9February 2018Financial Modeling and ForecastingThe forecasting process is where words like "dupliciling" are invented, which means to duplicate and reconcile. This is a common practice where the FP&A team is asked a week early for a forecast of the monthly forecast, and then a complete reconciliation when the forecast of the forecast is different from the final forecast.To create a value-added forecasting process, start by focusing on a single monthly forecast with analytically backed insights and recommendations that enable the ability to course-correct and improve performance. Next, evolve to a simplified and driver-based modeling infrastructure where underlying assumptions are clear and can be tested. Less time on baseline updates equates to more time analyzing and incorporating the latest available information.Bring Stakeholders TogetherThe third guiding principle in redesigning the FP&A operating model is to simplify and improve the effectiveness of the forums in which FP&A distributes information. In other words, actionable insights must get into the hands of those making the decisions if they are going to bring value to the organization.Performance Measuring and ReportingOnce performance goals and priority initiatives are established, the organization can implement comprehensive weekly business reviews that serve four purposes:1. Provide a Regular Progress ReportEstablish a system for scoring enterprise priorities such as tracking planned performance versus actual performance and tracking progress on key initiatives. 2. Review Insights and RecommendationsEnable improved performance and course-corrections by leveraging information and insight from an analytics learning agenda.3. Drive AccountabilityPut the ownership of performance and progress reports back in the hands of the accountable executive who is responsible. Clear and measurable goals make it difficult to hide from the numbers.4. Create a Culture of Collaboration and ProblemSolving"Off-track" and "at-risk" initiatives will be an opportunity for cross-functional leaders to come together and solve problems as a team which can dramatically improve the pace of progress.FP&A as a True Strategic PartnerBy redesigning the operating model to improve, evolve, and bring stakeholders together, FP&A can emerge as a true strategic partner within the organization. Improving the value proposition positions the company to lead with data, information, and insight. Evolving to value-added processes will dramatically increase stakeholder engagement. Bringing the stakeholders together breaks down silos and creates a culture of collaboration. Using these three guiding principles, businesses gain FP&A as a true strategic partner as they leverage the power of insight and working together to improve their results. An effective structure is one that allows stakeholders to focus on the business questions they need answered, with the FP&A team procuring the data, completing the analysis, and circling back with insights and recommendations
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