Five Questions Every CFO Should Ask Their FP&A Leader

September 12, 2023
Season 4, Episode 34

In this episode of the Business Excelleration® Podcast, today’s challenging business environment, financial planning & analysis (FP&A) is playing a greater role than ever. How can CFO’s help their FP&A organization drive greater speed and agility? With The Hackett Group Principal, Finance Transformation Jason Logman and Principal, Finance Transformation Glenn Hafler.

Welcome to The Hackett Group’s “Business Excelleration Podcast,” where week after week we hear from experts on how to avoid obstacles, manage detours and celebrate milestones on the journey to world-class performance. This episode is hosted by Jason Logman, principal in The Hackett Group’s Finance Transformation practice. Today’s episode will discuss the five questions chief financial officers (CFOs) should ask their financial planning and analysis (FP&A) leadership. Jason is joined by Glen Hafler, senior principal, also in The Hackett Group’s Finance Transformation practice.

It can be easy for CFOs to get caught up in the routine under FP&A. However, what we really want to see is FP&A creating a compelling vision for how they can become a partner that proactively identifies business opportunities and shows the ability to effectively communicate and influence the business. Diving into the conversation, hear the things organizations can do to drive that vision and move the needle forward. The root of many of the FP&A function’s transformations is often what is measured and managed, which then dovetails into planning and forecasting. Thus, it is crucial to determine the right metrics, ensure the right people are getting access to them and reevaluate how we are looking at profitability analytics. Additionally, it is important for organizations to understand that these metrics can and will change over time.

Next, Jason speaks to the importance of managing expectations for the business and knowing how and when to say no. It is crucial to make sure that we are focusing on the drivers, which are actually correlated to driving revenue, and not wasting too much time focusing on the things which don’t. Then, we should look at how to streamline and integrate the data. Unfortunately, Jason shares, the vast majority of companies The Hackett Group works with don’t do a great job managing report inventories. Having a clear purpose for each of the traditional cycles within the planning space can help eliminate further reporting. When companies are explicit about business forecasting, they are better equipped to hold their business line accountable, identify risks and allocate resources. Decades of data proves that the less detail you use, the fewer people involved, and the faster you go, the more accurate your forecasts will be. This is when the most value is realized.

The last question every CFO should be asking their FP&A leader is whether or not they have a clear vision of technology – how to enable it and how to leverage it. Technology is not a silver bullet; it is crucial to ensure we are exemplifying its positive attributes. First and foremost, we need to have a vision when it comes to our technology efforts. While some tools are better fit to a company’s business and culture, there is not a “bad” choice when it comes to making a decision. There can, however, be bad implementations and designs of a tool. It is unrealistic to think that a single tool will be able to do every single thing. When deploying capabilities, it is all about making incremental progress to achieving an overall vision.

In closing, Glen summarizes the five questions every CFO should ask their FP&A leaders: Do we have an established vision? Are we producing the right things? Are we effectively saying no in the right ways? Are we spending our time the right way? Do we have a clear vision of how to leverage technology for enabling our teams?

Time stamps:

  • 0:56 – Welcome to this episode hosted by Jason Logman.
  • 1:39 – The CFO’s ideal vision for FP&A.
  • 3:49 – How can organizations drive that vision?
  • 7:38 – Managing expectations for the business.
  • 10:33 – How should finance organizations be spending their time?
  • 12:50 – Discussing the number of reports organizations are providing right now.
  • 15:40 – Why create a plan?
  • 17:56 – Asking FP&A about technology.
  • 23:04 – Summarizing the five key questions every CFO should ask their FP&A leaders.