Propelling Your Business Forward With Integrated Financial Plans

Brian Kalish

Part 3 in the “Intelligent FP&A” series

Today’s business world is significantly different from that of just a few years ago, and the velocity and magnitude of change and uncertainty will only accelerate. We are operating in an environment of high “VUCA” – volatility, uncertainty, complexity, and ambiguity.

Today’s decidedly intricate enterprises may comprise multiple businesses, product lines, departments, and geographic locations. Aggregating all of the associated data required for financial reporting, forecasting, budgeting, analytics, and long-term strategic planning presents an enormous obstacle. One way organizations have overcome this challenge is to embrace a collaborative business planning philosophy.

When organizations are not planning in sync

Traditional approaches to financial planning are no longer sufficiently flexible or sophisticated to enable rapid response to dynamic changes in the business environment. As a result, financial plans can end up disconnected from the day-to-day reality of the organization and ultimately, the financial planning process becomes an exercise in playing catch-up rather than a path to desired results. Experience has confirmed that financial planning often suffers from inadequate direction and integration. Failure to adapt financial planning processes to reflect the changing environment can lead to a number of issues:

  • Financial plans are not linked to downstream decision-making.
  • There is no continuity across planning cycles, which inhibits plan quality.
  • The tools that link the processes are inadequate.
  • Financial planning is an exercise of aggregating bottom-up submissions.
  • Inputs and assumptions are inconsistent.
  • There is too much reliance on “gut feel.”

The root cause of these challenges (not just the symptoms) is what we are attempting to cure with collaborative business planning. Instead of failing to address why are we planning in the first place, we should be able to produce a great strategic plan that is connected to planning, budgeting, and forecasting.

We want our capital budgeting, long-range planning, annual planning, strategic and operational planning, and management reporting to be integrated. We want to be able to execute real-time scenario-planning. We want to help multiple business areas translate the financial strategy into their individual plans and targets. And we want everyone to be speaking the same language.

When organizations are planning collaboratively

By incorporating this philosophy with a robust planning and analysis system, organizations can connect the financial planning function (led by the FP&A group) across all of the business units and functions. This is the way to improve operational alignment and financial performance. A collaborative approach can link strategic and operational planning with financial planning.

The benefits of this approach are multifold. It can:

  • Provide an integrated planning platform
  • Generate a holistic understanding of performance drivers and identify top financial drivers
  • Quantify the financial impact and interdependencies across planning alternatives
  • Optimize strategic planning and resource allocation
  • Quantify financial risk
  • Increase business flexibility
  • Help answer what-if scenarios

Think of your company as a shell in a competitive rowing event. Each department is paddling in various directions, with various amounts of power. Once collaborative business planning is incorporated with the FP&A team as the coxswain, and with performance drivers in place and in sync across the departments, everyone rows in the same direction at the same cadence. The shell shoots right across the water.

Learn more

We will be hosting a number of events all over the world, where we will be discussing and diving deeper into these critical issues and topics. In addition to our Global FP&A Roundtable series, we hope to see you at Financials2018 EMEA in Prague, October 16– 18, and the Financial Excellence Forum in New York City.

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Brian Kalish

About Brian Kalish

Brian Kalish is founder and principal at Kalish Consulting. As a public speaker and writer addressing many of the most topical issues facing treasury and FP&A professionals today, he is passionately committed to building and connecting the global FP&A community. He hosts FP&A Roundtable meetings in North America, Europe, Asia, and South America. Brian is former executive director of the global FP&A Practice at AFP. He has over 20 years experience in finance, FP&A, treasury, and investor relations. Before joining AFP, he held a number of treasury and finance positions with the FHLB, Washington Mutual/JP Morgan, NRUCFC, Fifth Third Bank, and Fannie Mae. Brian attended Georgia Tech in Atlanta, GA for his undergraduate studies and the Pamplin College of Business at Virginia Tech for his graduate work. In 2014, Brian was awarded the Global Certified Corporate FP&A Professional designation.