Anatomy of an FP&A Transformation: How We Did It

Why is Financial Planning and Analysis transformation so important? When you look at the post-pandemic landscape, the themes, the action items that businesses are focusing on are really coming out of FP&A.

Finance teams are in the spotlight! It's our moment to really step up and lead organizations through this most challenging and difficult time. FP&A transformation is critical to give us the ability to take that lead. Prophix just published a survey (Bridge the Gap) that shows some pretty big gaps that Finance teams need to fill — but, you know, every place we’re coming up short is just an opportunity to do better.

Here’s a real-life story that can help inspire you to get started.

My FP&A Transformation Story

For me, financial transformation really distills down to four key topics: The right people, process, partnerships and platform.

I’ll explain what I mean with a story of a win that I was especially proud to be a part of. I was working with a SaaS company that sold a full CRM solution to non profit Chambers of Commerce and other associations. I was charged to revamp their FP&A process. Here’s how we did it.

Looking Ahead, Not Keeping Score

My goal was to lead the Finance department away from being scorekeepers, and to transform them into valued advisors in the business.

Now, what I consider a “scorekeeper,” are people that just report the numbers out to the organization. Valued advisors can communicate actual insights in a highly efficient and accurate way, helping direct and drive the business forward.

So we embarked on an 18-month journey of transformation. We had a lot of different touch points inside the business. We talked with a ton of different stakeholders. And really, like I said, we distilled it down to those four key areas of people, process, partnership and platform.

Pillar one: People

The first step in the transformation was a Human Capital Planning roadmap. This human capital strategy was able to align people's individual functions to the overall business performance that we were looking to achieve.

Now, planning a human capital strategy is something that is typically outside of Finance’s wheelhouse, but it’s a good example of how the transformation strategy has to encompass a larger view than just the Finance team. So bringing in those stakeholders was a first step.

For Finance specifically, it was all about sharpening our focus on how we go to market with our solution to help serve our customers. When I originally was brought in the organization, it was a very scorekeeping mentality. Scorekeepers are typically low on financial efficiency and low on business insights. And I was brought in to move our accounting, finance and FP&A team to be high on their financial efficiency, to be able to advise the business. To do that, they had to become more aware of the entire operation, not just Finance.

We did that by making sure we had state of the art technology, and that we had aligned processes. And then we worked to make sure that our people had the skill sets and outlook they needed to succeed.

Pillar Two: Process

For any kind of process transformation in Finance, the first thing you need to focus on is getting your month-end close as streamlined and as efficient as possible. So for us, we had a focus of reducing our close from twelve days down to four. With those extra eight days, we didn't spend it going through the monthly, what was in the past; we spent the time focused on how that past can inform the future.

We spent more time on analysis, on the business partnership, and on the forward-thinking side of the business.

The second key process we implemented was a full enterprise business application solution inside of our organization. Some people were using Google Sheets, some people were using Excel, our business application suites were all across the board. That made collaborating and communicating across the organization really inefficient.

Ultimately, we were able to centralize all of our processes down to one version of the truth around all of our KPI tracking and reporting. That really laid the foundation to communicate, collaborate and connect across all of our enterprise, not just accounting or Finance.

Pillar Three: Partnerships

We needed to develop really deep, strategic partnerships with our leaders inside and outside of Finance, as well as our external partners. You have to make sure everybody inside the business (and your vendor partners) are connected to the overall vision that you're driving.

So it was working with the sales and marketing group, it was working with operations, it was working with client success. It was working with our implementation groups to help them connect to the vision that we were driving into organization.

So during that 18 month window, due to these interdepartmental partnerships, we in Finance were able to lead two rounds of securing investors. That was a very, very big win for us, to be able to fund our operational strategies and secure the future of the business.

The second key win is that for the first time in the organization's 30-year history, Finance was able to work with sales, marketing, client success and finance to create a three-year business strategy. Working together with the other departments let everyone know that we’re not thinking short-term with our FP&A transformation, that there is a vision for the business that extends well into the future.

We also worked across the organization to develop the OKR (objective and key results) processes. We aligned objectives and key results and pegged them to people's compensation on a quarterly basis, around four key elements that we know increase revenue.

Adding that incentive directly tied to compensation was a crucial step, because it let people know that they have a stake in the success of this transformation. When people can’t connect their daily tasks with the overall organizational vision and strategy, you lose investment, connection, and that interest in helping the company succeed.

So I think from a partnership perspective, that was a key win for us: Getting that “what’s in it for me” in a quantifiable, measurable way tied to universally agreed-on objectives and KPIs.

Pillar Four: Platform

I think a common fallacy you see in FP&A is they throw in more people to solve problems. We didn’t have that luxury; we were a lean team without the resources to hire a bunch of new folks to pick up the slack.

Instead, we had to take a step back and say, ”how can we leverage technology to help answer 80 to 90% of these issues? How can we focus our people on the right aspects of driving value inside of the business?” Our business intelligence and analytics platform helped us automate and do more with what we had.

One unexpected side benefit is that we were able to leverage our BI and analysis platform into a product solution that we sold to customers. Finance was able to put our stake in the ground and say “Hey, we’re revenue producing! We’re not just a support function and we’re not just a necessary expense.” That really helped cement the department’s new role in the organization.

Bringing it Together

In just a year and a half, we were able to take a Finance team from scorekeepers to valued advisors, connected to the lifeblood of the business and working together with partners across the company. We upskilled our people, made processes more efficient, cemented partnerships that got everyone invested, and put it all on a platform that ultimately became a revenue driver for the business.

For me, these are the key points for how we did it:

1. We got the C-suite to share the vision. Their buy-in was essential to getting it off the ground and seeing it through.
2. We connected our strategy with our tactics - the vision to the day-to-day practice.
3. We kept in tight communication with employees and helped them see the value.
4. We standardized our processes on an integrated platform.

The end result for that SaaS company? Less than 18 months after our transformation, they were acquired. And the CFO at the time said, “Chris, if we hadn’t embarked on this Finance transformation, there’s no way we could get to the point of being acquired by a competitor. We would not be in business, we would not have sharpened our focus, we would never have reached that stage.” I can’t think of a better endorsement than having the CFO basically say, “FP&A transformation increased the value of the business and led directly to our success.”

How can you level up your Finance team? Check out Prophix's Bridge the Gap report to find out.