1 00:00:05,310 --> 00:00:06,840 Welcome back to Count Me In, 2 00:00:07,140 --> 00:00:10,360 IMA's podcast about all things affecting the accounting and finance world. 3 00:00:11,070 --> 00:00:12,520 This is your host Adam Larson, 4 00:00:12,940 --> 00:00:16,400 and I'm here with you again to preview another insightful conversation about 5 00:00:16,401 --> 00:00:19,760 financial planning and analysis. Here in episode, 171, 6 00:00:19,930 --> 00:00:22,990 Mitch spoke with Larysa Melnychuk about trends in modern FP&A. 7 00:00:23,290 --> 00:00:26,750 Larysa is a leading FP&A professional and influencer. 8 00:00:27,410 --> 00:00:30,950 She held senior roles at top organizations before establishing the international 9 00:00:31,250 --> 00:00:32,710 FP&A board in 2013, 10 00:00:33,040 --> 00:00:36,950 which has since expanded to 27 chapters in 16 countries across Europe, 11 00:00:37,210 --> 00:00:41,860 the Middle East, Asia, Australia, and North America. In this episode, 12 00:00:41,920 --> 00:00:45,020 she discusses how FP&A has evolved and explained some trends, 13 00:00:45,021 --> 00:00:47,340 including XP&A and digital FP&A. 14 00:00:47,690 --> 00:00:51,020 Keep listening to learn more as we head over to the conversation now. 15 00:00:57,730 --> 00:01:02,370 Larysa with your international FP&A board project and speaking with 16 00:01:02,530 --> 00:01:06,210 you previously, I understand you've traveled through many countries, 17 00:01:06,211 --> 00:01:11,050 16 countries. There are 27 chapters for this project, across Europe, 18 00:01:11,200 --> 00:01:14,690 Asia, Australia, the Middle East, North America. You know, 19 00:01:14,691 --> 00:01:19,530 this is a wide covering project when it comes to the topic of FP&A. 20 00:01:19,731 --> 00:01:23,520 So you've obviously seen a lot. You've heard a lot. To start things off. 21 00:01:23,680 --> 00:01:27,400 I would like to first get your definition of modern FP&A, 22 00:01:27,900 --> 00:01:31,120 and how does it kind of vary across these different regions? 23 00:01:33,020 --> 00:01:36,800 Thank you, Mitchell. first of all, thank you for inviting me, to this podcast. 24 00:01:36,820 --> 00:01:41,040 It's especially pleasant, to talk about, trends and FP&A 25 00:01:42,801 --> 00:01:45,510 at the beginning of the year, when we all look ahead, 26 00:01:45,511 --> 00:01:47,950 in order to understand what is happening, 27 00:01:47,951 --> 00:01:50,910 with our environment and with our profession. So, 28 00:01:50,911 --> 00:01:54,510 there are really a lot of definitions, 29 00:01:54,610 --> 00:01:58,790 of FP&A from, different account and boards from, different practices, 30 00:01:58,790 --> 00:02:03,390 practitioners. The one that I really love, it came from one of 31 00:02:05,160 --> 00:02:07,180 our meetings and, it was the definition, 32 00:02:07,200 --> 00:02:11,420 very practical definition from my former CFO at Swiss Re in Zurich 33 00:02:12,010 --> 00:02:12,940 in Switzerland. 34 00:02:12,950 --> 00:02:17,740 This definition he shared at our meeting and, 35 00:02:17,880 --> 00:02:22,620 actually he shared that his company really adhere to 36 00:02:22,621 --> 00:02:25,010 this definition in terms of their FP&A, 37 00:02:31,411 --> 00:02:32,370 so he said that, 38 00:02:32,670 --> 00:02:37,450 FP&A helps to manage the value of the company by five different 39 00:02:37,560 --> 00:02:42,410 ways. First one is, helping to understand the value of the company, 40 00:02:42,411 --> 00:02:45,480 describing extraction steering, 41 00:02:45,880 --> 00:02:50,840 and reporting it to the key stakeholders. So fantastic definition that, 42 00:02:50,841 --> 00:02:53,600 really described, the strategic value of FP&A 43 00:02:57,601 --> 00:03:02,520 and how it helps to sustain the value of the 44 00:03:02,720 --> 00:03:07,120 company. Our FP&A trends definition that we 45 00:03:07,560 --> 00:03:08,720 checked at, 26, 46 00:03:08,721 --> 00:03:13,120 27 different chapters in 16 countries around the globe. It's, 47 00:03:13,140 --> 00:03:17,480 that FP&A is a proactive force that helps to manage, 48 00:03:17,580 --> 00:03:19,110 the understanding of the business, 49 00:03:19,170 --> 00:03:21,830 the understanding of the value of the business. 50 00:03:22,190 --> 00:03:26,350 It supports a decision making process at different levels of organization, 51 00:03:26,650 --> 00:03:29,110 and also it integrate, 52 00:03:29,300 --> 00:03:33,390 organizational processes of strategic financial, and operational planning. 53 00:03:33,391 --> 00:03:37,070 It provides a critical, insights for the decision making. 54 00:03:37,290 --> 00:03:40,220 So this is my answer, what FP&A is. 55 00:03:41,600 --> 00:03:44,140 That's excellent. And thank you for sharing, you know, 56 00:03:44,220 --> 00:03:46,540 I think in today's business environment, 57 00:03:46,920 --> 00:03:51,300 as we really try to focus on our management accountants, right, 58 00:03:51,301 --> 00:03:54,140 the finance and accounting professionals, you know, 59 00:03:54,200 --> 00:03:58,140 that definition must be top of mind because as everything that they're doing, 60 00:03:58,141 --> 00:04:02,530 today on the job, it really needs to be adjusted, you know, 61 00:04:02,531 --> 00:04:06,290 if not totally transformed because of the direction the profession is going. 62 00:04:06,291 --> 00:04:09,890 So to follow up on your definition and what you've shared from your experience, 63 00:04:09,891 --> 00:04:14,410 what are some of the trends and potentially some of the challenges really that 64 00:04:14,411 --> 00:04:15,490 go along with modern FP&A, 65 00:04:17,571 --> 00:04:22,120 as you define and supporting the transition in the evolution of the management 66 00:04:22,121 --> 00:04:22,954 accountants role. 67 00:04:24,600 --> 00:04:25,433 First 68 00:04:33,040 --> 00:04:34,860 of all, the trends I defined, 69 00:04:35,680 --> 00:04:39,420 but this incredible business environment that we all experience. So, 70 00:04:39,421 --> 00:04:43,650 at the moment we are talking about applying and forecasting, 71 00:04:43,680 --> 00:04:48,330 in the environment of high uncertainty and what it means, 72 00:04:48,400 --> 00:04:52,810 it means that, our traditional management accounting methods, 73 00:04:52,811 --> 00:04:55,730 they're working only within this span of predictability, 74 00:04:57,010 --> 00:05:01,960 span where we can really, apply our, variance analysis method, 75 00:05:01,961 --> 00:05:05,160 one plan, one forecast. But, the problem, 76 00:05:05,161 --> 00:05:10,120 with a current environment is that the span of projectability 77 00:05:10,270 --> 00:05:13,200 is decreasing. So we really have to look at different methods, 78 00:05:13,480 --> 00:05:18,200 how we can plan and forecast, and make decisions under, 79 00:05:18,201 --> 00:05:20,840 uncertainty from this point of view, the first obvious, 80 00:05:20,841 --> 00:05:23,830 and very important trend that we observe, 81 00:05:23,831 --> 00:05:26,670 especially for the last two years, it's moving, 82 00:05:27,050 --> 00:05:29,790 not only to scenario planning, 83 00:05:30,030 --> 00:05:34,910 I would call this scenario management. So everything at the moment, it's, 84 00:05:34,911 --> 00:05:36,550 about looking at, 85 00:05:36,730 --> 00:05:41,550 futures and deciding what is going to work. And of course, 86 00:05:50,320 --> 00:05:53,460 organizations that are able, to play, scenarios very quickly, 87 00:05:53,461 --> 00:05:58,440 practically in real time at different levels of the organization, really, 88 00:05:58,580 --> 00:05:59,340 with analytical insights, 89 00:05:59,340 --> 00:06:04,320 those organizations are at the leading stage and they really are at a good pl 90 00:06:04,320 --> 00:06:08,360 ace. We looked at many different case studies and interesting to see that, 91 00:06:08,361 --> 00:06:12,520 practically every organization at the moment are trying to be there. But though, 92 00:06:12,580 --> 00:06:16,750 in order for us to be, at this, stage when, 93 00:06:16,751 --> 00:06:21,190 scenario management works in agile manner, we really have to look at, 94 00:06:21,210 --> 00:06:25,590 the way how to achieve it and, those stages, 95 00:06:25,660 --> 00:06:30,150 those next trends that I would like to outline here. They definitely, 96 00:06:30,280 --> 00:06:34,510 those important trends that are needed in order to be at this scenario 97 00:06:34,511 --> 00:06:35,550 management stage. 98 00:06:36,410 --> 00:06:39,660 I would say that the second one and very important one, 99 00:06:39,920 --> 00:06:43,540 is driver based planning many would say, oh, 100 00:06:43,600 --> 00:06:46,140 we are talking about driver based planning. For 101 00:06:49,260 --> 00:06:53,740 many years, it's not the latest strength, but I would say that, 102 00:06:53,741 --> 00:06:58,250 at this particular environment we are talking about not traditional driver based 103 00:06:58,490 --> 00:07:03,250 planning, where you have all your defined and well known, 104 00:07:03,570 --> 00:07:06,730 drivers, but actually it's trying to look at those drivers, that, 105 00:07:06,800 --> 00:07:10,810 you never realize exist. And now we have to acknowledge that, 106 00:07:10,810 --> 00:07:13,570 they are helping us to define those drivers. 107 00:07:13,571 --> 00:07:16,570 So with help of predictive analytics, for example, 108 00:07:16,571 --> 00:07:21,320 we can define even behavioral factors, you know, 109 00:07:21,380 --> 00:07:21,920 how, 110 00:07:21,920 --> 00:07:26,440 behavior or expectations let's say of our customers will change the way 111 00:07:26,820 --> 00:07:30,120 how we do our business. So let's put it this way. 112 00:07:30,400 --> 00:07:35,240 A driver based planning that is at the next generation driver based planning 113 00:07:35,270 --> 00:07:38,400 that is based on identifying those key driver, 114 00:07:38,850 --> 00:07:42,590 20% of drivers that can explain 80% of the results. 115 00:07:43,170 --> 00:07:47,550 And also those drivers that, we never knew they existed, and, 116 00:07:47,770 --> 00:07:51,750 a lot of things happening now with external drivers as well, not only internal. 117 00:07:51,890 --> 00:07:54,190 So this is the second trend. 118 00:07:54,191 --> 00:07:57,910 The third trend I would say of course, is, digital FP&A. 119 00:08:06,901 --> 00:08:11,740 It's this, predictive prescriptive technologies that are transforming FP&A, 120 00:08:11,800 --> 00:08:15,420 it's artificial intelligence machine learning that helping us to automate things 121 00:08:15,421 --> 00:08:19,970 and also to take into consideration those things that 122 00:08:20,230 --> 00:08:24,130 we can't do with our human intelligence, you know, the 123 00:08:26,370 --> 00:08:30,130 full strength. It's FP&A architecture. What I mean by FP&A architecture 124 00:08:32,070 --> 00:08:35,290 is the combination of process and technology, how, 125 00:08:35,990 --> 00:08:40,010 FP&A can really help, to be this flexible and dynamic. Yeah. 126 00:08:40,260 --> 00:08:44,680 So how to, create this value chain, together with, 127 00:08:44,681 --> 00:08:49,120 combining both technology and process. And of course the fifth one, 128 00:08:49,180 --> 00:08:54,080 it's the role of FP&A digitized, we call this digitized FP&A business partner. 129 00:08:54,540 --> 00:08:56,720 And also we have a lot of emerging roles, 130 00:08:57,420 --> 00:09:00,080 to the classical role of FP&A analysts, 131 00:09:00,081 --> 00:09:02,720 but we will talk about this a little bit later. Mitchell, 132 00:09:03,820 --> 00:09:08,040 those are trends if I'm talking about, the challenges, 133 00:09:08,500 --> 00:09:11,840 those are also quite interesting. The first one, 134 00:09:12,120 --> 00:09:14,320 I would say one of the biggest challenge, 135 00:09:15,210 --> 00:09:17,630 which is very obvious in this environment, it's, 136 00:09:17,820 --> 00:09:21,630 disconnect between strategic financial and operational plans in organization. 137 00:09:21,990 --> 00:09:25,950 Amazingly, 60, 67 organizations. They say that, 138 00:09:26,730 --> 00:09:31,390 they fail they're well formulated strategy, 139 00:09:32,310 --> 00:09:37,180 and only 2% of, leaders, are confident that they will achieve their, 140 00:09:37,880 --> 00:09:41,460 80 or 100% of strategic goals. You see, and obviously, 141 00:09:41,461 --> 00:09:43,060 it's a big problem for organizations. 142 00:09:43,720 --> 00:09:46,780 And I would say that FP&A 143 00:09:52,661 --> 00:09:57,290 has the role to play there, through integrations, through using technology, 144 00:09:57,570 --> 00:10:01,250 through using cascade of drivers and so on. Another 145 00:10:06,291 --> 00:10:10,090 challenge is, of course, reducing span of predictability, 146 00:10:10,320 --> 00:10:14,890 something that already mentioned the third one, it's a traditional budget 147 00:10:16,440 --> 00:10:21,200 and culture. It's still so much embedded in, organizational culture. You see, 148 00:10:21,201 --> 00:10:23,320 so all of those traditional plants, 149 00:10:24,200 --> 00:10:28,800 when people try to negotiate targets and allowances for the next year, 150 00:10:28,870 --> 00:10:33,320 not thinking about, that the environment is changing and of course, 151 00:10:33,950 --> 00:10:37,750 data, quality, data democratization put it this way. 152 00:10:38,070 --> 00:10:41,830 It's one of the biggest problems as well. And another one FP&A talent. 153 00:10:42,050 --> 00:10:46,710 It continues to be a problem to find well-rounded FP&A 154 00:10:46,711 --> 00:10:51,350 professional. And it's not only true here in the UK or in north America, 155 00:10:51,490 --> 00:10:54,630 but actually travel in the globe. I saw that it's happening everywhere. 156 00:10:55,770 --> 00:10:59,460 So those are trends and challenges that we see. 157 00:11:00,600 --> 00:11:03,580 And you did a great job summarizing everything. Thank you. 158 00:11:03,740 --> 00:11:06,820 I know you mentioned briefly that we'll talk a little bit about them, 159 00:11:07,240 --> 00:11:11,420 later on in this conversation. I also know that we spoke before this recording, 160 00:11:11,421 --> 00:11:15,620 and we would love to jump back on again and dive deeper into some of these 161 00:11:15,621 --> 00:11:19,250 trends very specifically, but for today, we will keep things at 162 00:11:21,230 --> 00:11:26,210 a higher level and, you know, to get us to that next part of this conversation, 163 00:11:26,211 --> 00:11:28,570 I'd first like to take a step back, 164 00:11:28,571 --> 00:11:30,050 because when you first started your response, 165 00:11:30,051 --> 00:11:34,410 you talked about how some businesses are still operating with these, you know, 166 00:11:34,411 --> 00:11:36,490 outdated processes, outdated technologies, 167 00:11:36,491 --> 00:11:41,040 even FP&A cultures that are not up with where they need to today to adapt 168 00:11:41,041 --> 00:11:45,400 to these changes. So, you know, from your perspective, from your experiences, 169 00:11:45,401 --> 00:11:48,840 once again, in speaking with these professionals across the globe, 170 00:11:48,841 --> 00:11:53,400 what would be your advice on key steps that are needed to initiate this FP&A 171 00:11:54,220 --> 00:11:58,360 transformation, you know, is there a practical roadmap or a way for, 172 00:11:58,360 --> 00:12:01,720 FP&A professionals to lead and jump on these trends? 173 00:12:03,470 --> 00:12:08,170 It's a great question. And before, I give my nine steps of FP&A 174 00:12:16,710 --> 00:12:18,080 analytical transformation or FP&A transformation, 175 00:12:18,081 --> 00:12:20,760 I would like to share with you, 176 00:12:20,980 --> 00:12:25,920 amazing results that we see similar results on our 177 00:12:26,340 --> 00:12:30,240 FP&A transformation, survey for the last four years. 178 00:12:30,241 --> 00:12:34,790 It started from year 2017. We don't see, 179 00:12:34,791 --> 00:12:39,790 the improvement, in the, percentage of value, activities, in FP&A teams, 180 00:12:40,410 --> 00:12:42,190 you know, so starting from year, 2017, 181 00:12:42,200 --> 00:12:46,350 the time that is spent on value and activity 182 00:12:47,130 --> 00:12:49,070 is only from 20 to 22% 183 00:12:50,650 --> 00:12:53,030 in the last four, five years. 184 00:12:53,130 --> 00:12:57,660 So it's amazing consistency that shows us that the things should be done, 185 00:12:57,661 --> 00:13:02,020 what could be done from the point of view of analytical transformation and in 186 00:13:02,021 --> 00:13:02,701 you that, 187 00:13:02,701 --> 00:13:07,060 we're all in new environment when we 188 00:13:07,460 --> 00:13:11,900 need, to play scenario management techniques, to be flexible and dynamic, to be, 189 00:13:11,901 --> 00:13:16,130 really very quick with the support and decision making. So, 190 00:13:16,131 --> 00:13:20,770 I would say that, even simple steps they would help. And, 191 00:13:20,830 --> 00:13:21,291 I will, 192 00:13:21,291 --> 00:13:25,730 I'm about to tell you about nine steps that we defined at international FP&A 193 00:13:29,651 --> 00:13:32,810 board. But obviously it doesn't mean that they could be, 194 00:13:32,811 --> 00:13:35,320 should be in this particular order. They could be in parallel. 195 00:13:35,321 --> 00:13:39,600 It's a good age year to start at least from the first steps. 196 00:13:39,601 --> 00:13:42,080 You know, the approaches could be different. 197 00:13:42,081 --> 00:13:46,120 So the first one it's about analytical culture, 198 00:13:46,180 --> 00:13:47,720 the interesting thing that, 199 00:13:47,750 --> 00:13:51,560 if organizations still in traditional budget and mindset, 200 00:13:51,620 --> 00:13:54,320 sometimes they're not ready for this incredible change. 201 00:13:54,321 --> 00:13:58,750 So it's all starts from there. It all starts from the top, 202 00:13:58,751 --> 00:14:02,510 data quality, the obvious one, makes sure that, 203 00:14:02,511 --> 00:14:07,510 it's harmonization of data. It's, it's democratization of data. 204 00:14:07,511 --> 00:14:08,830 And many people say, oh, 205 00:14:08,831 --> 00:14:13,150 we have so many problems that when we fix the problems with data, 206 00:14:14,111 --> 00:14:17,220 we, it probably would be in the next three to five years. 207 00:14:17,880 --> 00:14:21,460 I saw incredible examples when it could be done in parallel when, 208 00:14:21,690 --> 00:14:25,860 the short steps of improvement, they really make incredible difference. 209 00:14:25,870 --> 00:14:30,340 So just start and see what you can do, of course, 210 00:14:30,960 --> 00:14:33,980 collaboration, between different parts of organization, you know, 211 00:14:34,000 --> 00:14:37,130 between planning processes, key drivers, we already, 212 00:14:37,790 --> 00:14:41,810 talk about importance and the new age of, driver based planning, 213 00:14:41,830 --> 00:14:46,570 think about the key drivers and not those traditional that you always 214 00:14:46,571 --> 00:14:50,250 had, your models rely on, but those that are really hidden, 215 00:14:50,680 --> 00:14:55,440 we already talk about this. Many people would be, really surprised to see, 216 00:14:55,870 --> 00:15:00,640 how many hidden drivers are there, driver based model. It's an important one, 217 00:15:00,710 --> 00:15:01,720 implement the system, the 218 00:15:13,911 --> 00:15:18,390 six step, automate with team, as much as you can, it's quite easy to do, 219 00:15:18,391 --> 00:15:22,750 with the modern technologies and actually it's even not 220 00:15:23,210 --> 00:15:27,830 so expensive. And of course, create your scenario planning infrastructure, 221 00:15:27,831 --> 00:15:28,870 in order to, 222 00:15:28,871 --> 00:15:32,260 perform this scenario management and of course support decision making. 223 00:15:33,220 --> 00:15:37,180 So those are nine steps. But I would say that, 224 00:15:37,280 --> 00:15:42,220 those steps they're going in circle they're, always, may be in spiral. 225 00:15:42,600 --> 00:15:46,180 Yeah. So you are always after decision making, you adapting, 226 00:15:46,340 --> 00:15:49,300 your it's influencing your analytical culture. 227 00:15:49,380 --> 00:15:54,210 You are working on data quality and collaboration, key drivers, 228 00:15:54,211 --> 00:15:57,170 driver based model system. It's all working, 229 00:15:58,870 --> 00:16:02,690 in circle, I would say, yeah, with the improvement at every stage. 230 00:16:04,310 --> 00:16:08,690 Now, as we take these steps, and as you said, may not be that specific order. 231 00:16:09,150 --> 00:16:10,810 They may happen over and over again, 232 00:16:10,811 --> 00:16:14,200 because there are so many different trends and different things that you need to 233 00:16:14,201 --> 00:16:17,520 adapt to. I'd like to take this opportunity to then now transition, 234 00:16:18,260 --> 00:16:20,440 take a step forward into some of those trends specifically, 235 00:16:20,441 --> 00:16:24,640 going back to 2020 Gartner introduced a new term of XP&A. 236 00:16:25,400 --> 00:16:27,400 And I believe you mentioned that earlier. 237 00:16:27,401 --> 00:16:31,600 So I just want to get a little bit of a summary as far as what is your view on 238 00:16:31,601 --> 00:16:35,110 this, and is this something that's completely new, you know, going back to 2020, 239 00:16:35,111 --> 00:16:39,230 obviously we're now, a couple years out from the introduction of the term, but, 240 00:16:39,231 --> 00:16:42,670 you know, what is your perspective on what this means to today's FP&A 241 00:16:44,271 --> 00:16:45,104 professionals? 242 00:16:45,540 --> 00:16:48,590 Another great question. Thank you. I would say that, 243 00:16:48,770 --> 00:16:52,710 definitely the concept that was introduced, it's not new. 244 00:16:52,711 --> 00:16:57,580 We observed this for at least the last seven to 10 years, 245 00:16:57,600 --> 00:16:59,940 and it's about the fact that, FP&A 246 00:17:05,570 --> 00:17:08,740 is becoming more strategic, and analytical, and it's, 247 00:17:09,480 --> 00:17:10,620 going beyond of just finance function. 248 00:17:10,760 --> 00:17:15,610 So this is the main concept of this extension that it's not financing 249 00:17:15,690 --> 00:17:16,523 in FP&A, 250 00:17:17,070 --> 00:17:21,370 is not the function just consolidate and operational and strategic plans, 251 00:17:21,371 --> 00:17:23,050 but actually it's doing this, 252 00:17:23,290 --> 00:17:27,130 it's collaborating and it's challenging and changing those. 253 00:17:27,830 --> 00:17:32,650 I would say that, other words, other definitions, 254 00:17:32,651 --> 00:17:37,080 that are similar to the concept of expanded planning and analysis. This is this, 255 00:17:38,050 --> 00:17:42,400 integrated FP&A where we have to integrate plan from different levels of 256 00:17:42,401 --> 00:17:45,840 organizations. And at the beginning of this conversation, 257 00:17:46,080 --> 00:17:50,800 I mentioned three important plans that we really have to integrate. 258 00:17:51,030 --> 00:17:55,440 It's strategic, it's financial and operational. And if financial plan, 259 00:17:55,750 --> 00:17:58,360 this is our traditional role. Yeah. With, XP&A, 260 00:18:02,920 --> 00:18:07,640 we are going to strategic function. We are helping with strategic planning, 261 00:18:07,670 --> 00:18:12,630 and we connect in these to financial plan and operational plan and 262 00:18:13,210 --> 00:18:18,070 also help in operational plans, to realize through, one approach through, 263 00:18:18,310 --> 00:18:21,590 analytical, and driver based approach as well. So, and of course, 264 00:18:21,591 --> 00:18:25,190 it's all about, the technology. Gartner mentioned this, 265 00:18:25,300 --> 00:18:29,980 that it's about IML. It's about predictive and prescreen. 266 00:18:30,500 --> 00:18:33,420 Definitely. This is the world that is expanding at the moment, 267 00:18:33,640 --> 00:18:37,620 and we should expect a lot of things happening there. So this is my view. 268 00:18:39,100 --> 00:18:40,180 Well, thank you. And, you know, 269 00:18:40,380 --> 00:18:43,060 I want to continue on some of these trends and things that you've mentioned 270 00:18:43,300 --> 00:18:47,500 previously. So in many webinars, different things that you've talked about, 271 00:18:47,501 --> 00:18:50,650 different things that, you know, the board and the project have discussed, 272 00:18:50,760 --> 00:18:54,810 digital FP&A I know it's very important to our audience, 273 00:18:55,310 --> 00:18:58,730 you know, our members at IMA, a lot of curiosity. 274 00:18:58,731 --> 00:19:03,210 So I'd like to get, your opinion on how AI, you know, 275 00:19:03,910 --> 00:19:08,850 artificial intelligence machine learning has changed FP&A specifically? 276 00:19:10,740 --> 00:19:12,440 Oh, yes. We started to observe, 277 00:19:14,161 --> 00:19:16,960 the first strengths when, FP&A, 278 00:19:25,761 --> 00:19:28,720 started to use a IML, it's happened approximately, 279 00:19:28,721 --> 00:19:31,870 four and a half years ago. I remember, 280 00:19:31,871 --> 00:19:36,750 at one particular meeting in San Francisco, 281 00:19:36,870 --> 00:19:40,350 one of the board members shared the experience, 282 00:19:40,410 --> 00:19:43,510 how they started, to, 283 00:19:43,850 --> 00:19:47,750 experiment with a machine learning forecasting process. 284 00:19:47,870 --> 00:19:50,950 So from year 2018, we created, our non-for-profit, 285 00:19:51,300 --> 00:19:54,180 artificial intelligence machine learning FP&A committee. So, since then we, 286 00:19:54,280 --> 00:19:57,780 the number of meetings, all meetings are, a digital format. And, 287 00:19:57,781 --> 00:19:59,820 I must say that we looked, 288 00:20:00,040 --> 00:20:03,700 the members are coming from different countries and, 289 00:20:04,120 --> 00:20:08,140 different leading organizations, such as Maersk, Amazon, DWI, 290 00:20:09,160 --> 00:20:13,850 government of Ontario, Jaguar, all the Microsoft, 291 00:20:13,851 --> 00:20:15,570 Pepsi and many others. 292 00:20:15,571 --> 00:20:19,650 We looked at a number of amazing case studies and normally what we do, 293 00:20:19,960 --> 00:20:23,290 FP&A professionals and also some thought leaders. We 294 00:20:28,171 --> 00:20:31,490 look at, the trends, how it's changing, 295 00:20:31,560 --> 00:20:34,920 where we are at the moment. What is the gap? 296 00:20:34,921 --> 00:20:39,320 The main conclusion is that definitely it's already happening. Definitely it's, 297 00:20:39,460 --> 00:20:43,000 creates a lot of opportunities, especially I mentioned to you that, 298 00:20:43,640 --> 00:20:48,520 we still continue to spend a lot of time in FP&A 299 00:20:49,220 --> 00:20:54,040 in non-value activity. Yeah. So one case of Microsoft, it's definitely, worth, 300 00:20:54,520 --> 00:20:58,280 looking at, we had several presentations from, Microsoft people, 301 00:20:58,940 --> 00:21:02,960 both in Japan and also in, America, in Europe as well. 302 00:21:02,961 --> 00:21:06,320 So in Microsoft, something that was done, by, 303 00:21:06,570 --> 00:21:10,910 many people within several months at the moment it's automated and done by, 304 00:21:10,911 --> 00:21:14,310 maybe one or two people with push of the button. 305 00:21:14,311 --> 00:21:18,150 So practically the revenue forecasting, and one of the biggest, 306 00:21:18,151 --> 00:21:19,990 company in the world, 307 00:21:19,991 --> 00:21:23,630 it's automated at the moment and it's automated to really, 308 00:21:24,670 --> 00:21:29,180 granular level. And when people say that, oh, we are quite complex, 309 00:21:29,240 --> 00:21:33,300 we are quite big. It's not for us. It would be difficult to do this. 310 00:21:33,440 --> 00:21:37,420 I always say that if it's possible for one of the biggest company in the world, 311 00:21:37,421 --> 00:21:41,260 it's a huge, huge message to all of us. So, 312 00:21:41,920 --> 00:21:44,740 but the main conclusion is that, artificial intelligence machine 313 00:21:46,900 --> 00:21:51,090 learning matters, they create additional, opportunities for us in FP&A, 314 00:21:55,291 --> 00:22:00,210 because they release time, they allow us, to move away from that boring, 315 00:22:00,950 --> 00:22:01,810 firefight and, jobs, 316 00:22:01,811 --> 00:22:06,290 where we look at a lot of spreadsheets where data are not working, 317 00:22:06,390 --> 00:22:10,960 we really can move our profession to the next level, because our belief is that, 318 00:22:10,961 --> 00:22:15,720 it's artificial intelligence and human intelligence that really 319 00:22:16,060 --> 00:22:18,040 create, the best in class of FP&A. 320 00:22:18,980 --> 00:22:22,520 Now, as we take a step in the direction of, you know, 321 00:22:22,521 --> 00:22:25,320 adapting to these trends and everything, you just mentioned, 322 00:22:25,321 --> 00:22:26,880 what it really means to the professional. 323 00:22:27,560 --> 00:22:31,270 I think our listeners need to really understand not just the concepts and the 324 00:22:31,271 --> 00:22:32,350 theories of what's out there, 325 00:22:32,410 --> 00:22:36,310 but what does it actually mean to them as an individual? So as far as, you know, 326 00:22:36,330 --> 00:22:40,750 the skills and the capabilities of today's FP&A professional, 327 00:22:40,970 --> 00:22:43,830 you just talked about it a little bit, as far as the technological skills, 328 00:22:44,330 --> 00:22:46,670 the human skills, but, you know, 329 00:22:46,700 --> 00:22:50,620 what should our listeners really be focusing on far as personal development when 330 00:22:50,621 --> 00:22:52,860 it comes to adapting to these emerging roles? 331 00:22:54,510 --> 00:22:57,650 Thank you for this question. What I would say that, 332 00:22:57,651 --> 00:23:02,090 our traditional role in finance in management accounting is 333 00:23:02,100 --> 00:23:05,770 analyst. Yeah, we are really good analysts. We are, 334 00:23:06,030 --> 00:23:08,650 in FP&A we're really good at, model buildings 335 00:23:10,680 --> 00:23:14,480 in Excel, at understanding the main methods and all of these. 336 00:23:15,000 --> 00:23:19,120 But the reality is that our traditional role of analysts is expanding. So, 337 00:23:19,121 --> 00:23:23,240 really to be, at the age of FP&A professionals, 338 00:23:23,340 --> 00:23:28,160 we have to develop the skills, but at the same time, I don't want, 339 00:23:28,161 --> 00:23:32,750 to say to people that they have to become, data scientists and, influencers and, 340 00:23:32,820 --> 00:23:37,470 you know, they have to be programmers. It's not the point. 341 00:23:37,530 --> 00:23:39,110 What we have to understand that FP&A 342 00:23:46,030 --> 00:23:49,120 department, it's a multidiscipline department. 343 00:23:49,121 --> 00:23:54,080 This is department of different specialized roles and 344 00:23:54,081 --> 00:23:57,720 different general roles as well. So, the T shape FP&A professional, 345 00:23:57,721 --> 00:24:02,080 it's quite a popular, subject at the moment. Isn't it? 346 00:24:02,330 --> 00:24:06,430 So the reality is that, yes, there are some emerging roles, 347 00:24:06,630 --> 00:24:08,990 and I'm about, to share those with you. 348 00:24:08,991 --> 00:24:13,550 We identified five key roles that should be at each FP&A 349 00:24:15,511 --> 00:24:19,590 department in order for this department to be a functional in order for this 350 00:24:19,591 --> 00:24:23,590 department to be a really effective in this incredible environment. 351 00:24:23,630 --> 00:24:24,750 But what I want to say, 352 00:24:24,751 --> 00:24:29,540 it doesn't mean that you have to have minimum five people in your department bec 353 00:24:29,540 --> 00:24:31,500 ause people can combine roles. Yeah. 354 00:24:31,540 --> 00:24:35,980 And what I want to say that when you listen about this, please don't think that, 355 00:24:35,981 --> 00:24:39,100 oh, I don't have a chance because, you know, I don't have time, 356 00:24:39,140 --> 00:24:42,860 or I don't have capabilities in that particular role. 357 00:24:42,861 --> 00:24:47,650 It's about the team. it's about how it goes. So, 358 00:24:47,710 --> 00:24:51,090 let us start from some very interesting, roles that we, 359 00:24:51,200 --> 00:24:55,730 identified at the marketplace. The first one is FP&A architect, 360 00:25:02,411 --> 00:25:04,930 emerging role, the role that previously, 361 00:25:04,990 --> 00:25:07,200 at least here in the UK was called system accountant. 362 00:25:08,030 --> 00:25:12,640 Or I can see that in the us it's called FP&A 363 00:25:13,180 --> 00:25:15,320 model, or in different countries it's means different things. 364 00:25:15,321 --> 00:25:18,720 But what I want to say that, FP&A architect, 365 00:25:18,721 --> 00:25:22,720 it's not only system accountant or modeler, it's much wider than this. 366 00:25:22,920 --> 00:25:24,400 So the term architect, 367 00:25:24,420 --> 00:25:29,190 so this is the building of, this infrastructure, 368 00:25:29,850 --> 00:25:33,510 decision making process that consists of, not only technology, 369 00:25:33,530 --> 00:25:38,510 but the process in order to make sure that we implement and 370 00:25:38,540 --> 00:25:41,990 the drivers from the raw data, it goes, 371 00:25:42,010 --> 00:25:46,990 directly to the systems to driver based model. the system analyze it, transform, 372 00:25:47,120 --> 00:25:51,700 is to decision sets where let's say 373 00:25:51,980 --> 00:25:54,220 storytelling, platforms, and decision makers. 374 00:25:54,290 --> 00:25:58,540 They look at these at different levels. So obviously in order to create such, 375 00:25:58,720 --> 00:26:03,020 infrastructure, it would require, not only technology, 376 00:26:03,021 --> 00:26:04,260 but also the process. 377 00:26:04,480 --> 00:26:09,410 So FP&A architect is the bridge between IT and many other departments 378 00:26:09,411 --> 00:26:13,930 and the person who can do this. Yeah. So this is the first role emergent role, 379 00:26:14,010 --> 00:26:18,090 another role, we call this FP&A data scientist. 380 00:26:18,210 --> 00:26:22,890 It's not a classical data scientist with university degree in quotes and, 381 00:26:22,950 --> 00:26:24,570 so on so far, 382 00:26:25,130 --> 00:26:28,010 but this is the bridge between fine and data science function. 383 00:26:28,820 --> 00:26:33,360 So this is the problem of, today's world that, we have so many, 384 00:26:33,390 --> 00:26:33,961 different disciplines, 385 00:26:33,961 --> 00:26:37,160 and we don't have translators bridges between those disciplines. So, 386 00:26:37,161 --> 00:26:41,600 FP&A data scientist is someone who is skilled 387 00:26:42,100 --> 00:26:43,680 in using predictive technologies, 388 00:26:43,960 --> 00:26:48,560 such as IML to uncover those drivers and trends that will 389 00:26:49,140 --> 00:26:52,760 be used for the planning models here, but at the same time, 390 00:26:52,880 --> 00:26:55,040 this person can really translate, the land, 391 00:26:55,070 --> 00:26:59,280 which can be translated between in data science, 392 00:26:59,281 --> 00:27:02,950 world and FP&A world, other roles, that we identified, 393 00:27:02,951 --> 00:27:07,150 there could be more like from the IT side, of the shape, 394 00:27:07,510 --> 00:27:08,870 of course, FP&A storytelling, 395 00:27:09,110 --> 00:27:13,110 it's FP&A influence in particular influence and without the authority. 396 00:27:20,460 --> 00:27:24,260 Yeah. So those are the roles they should be fueled. 397 00:27:24,440 --> 00:27:28,900 But please remember that depending on the talents and abilities people can 398 00:27:28,960 --> 00:27:32,580 develop in one of, or two of those, and always, 399 00:27:32,600 --> 00:27:34,620 could be at the age of this profession. 400 00:27:36,520 --> 00:27:37,740 And, you know, lastly, 401 00:27:37,741 --> 00:27:41,100 now that we have introduced maybe some new trends to our listeners, 402 00:27:41,110 --> 00:27:43,060 maybe some new roles, you know, 403 00:27:43,061 --> 00:27:46,530 maybe the listeners have heard about these different topics, 404 00:27:46,550 --> 00:27:47,730 but need to know more, 405 00:27:48,480 --> 00:27:51,730 what are some additional resources that you would recommend as far as staying up 406 00:27:51,731 --> 00:27:54,770 to speed with FP&A, and everything that we've talked about today? 407 00:27:55,470 --> 00:27:59,050 I would say that there are a lot of resources available at the moment. Yeah. 408 00:27:59,240 --> 00:28:00,250 And, I know that at IMA, 409 00:28:00,870 --> 00:28:05,280 you have a lot of resources that are so relevant for FP&A 410 00:28:06,580 --> 00:28:07,413 recently we started, 411 00:28:07,760 --> 00:28:11,720 to collaborate with your Institute as well at some of the webinars. 412 00:28:11,721 --> 00:28:15,080 And of course, I would like to recommend our FP&A website, 413 00:28:15,420 --> 00:28:18,600 where we have a lot of, articles and videos and, 414 00:28:18,780 --> 00:28:20,960 practically every week have, 415 00:28:21,540 --> 00:28:25,350 webinars and digital FP&A boards. 416 00:28:25,870 --> 00:28:30,590 You also can download some of the, papers that we do, research papers, survey, 417 00:28:30,591 --> 00:28:32,830 inside papers. And of course, 418 00:28:32,831 --> 00:28:36,310 there are a number of books. 419 00:28:36,311 --> 00:28:39,630 Some of them I can recommend, I really love, 420 00:28:39,631 --> 00:28:43,750 book by Steve Morlidge and Steve Player is called Future Ready: 421 00:28:43,751 --> 00:28:47,420 How to Master Business Forecasting. It was written some time ago, 422 00:28:47,660 --> 00:28:51,860 but I think it's a fantastic classical book, in order, 423 00:28:51,861 --> 00:28:54,580 to understand the forecasting world. Yeah. from my side, with 424 00:28:57,520 --> 00:28:58,500 my colleague, Michael Ko, 425 00:28:58,550 --> 00:29:03,340 we are writing a book that is based 426 00:29:03,370 --> 00:29:06,450 on the, results of the travel to 16 countries, 427 00:29:06,451 --> 00:29:10,210 27 cities around the globe. Hundreds of meetings with FP&A professionals, 428 00:29:10,211 --> 00:29:15,090 looking at hundreds of case studies and actually looking at the trends around 429 00:29:15,091 --> 00:29:18,810 the globe. It should be ready somewhere this year. 430 00:29:19,330 --> 00:29:23,850 So it's another thing that I would like to share 431 00:29:24,000 --> 00:29:25,090 with people. Thank you. 432 00:29:34,750 --> 00:29:37,160 This has been Count Me In, IMA's podcast, 433 00:29:37,550 --> 00:29:40,760 providing you with the latest perspectives of thought leaders from the 434 00:29:40,761 --> 00:29:43,440 accounting and finance profession. If you like what you heard, 435 00:29:43,540 --> 00:29:46,520 and you'd like to be counted in for more relevant accounting and finance 436 00:29:46,630 --> 00:29:50,320 education, visit IMA's website at www.imanet.org.