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Financial planning & analysis the urgent need for new skills

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  • 1. Thank  you  for  Financial Planning & aEending.  We  will   begin  at  11:00  a.m.   (Central  Time)  Analysis: The Urgent Need Audio  is  available  for New Skills through  your   computer’s  speakers   or  through  direct   dial-­‐in  Wednesday,  October  17,  2012   If  you  have  technical   quesQons  or  need   assistance  contact  Moderator:  Mary  Driscoll   GoToMeeQng  Special  Guests:     customer  support  at:   (888)  259-­‐8414  or    Susan  Serven  and  Jim  Robertson   +1-­‐805-­‐690-­‐5751  
  • 2. Housekeeping  Audio  is  available  through  your  computer  speakers  or   through  dial-­‐in.  All  lines  are  muted.      You  can  submit  quesQons/comments  at  any  Qme.  We  will   address  all  quesQons  during  the  Q&A  session  at  the  end  of   today’s  presentaQon.    Links  to  the  slides  and  recording  will  be  made  available   and  sent  to  all  aEendees  via  e-­‐mail.  ©2012  APQC.    ALL  RIGHTS  RESERVED.   2  
  • 3. Financial Planning & Analysis:The Urgent Need for New SkillsOctober  17,  2012  Moderator:  Mary  Driscoll,  APQC  Special  Guests:  Susan  Serven  and  Jim  Robertson  
  • 4. Today’s Featured Guests Susan  Serven     Co-­‐Founder,  EPM  Channel   Jim  Robertson   FP&A  ExecuQve                                            ©2012  APQC.    ALL  RIGHTS  RESERVED.   4  
  • 5. Discussion Points  The  gap  between  the  potenQal  value  that  Finance   can  deliver  and  the  value  now  being  delivered.    Higher  order  analyQcal  skills  and  capabiliQes  are   needed  for  finance  to  be  a  stronger  business  partner    Leaders  emphasize  development  of  sof  skills  as  well   as  hard  skills    FP&A  mission,  design  issues,  and  evolving  skill  sets    What  are  “Big  Data”  analyQcal  skills  and  why  develop   them  within  Finance?    ©2012  APQC.    ALL  RIGHTS  RESERVED.   5  
  • 6. Finance is Not Optimized only 5% of respondents say their Finance organization is delivering Game Changing Value today 2%   5%   17%   Game-­‐changing  value   Significant  value   Make  a  difference   41%   Add  value  here  and  there   Not  very  much  value   35%   N  =  117  Over 50% say the valuedelivered is not significant  ©2012  APQC.    ALL  RIGHTS  RESERVED.   6  
  • 7. Finance Says: We Can Do Much More 1%   42% say they could make a 8%   major impact   42%   Game-­‐changing  value   Significant  value   Make  a  difference   49%   Add  value  here  and  there   N  =  119  ©2012  APQC.    ALL  RIGHTS  RESERVED.   7  
  • 8. Is Finance Considered aBusiness Partner? What makes these different from those considered business partners? No;  21%   Yes;  79%  ©2012  APQC.    ALL  RIGHTS  RESERVED.   8  
  • 9. Q. How satisfied do you think business managers are with the analyticalsupport provided by your finance organization? "Line  Managers  Are  Sa2sfied  with  the  Analy2cal   Support  from  Finance"   70%   60%   60%   50%   40%   36%   30%   20%   10%   0%   Where  Finance  is  Perceived  as  a  Partner  in  the  Business   Where  Finance  is  Not  Perceived  as  a  Partner  in  the  Business   ObservaQon:  Companies  that  are  not  seen  as  a  partner  in  the  business  aren’t  providing  the   level  of  analyQcal  support  their  internal  clients  are  looking  for.   ©2012  APQC.    ALL  RIGHTS  RESERVED.   9  
  • 10. Q. What kind of investments has your finance organizationmade in developing and retaining finance talent?ObservaQon:   In   those   companies   where   Finance   is   a   partner   in   the   business,   investments    have  focused  on  SoA  Skills  Training,  Encouraging  Finance  Employees  to  Learn  the  Business  and  in  enabling  Technology.   ©2012  APQC.    ALL  RIGHTS  RESERVED.   10  
  • 11. FP&A: Tough Positions to Fill 70%   64%   60%   FP&A   50%   AccounQng/Financial  reporQng   Tax   40%   37%   TransacQonal  processing  (e.g.  AR  or   30%   AP)   Treasury   20%   14%   Internal  audit   10%   7%   7%   6%   5%   Other   0%   N  =  115  ©2012  APQC.    ALL  RIGHTS  RESERVED.   11  
  • 12. FP&A Mission: Helping People MakeBetter Decisions (part one)Strategic  Planning/ExecuQon   Financial  Analysis    CoordinaQng/leading  the  process     CoordinaQng/leading  the  process    Developing  business  plans  to     Return  on  Investment  –  e.g.  projects,  IT   achieve  strategic  objecQves     Profitability  analysis  –  market,  customer,    Modeling  financial  outcomes  of   strategic  iniQaQves   product,  business    IdenQfying  KPI’s  which  link  to  the     Variance  analysis   strategy     Capital  expenditures     KPI  Tracking  and  ReporQng     IdenQfying  iniQaQves  driving  KPI’s   and  linking  to  budgets   Other  Areas     M&A  support  –  due  diligence,  Financial  Planning   integraQon    Annual  Planning  –  driver  based     Planning    Single  and  mulQ-­‐quarter     Product  development  modeling   forecasQng    Tools,  methodologies,  templates   (ConQnued)     ©2012  APQC.    ALL  RIGHTS  RESERVED.   12  
  • 13. FP&A Mission: Helping People MakeBetter Decisions (part two) New  Business  Support     Pricing  analysis     Sales  administraQon     Contract  review     Business  cases     Product  development  modeling   Managing/CoordinaQng/ReporQng   Business  Performance     Monthly/Quarterly/Annual  Business   Reviews     Investor  RelaQons  Support     ReporQng/analysis  packages  for   internal  and  external  customers   CompensaQon     IncenQve  compensaQon  design/ measurement  for  annual  and  long   term  plans     Sales  compensaQon  plans  and   administraQon  ©2012  APQC.    ALL  RIGHTS  RESERVED.   13  
  • 14. FP&A Design ConsiderationsCompany   Processes  and  Systems     External     What  is  currently  working/not     Industry  Maturity   working  well     CompeQQveness     How  strong  is  IT  group     Smart  or  Dumb  CompeQtors     Availability  of  and  access  to     Rate  of  Change   transacQonal  and  operaQonal  data     Customers     ERP     Customer  needs     Planning  sofware     Products     Current  reporQng  in  place     Technology     Ownership  structure  and   expectaQons       Internal   FP&A  Team     Where  is  company  in  its  life   cycle     Current  Team     How  do  leaders  make  decisions     Strengths,  weaknesses     Approach  to  accountability     Ability/interest  to  stretch/grow     Like/Dislike  of  process     OrganizaQon     Where  are  pain  points     Where  does  FP&A  report?     How  predictable  is  the  business     Centralized/Decentralized     RelaQonship  with  AccounQng  ©2012  APQC.    ALL  RIGHTS  RESERVED.   14  
  • 15. FP&A Skill Sets and Characteristics  Personality     FuncQonal     Process     Curiosity     AccounQng     Change     Precision     Strategy   Management     Broad  perspecQve     Understands     Persuasion     Service-­‐oriented   business  and     How  business  is     Flexible   drivers   managed     Good  judgment     Financial     PoliQcs     IT     Managing     CreaQve     Systems     Leading     Meets  commitments     Cross-­‐funcQonal     Lifelong  learner     Match  tool  to   problem   ©2012  APQC.    ALL  RIGHTS  RESERVED.   15  
  • 16. ©2012  APQC.    ALL  RIGHTS  RESERVED.   16  
  • 17. Financial  Planning  and  Analysis   Financial  Planning,  and  Analysis  ©2012  APQC.    ALL  RIGHTS  RESERVED.   17  
  • 18. What’s the Big Deal about Big Data?  What  is  big  data?     “Big  Data  are  high-­‐volume,  high-­‐velocity,  and/or  high-­‐variety  informaQon  assets   that  require  new  forms  of  processing  to  enable  enhanced  decision  making,  insight   discovery  and  process  opQmizaQon.”  1      What  are  some  examples  of  big  data?       Wal-­‐mart  handles  more  than  1  million  customer  transacQons  every  hour,  which   is  imported  into  databases  esQmated  to  contain  more  than  2.5  petabytes  of   data  —  the  equivalent  of  167  Qmes  the  informaQon  contained  in  all  the  books   in  the  Library  of  Congress     Facebook  handles  40  billion  photos  from  its  user  base.     FICO  Falcon  Credit  Card  Fraud  DetecQon  System  protects  2.1  billion  acQve   accounts  world-­‐wide.  2     1  Gartner,  2012   2  Wikipedia  ©2012  APQC.    ALL  RIGHTS  RESERVED.   18  
  • 19. Big Data Requires a New Approach  What’s  different  about  working  with  Big  Data     Dataset  size  is  beyond  the  capabiliQes  of  commonly  used  tools  to  capture,  manage,  and   process  the  data.     AnalyQcal  techniques  to  understand  paEerns  in  Big  Data  are  complex  and  include  approaches   such  as  cluster  analysis,  regression  analysis,  paEern  recogniQon,  senQment  analysis.     At  the  end  of  the  day,  data  analysis  must  be  balanced  with  criQcal  thinking  and  judgment  to   make  good  decisions  –  no  black  boxes  allowed.    What  are  the  impacts  of  Big  Data  on  finance  talent  and  skills     “Once  (companies)  have  data,  they  really  need  people  who  can  manage  it  and  find  insights.”  1     Finance  is  a  natural  home  for  building  enterprise-­‐wide  analyQcs  capabiliQes     Many  finance  professionals  are  comfortable  using  data  to  help  make  business  decisions;   big  data  requires  advanced  skills  in  research  design,  analyQcal  approaches,  and  tools.     People  naturally  turn  to  Finance  for  help  with  data     Finance  has  the  business  understanding  and  relaQonship  skills  to  solve  problems  with   Big  Data    “Companies  that  want  to  make  beEer  use  of  the  data  they  gather  should  focus  on   two  things:  training  workers  to  increase  their  data  literacy  and  more  efficiently   incorporaQng  informaQon  into  decision  making,  and  giving  those  workers  the  right   tools”  (2)    1  Dan  PorQllo,  Greylock  Partners,  “Harvard  Business  Review,”  October,  2012.  2  “Harvard  Business  Review,”  April,  2012.  ©2012  APQC.    ALL  RIGHTS  RESERVED.   19  
  • 20. “Putting Analytics to Work is Improving Performance inKey Business Domains using Data & Analysis1” New  Tools                                                                                                                              Require  New  Skills   1    Davenport,  Harris,  and  Morrison,  AnalyQcs  at  Work,  p.  1   ©2012  APQC.    ALL  RIGHTS  RESERVED.   20  
  • 21. New Certification Programs Cer2fied  Corporate  FP&A  Professional   Cer2fied  Analy2cs  Professional  (CAP)    Sponsor:    AssociaQon  of  Finance     Sponsor:    InsQtute  for  OperaQons   Professionals   Research  and  Management  Science     Knowledge  Domains    Knowledge  Domains    Inaugural  exam  February  and  March  2014    hEp://fpacert.afponline.org/ FPA-­‐12_Brochure.pdf     Inaugural  exam  at  2013  INFORMS   Conference  on  Business  AnalyQcs  and   OperaQons  Research,  April  7-­‐9,  2013,  San   Antonio,  Texas.     hEp://www.informs.org/Build-­‐Your-­‐ Career/AnalyQcs-­‐CerQficaQon   ©2012  APQC.    ALL  RIGHTS  RESERVED.   21  
  • 22. Make Time For Analysis  Fix  the  foundaQon:  Data     MulQple  sources     Data  integrity     Master  data  structure     Common  business  language    Stop  doing  low  value-­‐added  acQviQes     Changing  packages  monthly     Irregular/non-­‐standard  management  processes     Fire  drills  only  when  necessary     Variance  analysis     Making  budget  decisions  once/year  ©2012  APQC.    ALL  RIGHTS  RESERVED.   22  
  • 23. Benefits of Developing “Big Data”Analytical Skills in Finance  Company  PerspecQve     CompeQQve  advantage  from  knowing  things  your   compeQtors  do  not  and  capitalizing  on  this  knowledge     First/early  mover  advantages  sQll  available  but  window  is   closing     ConQnued  acceleraQon  of  data  capture  and  storage     Can  be  argued  finance  is  the  best  place  to  seed  this   skill  set     Improved  retenQon  as  analyQcs  professionals  want  to   stay  and  conQnue  solving  challenging  problems    Finance  Employee  PerspecQve     Learn  related,  cuxng  edge  skill  sets     Contribute  anywhere  analyQcs  can  be  useful     Expand  career  path  opportuniQes  beyond  finance      ©2012  APQC.    ALL  RIGHTS  RESERVED.   23  
  • 24. In Conclusion •  Finance’s  role  in  analyQcs  will  surely  grow  as  business              decision-­‐makers  become  more  adept  at  modeling  the  economic                impacts  of  their  choices   •  New  skills  sets,  tools,  and  new  career  paths  within  Finance  are  needed   •  Companies  that  make  Finance  a  place  where  Big  Data  analyQcal  skills              are  nurtured  will  aEract  and  keep  the  talent  they  need  to  grow  and  prosper      ©2012  APQC.    ALL  RIGHTS  RESERVED.   24  
  • 25. For More  Visit  www.apqc.org/knowledge-­‐base  to  see  more   Financial  Management  content.    Have  a  suggesQon?  Let  us  know  what  topics  you   would  like  future  Webinars  to  cover  at   www.apqc.org/feedback.  ©2012  APQC.    ALL  RIGHTS  RESERVED.   25  
  • 26. ©2012  APQC.    ALL  RIGHTS  RESERVED.   26