sharing insights about the data, which provides improved business decision-making.

These benefits are a direct result of focusing on broader and deeper end-to-end FP&A work process redesign efforts. For most companies, the benefits will by far outweigh the cost and efforts of the FP&A process redesign.

About SynFiny Advisors

We value experience. Our advisors leverage decades of Fortune 50 experience in financial planning & analysis and shared services design and operations to deliver breakthrough solutions for our clients. This collective experience has been distilled into a proprietary consulting methodology that enables our advisors to quickly apply their experience to the specific objectives of our clients, leading to faster and longer lasting value creation.

For more information, please visit synfiny.com.

About The Author

Jeff Wuest

Jeff Wuest is a business strategist and visionary, and he helps companies to achieve extraordinary growth. Today’s environment demands the right blend of innovation, strategy, and risk-taking to define new opportunities, be first to market and lead the industry. Jeff works with leaders to push the boundary of what they think is possible, make big strategy bets without risking it all, and create an environment where they can achieve 10x growth. Jeff ’s expertise includes strategic planning, rapid market expansion and operational scaleup. He’s an entrepreneur with experience mentoring startups and emerging companies, as well as a strategic advisor to multi-billion-dollar corporations. Jeff has over 30 years of experience developing game- changing strategies across different industries, categories, products and services. His focus is helping forward-thinking leaders succeed with breakthrough strategy, execution and operations. Currently, Jeff is the CEO of SynFiny Advisors, a global business consultancy firm, which was recognized by Inc Magazine’s, Inc. 5000, and ranked in the top 500 of the nation’s fastest- growing private companies.

The Struggles of Sustainability

Funny how words change their meaning over time. Back in the 1300s “silly” started out meaning “blessed” and “pious”. Over time its meaning morphed to “innocent” to “harmless” to “pitiable” to “weak” to “foolish”. Quite a step down from “blessed”.

Makes me think of the word “sustainability.” It went from meaning “the quality of being sustainable at a certain rate or level” to “the property of being environmentally sustainable.” Now admittedly environmentalists will recite the “three legs of the stool” and say that, whatever you do, it has to be sustainable environmentally, socially, and economically. But nobody really means that. Not really. The economic part of sustainability is just lip service. The environment trumps.

Think about all of the third-party groups out there that have set up criteria for sustainability performance in different industries. You will be hard pressed to find one that includes EBITA or PROFIT along with emissions and carbon neutrality as measures of sustainability. Take the “circular economy” mantra as an example. Having a business model that reuses everything, generates no waste, and is environmentally neutral, and socially beneficial is a wonderful idea. If you are starting with a blank sheet of paper. But virtually all businesses are based on a XXth century business model that does not measure—let alone value—those outcomes. And virtually all businesses don’t have the luxury of foregoing revenue—let alone profit—while they reinvent themselves. As a result, the expectation being placed on business leaders is akin to being asked to redesign a car. While you are driving it. At ninety miles an hour. At night. On a dirt road winding along a cliff. Narrow road. Very narrow. In a snowstorm. Economically sustainable—don’t be silly.

Having said all that, becoming environmentally sustainable is a bona fide objective. Certainly no one can disagree with it. So how can business leaders tackle it, while staying economically sustainable? I’m going to propose two broad themes that are going to define sustainability success in the XXIst century. And there’s good news bad news, depending upon what kind of leader you are.

Life Cycle

“Sustainability” is in the eye of the beholder and there are a lot of beholders out there eyeing your business. At its broadest, it holds you accountable for the environmental and societal repercussions of your business. But the devil is in the detail.

Environmental performance is not a single metric but rather a basket of individually complex, interdependent variables: climate change, acidification, eutrophication, photochemical smog formation, human, marine and aquatic toxicity, to name just a few. Improving one often exacerbates one or more of the others.

Societal performance has been interpreted to cover everything from child labor to human health threats. And you are held accountable for all of these impacts regardless of where they arise in your value chain — from raw material extraction to manufacture to use to end-of-life of your products.

How to even begin?

At the risk of sounding trite, you can’t measure where you are going until you know whence you came. You need a baseline. What does that entail? Everything. I mean EVERYTHING. From the raw materials you purchase through the manufacturing of your products through their useful life and their end-of-life fates. All inputs and outputs. Energy, materials and water in, waste and emissions out. Transportation as well. Everything. For every facility. You need data if you are going to measure change. This isn’t just writing a check. This is ongoing headcount and measurement systems, standardized across all of your facilities. Sustainability costs.

 

 

Why can’t we just focus on climate change and call it a day? Isn’t that the most critical issue? Ok, let’s look at climate change. Without throwing several pages of citations at you, many very credible environmental thinkers argue that the only way we are going to avoid climate change catastrophe is through the adoption of (wait for it) nuclear energy. So why don’t we? Well, there’s Three-Mile Island, Chernobyl, and Fukushima to start. And what are they about? Human, marine and aquatic toxicity. Tell me, how much climate change is worth how much toxicity? And there’s the rub. Sustainability isn’t just a single thing. It is a basket of different environmental impacts: climate change, eutrophication, photochemical smog formation, human-marine-aquatic toxicity, to name a few. And each of these impacts is defined by three axes: duration (seconds or centuries), severity (sniffles or death), coverage (your living room or the entire planet). And they are all interrelated, witness nuclear energy. You decrease one but, in doing so, you inadvertently increase another. Whack-a-mole.

The same challenge presents itself across your lifecycle. In more than one case, I have seen an increase in environmental impacts during manufacturing that has produced a product with dramatically reduced environmental impacts during its useful life. The net effect is a reduction of environmental impacts. But if you are only looking at smokestacks and drainpipes, you won’t see it. And many environmental groups look only at these, or only at climate change. So you don’t see the whole picture until you do a lifecycle analysis of your business. Sustainability costs.

Ok, so you’ve got a lifecycle analysis. But, as we’ve shown, the impacts are interrelated as are the phases of the lifecycle. So, what’s the right thing to do? Every good decision has a bad consequence, or so it seems. Welcome to adulting. I don’t remember saying that this was easy. But making hard decisions based on sound data is always better for the environment as well as your business than the alternative.

Schöpferische Zerstörung

What the heck is that? This is Joseph Schumpeter’s theory of creative destruction. Basically, for anything new and novel to emerge, it has to destroy whatever it is replacing. Nothing new, really.

Except that… things are changing.

Think about how business planning currently works (or doesn’t).

In theory…

A good business strategy provides a future plan of action to generate profit extending beyond the life cycle of a product or service. It is based upon insights born of an ongoing, thoughtful study of the:

  •  Strategic Landscape: critical uncertainties that will change the future business environment in which the industry operates, such as disruptive technologies, societal shifts, demographic changes, economics, etc.
  • Market Landscape: critical uncertainties that in the future will impact and modify the industry in which the business currently competes.
  • Competitive Landscape: critical uncertainties about the future behavior of individual industry players.

Using geopolitical terms, a more accurate way to describe these three categories are as forms of “intelligence,” since intelligence is the acquisition and application of knowledge.

How far into the future a strategy looks depends upon the length of the product or service life cycle. For software, it may be as little as two years. For toothpaste, it may be five years. For oil, it may be 50.

Strategy isn’t a static event, but rather a continuously evolving process altered as new intelligence emerges that impacts the insights upon which the strategy is based.

In practice…

Too many business strategies suffer from one—if not all—of the following flaws.

  • Shortsighted Intelligence: Too many strategies fixate on the immediate competitive landscape, concern themselves too late with the mid-term market trends and completely ignore the larger long-term business environment change. Remember Kodak?
  • Misdirected Metrics: Given bad intelligence, too many strategies set performance objectives based upon internal performance without regard for how the market pie is growing, shrinking or shifting. From this comes the ubiquitous hockey stick strategy. Since internal performance objectives are unrelated to external market behavior, they are rarely met. This breeds cynicism which, in turn, undercuts employee commitment to meet next year’s hockey stick.
  • Forced Process: Too many strategies result from a “hot house” process: an intense annual session in a hotel or corporate conference room where everyone involved loses the will to live before the cake is finally baked. And after it is baked, it goes on the shelf and no one bothers to eat a slice until the next year’s bakeoff. No time is afforded for teasing insight out of the intelligence and there is certainly no expectation that reflecting upon that intelligence is an ongoing, every-day part of a manager’s position description.
  • Top-Down Culture: Too many strategies are imposed from the top down rather than constructed from the bottom up. They are based largely upon what the CEO or the VP feels is going to happen and are unencumbered by solid intelligence analysis. Invariably, the false assumption is made that the underlying business model is durable which, in turn, leads to misdirected metrics. The sad irony is that the more successful a business has been in the past, the harder it is for leadership to see that the business model may fail in the future. This is partly due to arrogance, but it is also due to laziness. Good planning is hard brainwork, and it is far easier to mindlessly continue doing what has always been done. “Managers do things right. Leaders do the right things….”⦁ [1]

“Houston, we have a problem…”

All of this would be bad enough if nothing else was happening. But something else IS happening.

Up until recent years, business environment and industry change—with a few exceptions—was evolutionary. This gave businesses the luxury of time to react and course correct before it was too late. 

That is no longer the case. The rate of change has accelerated in virtually every industry, fueled by a perfect storm of societal forces and disruptive technologies. The data already shows the consequences of this acceleration. In 1935, the average lifespan of a Fortune 500 company was 90 years. In 2016, it was just 18[2]. Between 1970 and 2015, the average lifespan of all publicly traded companies nearly halved[3]. Unlike the Fortune 500, midmarket companies have never had the luxury of a deep planning bench. The accelerating decline in longevity makes strategic planning more important today than ever before. Companies no longer have the luxury of time to react; increasingly they must anticipate if they are to survive, let alone prosper. We are approaching a maelstrom of Schöpferische Zerstörung.

So, how does a business cope with this whirlwind of change? On the societal side, how do you digest and prepare for deflation, urbanization, and deglobalization, as well as changing consumer and employee behavior? On the technological side how do you cope with 3D printing, nanotechnology, automation, new materials, the Internet of Things, big data, artificial intelligence, blockchain, synthetic biology, and digital manufacturing?

Consider the business environment and market ramifications of a declining population as an example. A growing body of demographic experts now believe that global population will peak in our lifetimes—and then decline[4]. What happens to your business—to your industry—when there are fewer young workers with different career aspirations, markets are shrinking and the majority of consumers are over the age of 50? 

Digesting strategic, market, and competitive intelligence to forecast this future is hard. More adulting required.

A Perfect Storm… Societal Change

  • Health & Wealth—increasing wealth and greater longevity
  • Urbanization—dramatic urban population growth in the developing world
  • Deflation—shrinking, ageing populations
  • Deglobalization—increasing political unrest within developed world working classes
  • Consumer Behavior—shifting developed world consumer patterns
  • Employee Behavior—shifting  millennial employee expectations

Technological Disruption

  • Energy—growing cheap ubiquitous off-grid energy
  • Automation—changing the role of labor
  • 3D printing—changing how things are designed and where they are made
  • Nanotechnology—changing the scale at which things are made
  • New Materials — expanding material performance attributes
  • IoT+BigData+Analytics+AI — increasing insights to be gained from data
  • Digital Factory — redefining how manufacturing is done
  • Blockchain — redefining how transactions are done
  • Synthetic Biology — redefining how things are designed

 

Takeaway

So what do these two cosmic themes mean for your business? Well, here’s the good news bad news. We talked about the near impossibility of retooling an old XXth century business model to accommodate the expectations of sustainability. The good news bad news is that your old XXth century business model is on its way to being destroyed by XXIst century disruptive forces. If you don’t reinvent yourself, your competition will do it for you. Soon. And, in reinventing yourself, you have the opportunity to factor in sustainability as part of your core business design which includes profit.

I don’t remember saying that this would be easy.

How to Move FP&A Roles to Shared Services

Most senior finance leaders ask, “Why would I want to move financial planning and analysis (FP&A) work to shared services when the work is so essential to the success of the business?” True, FP&A is crucial to the business – but like all functions, it can be streamlined to achieve even better results.

There are a couple of responses to the question of whether moving FP&A to shared services is a good idea:

  • The work moving to a scaled FP&A organization has little to do with the real business analysis or decision-making. The work that will move is what is already manually done today, typically inefficiently, and definitely does not improve business decision-making.
  • The move of transactional work away from the business actually improves results. This is attributed to the fact the business can focus externally on competition and growth building activities versus internally on highly technical and transactional FP&A tasks.

The creation of FP&A shared services provides significant benefits to a company. It enables more effective and efficient creation of the technical financial planning process. This is the direct result of focusing resources only on the technical tasks. At the same time, the FP&A resources remaining in the business centers are able to focus on analysis and insights to grow the business.

The closest comparison to FP&A technical work moving to shared services is related to the accounting profession. The creation of globally scaled organizational design in accounting has been going on for three decades.

Background

In the past 30 years, accounting has transitioned from local accounting completed by accountants booking entries from the city country, or region of the world where they live and work, to local accounting completed by accountants sitting in regional service centers booking entries for legal entities somewhere in the world. Many times, the accountant has never even visited the country where the legal entity is domiciled; he/ she is simply handling transactional accounting for their company in the most cost effective and efficient manner possible.

How has this been possible? Professor Gary A. Giroux of Texas A&M University has a keen interest in accounting history and frequently writes about the rapid development of technology, which has allowed for the monumental change in accounting. Through technology, accountants can now sit in any location in the world. They can communicate and transact accounting through the use of technology (like SAP, Oracle, etc.) with any sales office, regional headquarters or global headquarters of their company. However, technology only partly explains this change. There are other enablers required for technology to facilitate this approach to accounting, including:

  • Centralized organizational design
  • Globally standard work processes
  • Globally standard policy

Convincing Arguments – Now What At Are The Thee Options?

If the similarities between accounting and FP&A are accepted, it is not difficult to imagine a future where FP&A transactional activities occur in a centralized organization located onshore or offshore in shared services or outsourced.

There are a number of organizational design decisions that need to be made prior to moving into shared services.

The initial decision is related to whether to outsource or insource the work. Although this should be a relatively value-driven discussion it typically becomes more of a company culture choice. To avoid the inevitable politics of this choice, a request for proposal process that pits the creation of an internal shared service organization versus outsourced is recommended. At a minimum, there will be financial data to support the decision.

Once the decision to outsource or insource is made, there are a number of centralized or decentralized and onshore or offshore options to assess, as outlined below. These options need to be assessed versus the respective company culture and overall global footprint. However, the pros and cons outlined above should give some guidelines to help in the assessment process.

Setting Up Shared Services

For discussion purposes, assume a company decides to set up a centralized, offshore shared services location. There are two different organizational designs related to this: front and back office.

Front office key design elements:

  • This organization is responsible to interact directly with the ‘center of expertise’ or the end users.
  • This organization owns direct interaction with the back office – the organization that owns the collection of inputs, processing of data and sending out final reporting or analytical data.
  • These roles require a number of skills that may be difficult to develop in the typical shared services. Extended business trips, travel to the business centers, or some combinations are often required to build the right level of expertise.
  • These roles must be adept at the systems or tools, understand the end-to-end work process, have a working knowledge of the business, be able to participate in business process changes, and communicate clearly and concisely with the business resources.
  •  These roles will typically be located in a service center that is in a time zone-friendly location for easy communication with the end users.

Back office key design elements:

  • This organization is responsible for interacting directly with the front office. In some specific ‘rule-based’ activities they interact directly with an end user.
  • This organization owns the collection of inputs, processing of data and sending out final reporting or analytical data.
  • These roles require specific skills that may be difficult to develop in typical shared services. However, it is possible to leverage the setup of the front office to develop and train the back office. (“Train the Trainer” concept: Front office is trained on the ground, in the business location, and goes back to the service center location to train the back office.)
  • These roles are the key experts on the systems or tools, understand the detailed workings of the end-to-end work process, have a limited knowledge of the business, have an ability to participate in system or tool testing, and communicate clearly and concisely with front office on technical issues.
  • Roles are located in a service centre; time zone is less critical since they interact directly with the front office. In most situations, the back office can be consolidated into one location around the globe. This may require the use of double shifts in some locations.

Unfortunately, there is further end-to-end organizational design required to best operate a shared service structure.

 

About SynFiny Advisors

We value experience. Our advisors leverage decades of Fortune 50 experience in financial planning & analysis and shared services design and operations to deliver breakthrough solutions for our clients. This collective experience has been distilled into a proprietary consulting methodology that enables our advisors to quickly apply their experience to the specific objectives of our clients, leading to faster and longer lasting value creation.

For more information, please visit synfiny.com.

About The Author

Jeff Wuest

Jeff Wuest is a business strategist and visionary, and he helps companies to achieve extraordinary growth.

Today’s environment demands the right blend of innovation, strategy, and risk-taking to define new opportunities, be first to market and lead the industry. Jeff works with leaders to push the boundary of what they think is possible, make big strategy bets without risking it all, and create an environment where they can achieve 10x growth.

Jeff ’s expertise includes strategic planning, rapid market expansion and operational scaleup. He’s an entrepreneur with experience mentoring startups and emerging companies, as well as a strategic advisor to multi-billion-dollar corporations. Jeff has over 30 years of experience developing game changing strategies across different industries, categories, products and services. His focus is helping forward-thinking leaders succeed with breakthrough strategy, execution and operations.

Currently, Jeff is the CEO of SynFiny Advisors, a global business consultancy firm, which was recognized by Inc Magazine’s, Inc. 5000, and ranked in the top 500 of the nation’s fastest growing private companies.

The Value of FP&A Transformation

This is the second in a series of articles that explore how to justify, plan and execute FP&A transformation. In the first article, we discussed how to justify a transformation project. In this article, we’ll look at how FP&A transformation delivers real, measurable value to the firm.

According to the most-respected international association of accountants and financial professionals, the US Institute of Management Accounting, when the right infrastructure is in place for an organization to use FP&A in an unbiased manner, FP&A can “provide consistent, reliable, relevant, and meaningful information.”* Yet, in most companies, the FP&A process tends to be non-standard, and executed with minimal planning, coordination or standard methodologies. This lack of a strong infrastructure surrounding FP&A leads to inaccuracy, ineffectiveness and inefficiency.

However, by intentionally developing and rolling out a synchronized financial planning process, your organization can quickly deliver best-inclass value

The SynFiny Advisors’ Definition of FP&A

  • Critical value creation processes, which require a deep understanding of finance, modeling, data systems and processes, and accounting, all married to deep business knowledge.
  • Typically combines financial and nonfinancial data as required to create strategic and operational financial plans.
  • When done well, these processes are a clear competitive advantage and thus are viewed as critical by a firm’s owners and senior leaders.

Measures FP&A can Improve

As your organization plans FP&A transformation, consider the following key metrics used to determine how well financial planning, budgeting and analysis tasks currently function. We’ve pulled this list from both industry reports (e.g., Hackett, American Management Association) and our own client experience. If your company’s current metrics fall below best-in-class in any of the metrics in this table, implementing FP&A transformation could bring significant value to your bottom line.

*2014 article at Association of Financial Professionals: https://gtnews.afponline.org/

What value can FP&A transformation bring to an organization?

FP&A can bring your company a variety of benefits:

  • Higher productivity by reducing spending on FP&A staffing
  • Faster and more confident decision-making can deliver sales growth
  • Identification of systematic ways to lower cost of goods
  • Optimize inventory levels and free up working capital

The building blocks of FP&A value come from many different elements, not simply the impact of improved productivity or better cost management. The value comes across the income statement and balance sheet. It’s both human and dollars and cents.

For example, FP&A allows a company to link financial strategies with operational goals, which benefits several areas:

  • Productivity (+15% to +30%): Centralizing the process for forecasting, budgeting and analysis produces a significant benefit in productivity.
  • Increased sales (+1 to 5%): Giving business teams more timely and accurate customer demand data, fulfilment and sales results allow them to make better decisions.
  • Decreased costs of goods or inventory (-1% to -5%): Business teams get better data on inventory, supply, demand and costs helping them optimize all these factors.
  • Salary and benefits savings (-15% to -30%): Centralizing the work improves productivity.
  • Potential wage arbitrage savings (-20% to -30%): Redesigning the finance organization to better assign “business knowledge” and “technical” tasks can allow the firm to shift technical F&A work to lower-cost locations.

Other benefits can also accrue, including:

  • Improved data cycle time (< 50%): Reporting cycle time can often be cut in half, giving better data to business teams faster.
  • More timely and visible data (2x faster): Better and faster data, provided with more understanding supports faster business decision-making.
  • More reliable and sustainable forecast accuracy: Clearer and better FP&A work processes enables better and more accurate forecasts.
  • Improved stewardship: Better financial plans are more transparent and better understood by decision makers and stakeholders, helping reduce forecast or budget surprises that could create control issues.

The bottom line is transforming FP&A can truly help your bottom line. With more timely and accurate data, your business can better understand and act on operational opportunities, from capturing new sales to achieving lower costs. Improved forecasts and data reporting also help companies better understand and manage adversity. For instance, reducing the impact of customer financial problems, adjusting to commodity price swings or addressing currency exchange issues.

FP&A Transformation makes for better finance and accounting organizations!

In addition to bottom line benefits, an FP&A transformation effort allows firms to deeply examine and clean-up work processes. Tasks and transactions that have “always been that way” get a needed review. Inefficient and ineffective work processes that have been baked into the organization for some time get their turn under the microscope.

Cleaning out these procedural cobwebs and getting to common, well documented and designed tasks and processes unlock FP&A’s bottom line impact. They also help the finance team spend more time on higher value analytical support and improvement work.

Firms, large and small, are getting behind FP&A transformation

Across industry, better and more standard financial planning processes are emerging. The American Productivity and Quality Center (APQC) has published FP&A capability white papers from US companies as diverse as Mutual of Omaha, Discovery Communications, Infosys Ltd., UnderArmor, AT&T, Clarient Inc., and Intel.

Importantly, transforming FP&A does not have to be a costly or intrusive systems projects. There may be simple and cost-effective options for implementing FP&A transformation. Future articles will look at some of these options in more detail.

If you believe your company could benefit from improved productivity and streamlined financial processes, the advisors at Synfiny Advisors can help.

You can find out more about us at synfiny.com

Meet the Practice Leader

Jeff Wuest

Jeff Wuest is a business strategist and visionary, and he helps companies to achieve extraordinary growth.

Today’s environment demands the right blend of innovation, strategy, and risk-taking to define new opportunities, be first to market and lead the industry. Jeff works with leaders to push the boundary of what they think is possible, make big strategy bets without risking it all, and create an environment where they can achieve 10x growth.

Jeff ’s expertise includes strategic planning, rapid market expansion and operational scaleup. He’s an entrepreneur with experience mentoring startups and emerging companies, as well as a strategic advisor to multi-billion-dollar corporations. Jeff has over 30 years of experience developing game changing strategies across different industries, categories, products and services. His focus is helping forward-thinking leaders succeed with breakthrough strategy, execution and operations.

Currently, Jeff is the CEO of SynFiny Advisors, a global business consultancy firm, which was recognized by Inc Magazine’s, Inc. 5000, and ranked in the top 500 of the nation’s fastest growing private companies.