Collaboration Is The Key To Success For FP&A

November 16, 2020

“Enlightened trial and error succeeds over the planning of the lone genius”

…to quote Peter Skillman from the famous IDEO shopping cart project. If anything sums up what it takes for FP&A to succeed in the future, it is this. Thinking that a skilled financial analyst can build a financial model (often in Excel) that can give all the answers is outdated. Only through collaborating internally in FP&A and with business stakeholders can we derive the proper insights needed for decision-making. We will explore the modern collaboration model for FP&A in this article.

In the past when all you had was Excel or bulky planning systems there probably was no better way to collaborate. However, cloud and collaborative tools have long changed the game for FP&A. Now we also need to meet the increased demands of senior stakeholders who want answers in real-time. There simply is no time to wait for FP&A to go back to an Excel model and try to figure it out. We must do this differently. Let us dig into how.

The online collaboration model

In an offline world where financial models are owned by individuals in a department and often created in Excel, there is not much room for collaboration. While file sharing is possible it would often crash the model since it struggles being worked on even by a single modeler. Furthermore, as we showed with George’s story, it does not work well when senior management changes the assumptions and wants to see the impact on the spot. A final issue is that these offline models typically are difficult to explain to others. Often it is only the modeler who knows how it works and should the modeler leave the company it loses its purpose.

It is time to move the models online which eases collaboration and often makes it easier to make changes on the spot. Geographically dispersed teams can now also easily collaborate in the same model. Not to mention in this age of working virtually, online seems to be the only approach that makes sense. This is not to say Excel could not be a part of the solution. In fact, any solution that you choose must be able to deliver on most of these criteria.

  • Fast and easy to use
  • Allow for multiple users working in the model at the same time
  • Have fast recalculation times for showing changes on the spot
  • Integration with Excel for easy ad-hoc analysis
  • Be intuitive to build new models when needed
  • Be visually appealing for communication with non-finance stakeholders

You can likely add more criteria, but these would be some of the main ones. This will allow the whole FP&A team, even in large organizations, to collaborate around planning, scenario-modeling, and ad-hoc analysis. Moreover, it will make it more feasible to share and implement best practices.

What does your collaboration model look like?

Most companies have realized during COVID-19 that their collaboration model was outdated, and they had to scramble to keep up. Too often Excel was used as a manual consolidation tool of input from across teams or entities. This was a slow and error-prone process that halted management’s decision-making. It is probably not unfair to say that in many instances we failed to be the business partner we needed to be. To some extent, the collaboration model was at fault.

Hopefully, most have managed to build something better in the past six months. However, much has been built under pressure and could probably be done a lot smarter. Hence, once we have beaten COVID-19 it is time for reflection on what changes we need to make. We would advocate that you should upgrade your collaboration model and give your teams the tools they need to deliver on management’s expectations!

What does your collaboration model look like today? Have you moved into an online environment where users can collaborate or are you still dependent on the lone genius? If the latter, now is the time to make a change. Do not get caught next time we are hit by unexpected changes. Business leaders expect us to learn from what we have experienced in 2020 and come out much stronger in 2021. Are you ready for that?

This blog is presented by ValQ in collaboration with Anders Liu-Lindberg, Business Partnering Institute. If you have any good cases for ValQ or stories to tell about how such solution can benefit you, please reach out to us.  

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