A high-performing FP&A team knows how to leverage data wisely and efficiently to help your organization stay ahead of the competition and challenging times. But, high FP&A performance doesn’t just happen for teams, especially those who frequently deal with data silos spread across finance departments.
Siloed information eventually leads to a sub-culture within teams, where teams blame each other when things go wrong. This lack of synergy leads to reports that offer limited value. As a result, instead of serving as a trusted advisor to steer the organization in the right direction, FP&A teams limit the decision maker’s ability to make smart and timely decisions.
This disjointed process is one of the key concerns most CFOs are experiencing when they begin our FP&A visioning program here at Collectiv. So, how can CFOs overcome these process challenges? How can CFOs break information silos and foster a single source of truth? Follow these do’s and don’ts to start maximizing FP&A performance now.
Break Information Silos with These Do’s and Don’ts
Don’t restrict access to data.
More often than not, the accounting and finance departments think their data is unique and it isn’t something that everyone should have access to. This mindset leads directly to data silos, preventing deeper collaboration needed to derive valuable insights. When information is accessible to people, they are more likely to work with each other to achieve common organizational goals.
Don’t neglect data accuracy and integrity of information systems.
Information silos happen when there is a lack of integrated systems that allow access to data across all finance functions. Even if such systems exist, teams often neglect their responsibility to consistently upkeep data accuracy and the integrity of those systems. As a result, you will find your teams trapped in spreadsheet hell, collecting data and creating reports manually.
Don’t think that your data doesn’t matter.
Stop promoting a mindset of holding onto data and thinking that it doesn’t really matter to the organization. Just because the data doesn’t impact your teams’ daily activities, it doesn’t necessarily mean that it will not influence other business functions. Remember, every piece of data in your organization will drive a process that ultimately drives the business bottom line.
Do share clear and concise KPIs.
Data silos also result when there are too many KPIs to measure business performance. Instead of having information around multiple things, establish 4-5 clear, concise, and strong KPIs that offer a clear picture of business performance. Spend less time on reporting numbers and focus on key metrics that matter most for decision-makers.
Do foster better collaboration and communication between departments.
When departments hold onto their data, they create information silos. The immediate effect of restricting data ownership is that teams fail to connect the dots and understand where their data fits the bigger business picture. For example, marketing teams own marketing data, but they never really share or communicate information to other departments.
However, this marketing information holds the potential to drive sales data. Ensure that collaboration and communication are happening between departments. Let people know how their part of the data plays a role in driving business goals.
Do remain transparent.
People often think they can grab their data and run an analysis with it, even if there are inaccuracies. One of the best ways to break data silos is to stay transparent. If there are inconsistencies in data, reach out to other teams to find the right answers to your business questions.
Drive Efficiency and Insights with These Do’s and Don’ts
Don’t couple financial efficiency and business insights together.
Financial efficiency and business insights are mutually exclusive. Don’t couple them together. Many organizations think that just because they have financial efficiency, they will drive better business insights. Each process needs specific strategies and tactics to produce desired outcomes. Make sure you consider them as separate initiatives and separate projects.
Don’t start with business insights first.
Don’t make the fundamental mistake of focusing on technology to drive insights straight away. Always start with improving processes to generate better financial efficiency first and get valuable data to build insights later.
Don’t measure too many KPIs.
Similar to the don’ts of information silos, more insights and KPIs aren’t necessarily the best way to go. For financial efficiency and business insights, key data points are often around whether the business is driving enough revenue, whether you’re cutting costs, and whether the business is growing. Establish clear and concise KPIs around these areas to effectively track organizational performance.
Do establish the baseline.
Before jumping right into analytics tools to generate insights, make sure you know exactly where you are with financial efficiency and processes. Establishing this baseline will help you build strategies and tactics to build upon those processes.
Do understand the skills of your people.
Once you establish the baseline, the next step is to evaluate your team’s composition and the skills they possess. Find out how best you can leverage those skills to drive better financial efficiency and business insights.
Do incorporate continuous improvement.
Once you have a well-defined process that delivers business insights, keep going. The process of financial efficiency and business insights is a continuous one. You will need to constantly look at the business, take deeper dives into established KPIs, and get consistent feedback to improve the process further.
Foster a Single Version of Truth with These Do’s and Don’ts
Don’t have managers drive a single version of truth.
A powerful initiative to promote a single source of truth should come from the leadership team. When top management isn’t involved, managers will likely have their own version of the truth, leading to information silos yet again.
Don’t consider the version of truth as static.
Most people commit the mistake of considering the version of truth as static. However, in reality, the truth is flexible and always changing. It’s important to remain flexible while making sure everyone speaks the same language around KPIs, processes, and strategies that drive the single version of truth.
Don’t rely entirely on technology for the truth.
Technology aids in improving processes, but relying solely on tools to derive the truth can sometimes lead to false negatives. It is always a good practice to back-test and question your single version of the truth to validate its correctness.
Do use the version of the truth in decision-making.
The truth will remain true only if you incorporate it into the decision-making process. Any decision that you or your teams make should stem from the version of the truth to validate its accuracy and trustworthiness.
Do leverage people.
Deriving better insights takes people and technology. Couple the people element to generate a single version of the truth to provide that color context and clarity—and insights from previous seasons.
Do ensure ownership of everyone.
Ensuring everyone has access to the same information also means everyone has an ownership stake in the truth version. Instead of keeping the truth within specific groups or departments, let it flow across the organization so every individual knows they have a stake in shaping the narrative around what the truth is going to be.
Following these do’s and don’ts is a great first step. Ready for the next step in maximizing FP&A performance? Start the Collectiv FP&A Visioning Program.