If you’ve mastered the basics of FP&A reporting and planning, it’s time to increase the strategic value of your efforts with operational data. In fact, this is the crux of Stage 2 on the roadmap to finance maturity that we outline in our eBook, “The Finance Leaders’ Guide to Scaling Strategic Finance.”
First, ask these questions for self-assessment:
- Have you settled into the right cadence for reporting in your unique situation, based on factors like market changes and your industry?
- Does your finance team have a solid understanding of the goals and struggles of other business units?
- Can our stakeholders access the latest financial reports and budgets themselves, without having to go through the finance team?
Take note of where you answered ‘no’ or ‘...not really’. Those are the next steps and opportunities for your team to grow in strategic finance maturity.
What Operational Data Do You Need?
You are after the non-financial data that has the most impact on revenue and performance. Chances are your stakeholders are already tracking these in the form of Key Performance Indicators (KPIs).
In a B2B context, key operational data often lies in customer relationship management (CRM) software, like Salesforce, or another database. Relevant operational data is specific to a company’s business model. Example KPIs in the SaaS sector include leads, bookings, deal size and velocity, and customer acquisition cost (CAC). Retail businesses live and die by metrics like average purchase size, inventory turn, sales per location, etc.
Why Should You Engage With Operational Data?
When you understand operational goals and KPIs – what drives revenue and makes the organization tick – you’re in a unique position to analyze their impact on the P&L statement. For example, you’ll see how a lagging sales hiring process or fewer marketing leads impact revenue goals. This knowledge improves your forecasts and your ability to advise business leaders on their next steps to adapt or solve these problems.
How well do you know your sales plan & sales team’s pain points? A working knowledge of those plans helps you tee up strategic questions during discussions and notice opportunities to mitigate risk together. Divisions can naturally form between departments and lead to miscommunication and missed opportunities, but you can step in with data-informed guidance to the executive team at crucial decision points.
“True alignment begins by really caring about the business – and not just the numbers. You have to have a deep understanding of what it takes for an operating manager to achieve his or her goals.”
Quy Dong, Head of Customer Success at Stratify
So how can your FP&A team consistently bring valuable insights to the table? Here are three practical goals you can set to align finance with other business units.
Your Top 3 Goals to Understand and Incorporate Operational Data
- Shift to collaborative planning alongside other department leaders. Strategic Value = Build trust between business units and show the value of a proactive finance team
- Understand business operations and key performance drivers (KPIs). Strategic Value = Forecast more effectively and support business growth
- Increase your agility with scenarios and modeling. Strategic Value = quickly guide stakeholders toward data-driven decisions
5 Opportunities to Grow Your Finance-Operations Connection
These are five key areas where you can practically improve your FP&A function and leverage the operational insights you need for success.
Data
Now is the time to incorporate sales data into your planning. Aim to have your ERP, HRIS, and CRM data integrated directly into an FP&A tool where stakeholders can directly collaborate with you on their plans. Joining this data together into one system saves you time and shows you the impact headcount or revenue assumptions have on your financial plan. You’ll be in a better position to provide insights into operations.
Collaboration
You now have the opportunity to leverage more business data to understand, analyze, and monitor performance drivers. As the finance leader, you’re becoming the glue between different departments to help with decision-making.
Improve and strengthen the business partnerships you are building by adopting a ‘lean in’ attitude and showing interest in other teams’ work rhythms, goals, and priorities.
As a result, your partners in the business will be more likely to share key business intelligence and support your planning efforts. You’ll hear about key hiring decisions or plans to enter a new market before or as they’re happening – not after!
Agility
Evaluate your reporting processes to identify the bottlenecks that prevent you from delivering more value. Examples of a bottleneck could be:
- Data inaccuracies or gaps
- Clunky legacy systems that slow down data aggregation and reporting
- Stakeholders need to go through you to access reports on their spending or other data
When you let an FP&A platform generate reporting packages automatically, your team can focus on higher-value analysis.
A self-service FP&A platform like Stratify enables you to back off of your traditional role as gatekeeper of financial data and let budget holders access the latest reports and analysis themselves. Access controls ensure they see only the data they need. This improved transparency gives other business units more ownership of budgets and metrics, too.
Frequency of Reporting and Forecasting
Be sure that your systems, processes, and communications support you to identify gaps in your plan, communicate across departments, adjust spending, and reallocate quickly to adapt to shifts in the market or your strategy. Agile organizations are moving to a state of continuous forecasting without the delays of gathering and reconciling data.
Technology
Technology is a vital support at this stage of strategic finance. An FP&A tool like Stratify will automatically join your business data from disparate systems (general ledger, HRIS, and CRM), enabling faster and easier analysis. It can also support you with:
- Increased forecasting sophistication, which helps you identify possible operational changes that could translate to financial gains.
- Faster scenario planning, to present business partners with different options and act decisively in the midst of market uncertainties.
You’re Not Alone on This Journey
Strategic finance isn’t an overnight destination; it’s a journey that will affect every aspect of your FP&A process. That’s why it’s helpful to think of strategic finance maturity as a continuum, so you can identify your starting point and then narrow your focus on the next right steps for your organization.
That’s why we created the Finance Leader’s Guide to Scaling Strategic Finance.
Incorporating operational data is the focus of ‘Stage 2’ in the guide. It’s part self-assessment and part roadmap that outlines 3 stages of FP&A maturity. Each stage has unique goals for you to aim for, along with inventory questions and tips from finance leaders who’ve been in your shoes before.
Download your FREE copy to gain confidence in becoming more strategic and make FP&A the financial heart of your business.
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