FP&A: Big Data & Planning Systems – The IT or Finance Ownership Debate
Steve blogged last week about the concept of Big Data and the questions around when Big Data is actually too much. An interesting blog which inspired quite a bit of debate on LinkedIn in particular. Steve got me thinking about the work I've done in my career and the ever expanding amount of data our tool sets are able to utilise. One of the questions that I'm regularly asked when implementing a new FP&A system is where should it 'sit' within an organisation and of course who 'owns' the system and the data.
The case for Finance:
Easy really. This data and system is ultimately used to produce financial forecasts. The buck stops with the FD, and as we've seen in recent high profile errors and in particular at Tesco it's almost never the CIO that gets pummelled for the mistake. The case is strong then for the FD to have complete ownership of the data and the system, particularly as we see the emergence of cloud technology and the decrease in reliance on IT maintained systems. I've often heard the argument that finance are the only people who 'know' the numbers and in deed I've seen IT departments seriously proposing the ERP was suggesting 5 million units of a certain item of furniture had been sold when the entire company turnover totalled 2 million. Optimistic indeed!
The case for IT:
So IT are never going to be responsible for the final plan numbers, but why should they take ownership of a system and its data? Well again, there's a relatively strong argument in favour of allowing the CIO to empire build. By their nature accountants, used to working in Excel, do not have the expertise to manage what is essentially an IT system. They'll mostly be oblivious to the idea of testing a change before implementing it, why wouldn’t they be as they were brought up in the world of excel and file->save as.
As the technology develops it is becoming more and more flexible, but even with cutting edge technology like Anaplan there is still a certain amount of self-control that needs to be exerted around changes. As long as IT can provide a quick turnaround on changes (which unfortunately isn't always the case) the argument for their ownership plays into the safe camp. And what about external data? Most FP&A systems will have external feeds - ERP, GLs workforce planning etc and IT will need to manage this technical integration. It would seem hard to imagine how this could be managed in any other way than having full ownership in IT.
I've often talked to clients about an e-finance team, or as Steve sometimes calls it an IMU(Information Management Unit). My ideal e-finance team reports to the FD but has a matrix structure where the team consists of at least one person from Finance and one from IT both personally responsible to their individual line manager. This team will be the owners of the system and the data and by fusing the capabilities of the two departments we should be able to avoid any of the conflicting arguments above.
A lot of organisations have implemented this structure almost by accident by employing System Accountants, but my suggestion takes it one step further by creating the specific team.
And the ultimate goal? To have this e-finance team as a centre of excellence who can essentially charge it's time out to parts of the business. To become a consultancy within the organisation whose specific goal is to identify and eradicate potential data or process bottle necks. How fantastic would it be to have an internal consultancy rather than having to rely on external experience at a higher cost. A win win situation.
Alas, despite having seen this work well in many large and small organisations, the battle between the forces of good and evil will continue. Boardroom politics will continue to dictate the answer to this vexing question as the solution, I propose, requires very strong personalities in the both FD and CIO roles as well as the e-finance team, with a heavy emphasis on collaboration as opposed to blame. Unfortunately not always the case.