Welcome back to Count Me In, IMA's podcast about all things affecting the accounting and finance world. I'm your host Mitch Roshong. And today we're going to hear about the popular topic of business partnering. Adam spoke with Rohit Thakkar, finance business partner at Adobe to define the role of a business partner and explain how you can guide the business with strategic decisions. So now let's head over and listen to the conversation.
So Rohit, how has the business partner's role become a navigator or copilot for finance in the organization?
Yeah, it's a great question. So think about it this way, the traditional roles within finance are changing and evolving and one such role is that of an FP&A which is evolving, you know, into a finance business partner profile as well, from just a traditional FP&A a partner who was supposed to, you know, do reporting for the business. Now we are looked upon and rightly so should be the trusted partner for various business organizations that we support to succeed in this profile I'm absolutely convinced of being a friend. Now as they say a friend is not the one who is, you know, has been the longest with you, but who can be relied upon to keep various, you know, various teams grounded in expectations, show the true and fair picture and who can manage to tell the right business story and bring the right business conversation into context. Navigated by definition. You know, if you go to a dictionary you will find the definition itself by means that who can direct the course of the ship by using various instruments and devices. Now in a corporate setup, that role, the ship becomes a corporate, the corporate becomes the ship. The route is the direction we are heading to and finding ways, on where we want to reach that instrument and devices are, you know, the final business plans and the financial plans that we are talking about. And we develop through the course of, you know, our journey into the financial planning. Now a critical role is that, you know, it entails a lot of work in joining various dots within the organization. I'll give you an example here, we undergo extensive process of planning exercise that requires us to understand the overall market opportunity. It actually starts with, you know, understanding that time of the market. So, you know, time is nothing but total available market. So we need to understand as finance business partner, what our overall market opportunity is, you know, we need to have an extensive analysis and understanding around how much penetration do we have in those markets. Where do we stand?Where do we want to go? What kind of a product fit that we have in all those markets? What are customers? What kind of needs that we are trying to address with our products? What is our competitive landscape? Now that's where the actual financial planning activity should start. From finance business partnership point of view. Now it's easiest said in like two or three sentences, but it really requires a lot of work, you know, do analysiskind of get into the surveys and you know, get the survey results, interpret those surveys. And you know, I tried to create customer segmentation for your own products within the organization. So the second thing, you know in this product, you know in this roadmap is you know, understanding about the product roadmap is very important. It's essential for the business partner to understand the vision of the product managers and the business unit. It is important at this time also to factor in what it will take to realize the product goals during thisexercise of what we call you know the planning exercise or the partnership. It becomes important as next logical step to understand and work upon our pricing and packaging. That is where a close coordination is required.= with another dot in the matrix organization like say, Adobe, to work very closely with the product marketing management teams. We chart out our plans aroundt how much unit, how much do we want to drive, how much are we going to generate and achieve those targets R.ealistically.We need to chalk out plans around how we want to market the product. Suppose, you want to grow a product by say 40% in Iran. Now how many units should expect to sell? What kind of efforts would be required by say, you know, various other teams like web sales teams.go to market team, phone teams, partnership teams, that we will need to materialize and achieve those targets? Now joining these dots across organization and ensuring that various parts of organization understand their financial contribution responsibilities and in turn leadership signing off, giving them a priority to execute two plans is the most critical role as a finance business partner.
So you've really kind of shown how finance becomes that business partner to the whole business, how it connects to each little section and that kind of goes to guiding the whole business. So what does that finance business partner's role when it comes to developing something like KPIs?
Yeah, it's a fantastic question. You know, let me kind of, you know, define what actually the KPI is. You know, KPIs by definition are those indicators that organizations should choose very wisely to reflect the actual performance. And they should be forward-looking. Theyshould be something that should be measurable, right? So, you know, it's super important for us to not just get bogged down by the financial KPIs, but to understand the relevance and the need of business KPIs. So business KPIs ideally should be forward-looking, especially in a matrix organization, you know, like, like Adobe. We tend to, you know, drive over planning activities by data key metrics, DCI. So what that stands for and it, you know, you can find that in six Sigma literature, but wedefinitely practice that is who's going to be the driver? Who is going to be there approver? Who's going to be the contributor? and do we need to keep informed when it comes to, you know, informing the reserves? So it becomes super important for us in matrix organization to ensure that we are able to derive responsibility assignment metrics as well from the Nike exercise. Now rule of finance is to sit across the table, bring folks from all across the organization and work to create those KPIs, to understand the role for themselves in setting up those business KPIs. Now we cannot just set up the financial KPIs and say that, you know, we can't be the monitor and say that, okay, go get the results for us. We need to be super practical and understand what kind of business KPIs we need to drive to get to our financial KPIs. Financial KPIs, so there's a circular reference if you have to, you know, think about it this way. There is a circular reference between financial KPIs and business KPIs. At one end you have financial KPIs, which are kind of a derivative of the business KPIs and on the other end, you know, think about that financial KPIs should be influencing your business KPIs as well. So I'll give you an example on one of the key financial forward-looking metrics that we definitely look for in the subscription business. That's the ARR, theannualized recurring revenue. That's considered to be much more forward looking compared to the revenue or the top line. Now the role of finance business partner actually goes beyond setting up this financial KPI. Think about it this way, it is kind of similar to activity based costing where organizations should move to activity-based revenue or top topline planning to identify the drivers for the top line. Let's say, you know, you are an eCommerce set up base company. Now, the most important thing that you would want to watch and be careful about is tracking the traffic to your website, and how good they are able to convert such traffic. Now in that case kind of case scenario, the business KPI would be traffic,would be your conversion rates and not just the financial KPI what ARR that you want to drive from the website. I had a great opportunity of working with the company Freescale as well. So Freescale was a spin off from Motorola, so it was a great company. You know, quite the learning experience for me myself. Whenwas looking at R&D effectiveness metrics and so you know, one of the tasks that I was working on was creating the R&D effectiveness metrics for the entire organization. And in turn I realized that the entire value chain for a semiconductor chip actually has a lot of variation from an automotive chip that it's like ayear to develop and two years to get into manufacturing versus the wireless kind of a setup chip, which would take like six to seven years to deliver the results. Now, you know, I started mapping out the process right from the wafer size and I realized that just the costing of, you know, the per unit costs just doesn't make sense to me. In order to ensure that I am able to effectively, you know, find the business KPIs and mapped out the entire process and figured out that we need to set up business KPIs around what kind of wafer size we are targeting. Then define the assembly and test use, not just the cost, what kind of a year we are targeting from our back-end as well as front end manufacturing units. What kind of burning time is required? What kind of packaging is required to deliver a zero defect package reserves. So that becomes the part of an entire playbook. I'll give you another example and it goes to the, you know, it goes to the usage of the product. Now if you can map the usage of the product and you can identify how engaged your customer is, a typical business KPI in that scenario would be NPS. It serves a good, you know, net promoter score it serves as a great metrics to identify how loyal your customer is to the product. Of course higher the better. But what finance business partner must understand is the trends and impact on retention of those customers to have a better recurring revenue impacting the lifetime value for the organization. So that's super important for us to understand how are we setting up KPIs, identifying what KPIs need to be said, not just for the financials but for the business.
I think those are some great examples kind of coming in altogether. So just kind of putting this all together with all the financial business partners acting as navigator for the organization, how do you recommend somebody can bridge that gap between this long-term strategic plan? You know, a lot of examples you just kind of gave with the short term goals, the daily operations and the more traditional responsibilities. And then how does that person, you know, become that business partner if the organization doesn't see the finance as that business partner?
Yeah, I mean, you know, there's a fine balance and you know. I think at times we confuse ourselves and you know, as our role as finance business partner for just the long-term vision perspective, and I would believe that you can actually be a finance business partner in the short term you know scenario as well as the long-term scenario. So we work on the long-term strategy and then the short term goals and the natural delegator of the long-term strategy. Just as in the case of any, you know, of defining those long-term strategies, the finance jockeys are required to coordinate with the product PMMs you know, the product managers and the teams across. The short term are MVPs ( think this is what he says) the finance business partners or the finance jockeys. They have, you know, they must ensure that they are partnering very well with the sales and marketing organizations, with the go to market teams that are required to deliver the reserves. So, you know, when it comes to responsibility, these teams are responsible to deliver the results. But it is very, very important for us to ensure and understand what our expectations are, how realistic those expectations are,nd we have a continuous dialogue and continuous conversations with those teams. It is also important that those tasks for managing short term results. They must have the right feedback, you know, they must have the right channel of giving feedback to the teams who are managing the long-term goals so as to ensure that we are, you know, keeping abreast of our performance and ensuring that, you know, if there is anything, anythingthat can be flagged off, you know, like really early. That will be great sign for the longterm strategic planning teams to figure out how do we factor those in and account for them. Just as the critical role of finance isit's equally important that we go to markets and sales teams, it must be recognized. We must support them to support the overall longterm vision, We must support them in the, you know, the short term scenario. The delivery of short term goals are super important for a sustainable value creating business in the long run. You know, to sum up, I would say that finance business partner profile is it kind of a very forward looking profile and not just a reporting profile. So you know, a lot of folks get bogged down by reporting in the short term and that's exactly not what it just needs, it needs you to u plevel your conversations in the short term as well as the longterm and ensure that you have a continuous dialogue across organization to influence, participate and modulate these business strategies to support the overall vision and purpose of the organization.
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