The fast-moving nature of today’s global business environment forces enterprises to react to events instantly, or they risk being left behind by their competitors. This puts significant pressure on the FP&A function in particular. In order for all departments across an organization to formulate and action an appropriate response to fresh challenges as they develop, as well exploit any new opportunities that may present themselves, decision makers must have the correct financial information to hand so they can understand the implications for the bottom line. Technologies such as the cloud have made this far easier, but as important as it is to access the information, far more important is the ability to understand it.
In order to ensure that those who need this data and understanding have it, many leading corporations are implementing FP&A Centers of Excellence (CoE).
A Center of Excellence is a group of people who collaborate in order to drive best practices in a specific focus area for successful business outcomes. In the case of FP&A CoEs, this is led by both finance teams and IT departments, who provide staff with the training, reusable knowledge, disciplines, and best practices in finance and data.
The benefits of this are many and persuasive. It promotes alignment between IT, finance, and other departments for better communication, higher rates of efficiency, and reduces costs from maintaining budget, plan and forecast consistency, and use. Routine planning and analysis workflows are also used to streamline integration across the organization, and it helps to increase the success of finance technology and its deployment by helping them deliver more value, at less cost, quicker.
Speaking at the recent FP&A for High Tech Summit in San Francisco, Karen Caggiano, FP&A Center of Excellence Director at Intel, discussed how the technology giant had built out their own FP&A CoE.
Intel has about 2600 finance employees and 300 FP&A analysts worldwide. Caggiano views their Center of Excellence as bringing together the optimized business process and the system, focusing primarily on forecasts. They have four main tools. These include BPC, which is the main tool, and Business objects, which is the reporting tool, used by the close and reporting group. There is also a homegrown tool called HAATT (Headcount, Allocations, and Actuals Tracking Tool). One of the things that’s really important for Intel’s CoE is that they have different products and different product schedules, so they need to know how many and what resources are deployed on those projects at any given moment. HAATT tracks these by name and is tied into different project hierarchies, showing how many people and for what duration are working on different projects. The fourth tool is Master Data Governance, which is used for project hierarchy. This is basically how they tie together the financials with some of the business unit requirements. Self-service reporting tools such as Power BI are also becoming more popular.
Caggiano’s team is a balance of finance and IT people, with five different areas supporting different parts of the BPC and HAATT tools. A finance manager might be running a particular organization or it could be an IT manager, and they’ll direct the work of a combination of finance people and IT people on a daily basis. This is why it’s called a Financial CoE - because you have finance professionals who can code working agilely alongside application developers to best understand and provide exactly what different business units want, and what they can actually provide. There is also embedded support to offer solutions on the frontline if anyone has any questions about the tools or forecasts, enabling the rest of the department to focus on more technical issues and adding value.
For all of this to work, processes and systems have to support one another. If this is not the case, customers and partners see systems as being non-value add. This is primarily about standardization, as all the CoE’s work is. If teams see a system as being non-value add, this leads them to start asking for custom reporting, but if there is not a process capable of supporting this, they often go unused. Intel’s CoE has subsequently put in a control whereby there has to be a stable business process before the system requirements are identified so they are sure that it is worthwhile to continue with them.
Another process they have implemented revolves around ensuring that there is one source of truth for data. Since resource managers often don’t really care about the data, finance and business group leaders have to spend time collecting and removing garbage from the systems. Intel found that if operations or finance users don’t like the system, they will often only input the final number. This means that when it comes time to show the report to senior management, they often find that there is no evidence to suggest this number is true. Caggiano gives the example of a situation she found herself in with showing the headcount to senior management. A manager needed headcount to add up to 800 per quarter, so they just put that number in judgement. When it came time to show these to senior management, the number did not marry up to expectations and they wanted to delve deeper but couldn’t as it was just the one number in judgement, not the actuals that they’d been collecting month-by-month. This shows that there needs to be standards to ensure the numbers are consistent and robust without having a mess of Excel spreadsheets to go through if you want answers.
Intel’s FP&A Center of Excellence is so successful because they planned carefully and brought in the right people, processes, and technology. This has enabled everyone who uses it to develop both their financial knowledge and technological capabilities. This has led to better decision making, and more agile, thorough, evidence-based decision making processes capable of dealing with events in today’s tumultuous business climate.