How FP&A Can Win Executive Friends, Influence Corporate Strategy, and Improve Shareholder Returns...
Transcript of How FP&A Can Win Executive Friends, Influence Corporate Strategy, and Improve Shareholder Returns...
How FP&A Can Win Executive Friends, Influence Corporate Strategy, and Improve Shareholder Returns 40% By Doing What They Do Anyway
WEBINARTranslating Finance to Strategy
Agenda
The Strategy – Execution GapFinance at the NexusCommon Challenges to FP&ATranslating Finance to StrategyCalculating the ROI
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Big thinking, marginal results
Most companies allocate the same resources to the same business units year after year. That makes it difficult to realize strategic goals and undermines performance. Source: McKinsey & Company study (2012)
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Strategy and targets are usually not linked
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Execution isn’t easy
Strategies are a lot easier to communicate than to execute
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Agenda
The Strategy – Execution GapFinance at the NexusCommon Challenges to FP&ATranslating Finance to StrategyCalculating the ROI
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Finance is expected to execute strategy
Here’s the Corporate Strategy
Context.Thanks. Great context for the
budget.
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How do I translate this into budgets which maintain
continuity and fit into corporate targets?
We look for ways to reduce the gap
Source: Gartner/FERF presentation at FEI Summit Leadership Conference, May 2013
CFO’s Know Technology to Support Decision Making is Inadequate
Source: modified template from CPM Methods consulting engagement 2012
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…So we revert to what we know
Agenda
The Strategy – Execution GapFinance at the NexusCommon Challenges to FP&ATranslating Finance to StrategyCalculating the ROI
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Guidance is usually too limiting
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Leadership
Business Units ---- Functions ---- Regions
Finance
Can you make me a slide that shows how this budget
reflects our strategic goals?
All budget requests should be within 3%
ExecutiveWhat’s the point?
Make guidance more specific
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Data can be ambiguous
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Leadership
Business Units ---- Functions ---- Regions
That’s okay, just do your best
How confident are you in this assessment of our corporate
goals?
“4” means higher than
average correlation
Here is our consolidated outlook…
“4” means strong
correlation
“4” means itis not a “5”
We’re not sure how to provide
scores to correlate with
corporate goals?
Minimize ambiguity; maximize the systemic
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Circumvention is too easy
The gap makes it easier for strong business leaders to get supplemental budget, effectively widening the gap through end runs.
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If I’m going to hit these revenue targets I need some margin
relief and more budget
I can probably find this in the corporate
pot somewhere
Make sure end runs can be put in context
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“Improvements” are incremental
“Improved” Planning Tools, Business Intelligence Tools do not address the gap
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Based on your improved analytics, here’s the new and improved corporate
strategy presentation
Thanks. Even better context for
the budget
Still not sure how I translate this into budgets which
maintain continuity and fit intocorporate targets?
Link strategic goals and budgets
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Agenda
The Strategy – Execution GapFinance at the NexusCommon Challenges to FP&ATranslating Finance to StrategyCalculating the ROI
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Bidirectionally translating finance and strategy
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FPG is unique solution
ConstructLibrary
Dashboard/Scorecard
Modeling
Preconstructed Queries
BI, CPM, ERP Funding ProfilesFeature Function
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Strategy Visualized
Agenda
The Strategy – Execution GapFinance at the NexusCommon Challenges to FP&ATranslating Finance to StrategyCalculating the ROI
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There is a material impact on the bottom line
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Using Funding Profiles helped us gain actionable insight into our strategic plan and helped us bridge our long-range plan with our operating budget.
Vice President of Finance and Investor Relations at Advent Software (NASD:ADVS)
Companies that evaluate the performance of business units, acquire and divest assets, and adjust resource allocations based on each division’s relative market opportunities will be worth an average of 40 percent more after 15 years.
A typical ROI case
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