The open secrets of forward-thinking teams
The EPM function can serve as a strategic partner to the business. But making that happen demands an overall performance framework that keeps sight of the basics and includes appropriate governance. At the same time, teams must embed new skills and capabilities to create rapid insights and action.
When considering the characteristics shared by forward-thinking EPM teams, there are a few in particular that stand out:
1. They see data as the new currency
FP&A leaders treat data as an asset. Most organizations sit on a mountain of ‘dark’ data — information in emails and texts, in contracts and invoices, and in PDFs and Word documents — that is hard to access and use for analysis. Estimates are that some 80% of enterprise data is dark. Understanding what data is available and valuable is a key first step.
While models and algorithms may underpin the work of the FP&A function, decision-makers need information in a digestible format to see the next steps. Technology offers support through advanced visualization and commentary generation, but people with the right business skills are also needed to deliver insights in actionable form.
2. They combine technical skills with liberal arts
The ideal EPM team functions as a center of excellence. Its people mix analytics and data science with critical reasoning to make sense of numbers in the business’ broader context, which helps them envision future scenarios. Members need technical and modelling skills ideally drawn from different industries to build sophisticated prediction models. And they must have advanced tools, such as analytics workbenches, that allow them to find the right algorithm for each purpose.
But while data scientists and financial specialists can focus on analytics, logic, and facts, recognizing the value in data — and whether it makes sense — also requires creativity, imagination, and visualization. This is not the traditional EPM skill set that is influenced by a history of auditing and compliance. To successfully transform, CFOs need to bring additional skills into existing teams with retraining, new talent, fresh ideas, and non-traditional skills.
To explore whether organizations are expanding their skill sets, Genpact studied the makeup of EPM teams in leading corporations. We found that a growing number of companies are hiring specialists — data and behavioral scientists, economists, and even anthropologists — into FP&A teams. And at the individual level they place greater emphasis on soft skills like consulting, negotiating, and influencing.
Today’s FP&A professionals must think beyond the numbers to deliver value in EPM.
3. Digital technologies and analytics empower them
To support greater collaboration and deeper insights, finance teams are investing in digital technologies and analytics that also free people to focus on exploring what the numbers mean, not just what they are. Digital technologies play many roles:
a. Data ingestion technologies collect, cleanse, and integrate structured and unstructured information from all relevant sources, whether internal or external
b. Artificial intelligence technologies, such as natural language processing, analyze and make sense of data. And natural language generation automates the first level of commentary writing, which reduces the time it takes to create reports
c. Predictive analytics forecasts what may happen, while prescriptive analytics identifies the best result within a range of choices given various factors
d. Rather than produce a 300-page report, data visualization allows EPM teams to make insights engaging and digestible, enabling better and faster decision-making
Combining these characteristics allows finance teams to provide the business with the insights it needs to make strategic, action-focused decisions