Financial Analytics: Redefining FP&A

  • Justin Reynolds
  • December 8, 2019
Financial Planning & Analysis

Financial planning & analysis (FP&A) is entering a new era. FP&A teams at companies of all sizes—from startups to global enterprises—are leveraging advances in technology to do their job of guiding companies’ strategic plans and investments, and building profitable operations. 

Financial departments are trading spreadsheets and legacy systems for SaaS platforms that combine real-time, historical data, and  powerful reporting features, delivered over flexible, user-friendly interfaces. This is a trend that will continue to accelerate throughout 2020 and beyond. 

FP&A: The Next Generation

We can point to at least five technological advancements that are reshaping the FP&A landscape: artificial intelligence (AI), big data, the cloud, connectivity, and blockchain. These technologies are transforming business intelligence (BI) and changing the way that companies manage their financial analytics. 

Here are some benefits to using next-gen FP&A solutions. 

Faster reporting 

Blockchain is allowing financial departments to effortlessly track and manage data—resulting in faster and more effective reporting. In layman’s terms, blockchain allows information to be distributed across a digital ledger in a way that is completely tamper-proof.

“Blockchain has the potential to be very transformative,” says Jon Raphael, chief audit innovation officer at Deloitte . “By itself, blockchain will likely change how records are maintained and how value is transferred between counterparties.”

According to Raphael, the proliferation of blockchain will be as transformative as the internet itself was on business. 

“Blockchain, when it reaches scale, could produce the same type of impact [as the internet] in terms of how transactions are recorded, and on the transfer and evidence of value,” Raphael continues. “I’m confident we will witness this as we start to see scaling of blockchain applications over the next couple of years.”

Deeper Insight

Using a BI platform like Tableau or Power BI, financial departments can glean useful insights that might otherwise go overlooked when using traditional reporting mechanisms.

For example, Tableau has a special feature that helps financial departments identify channel stuffing—a practice that occurs when a company inflates its sales figures by pumping more products through a distribution channel than it can realistically sell. Sales teams and companies often engage in channel stuffing to inflate their numbers or fool investors. 

Using Tableau, a financial department can sort suspicious returns by sales; identify potential anomalies; drill down into unusual transactions; and see specific details about each transaction. This tool can help a financial department gain an accurate assessment of a particular branch, subsidiary, or partner—without having to spend hours or days auditing them. 

Using Datameer Spotlight, finance teams can bridge data silos and quickly perform analyses on new data sets uncovering new strategic insights which would have been difficult to get to previously.

Simpler Sharing and Collaboration

Financial departments typically spend a lot of time communicating their research to managers, executives, investors, and potential customers. Much time is spent sorting through data, interpreting it, and compiling information into reports. 

Modern FP&A solutions like Tableau and Power BI contain features like custom visualization libraries, which make it easy to build attractive and impactful visuals. Print dashboards also help export reports for board meetings and planning sessions. 

Tools like Datameer Spotlight, allow teams to annotate and document their work, create transparency around dataset lineage, make it much easier to search for and reuse past analytics work, avoiding wasting time reinventing the wheel.

Centralized Access

Maintaining accurate financial analysis can be challenging when working with disparate branch locations—each with their own teams and systems. This often results in financial blind spots for an enterprise, which in turn creates risk in the form of compliance issues, tax problems, inaccurate sales forecasts, and more. 

By using a BI platform, and an analytics hub like Datameer Spotlight, an enterprise can share critical data across all of its global branch locations. This can reduce auditing risks, improve communication, and result in a healthier and more effective organization.

Pitfalls to Avoid

While digital transformation is having a big impact on FP&A, it’s also creating many problems in companies that rush into the process without fully understanding the tools they are using.

Here are some common pitfalls to avoid when using modern BI solutions to streamline FP&A. 

Eliminating Experts

More and more SaaS solutions come to market promising to streamline all aspects of FP&A. However, platforms do not eliminate the need for trained financial experts. Employees who work with data should have a close understanding of the information they are analyzing. Financial processes shouldn’t be fully automated or given to employees who lack financial knowledge. Otherwise, bad things can happen. SaaS platforms such a Datameer are procured and administrated directly by the lines of business, leaving the control of the data back to the domain experts and not a central IT team without the domain knowledge.

Poor Data Quality 

When using an analytics platform, data quality is incredibly important. Inaccurate or disorganized data can lead to major reporting errors—which can have devastating consequences for an organization. As such, it’s important to maintain strong data quality every step of the way.

Confusing Reporting for BI Tools

It’s easy to confuse a financial reporting tool for an advanced BI solution. However, there is a big difference between the two. Reporting tools provide access to events that have already taken place. On the other hand, BI tools explain why certain things took place and provide insight to guide future development and uncover latent opportunities. 

Data Transformation is Key

Remember, effective FP&A starts and ends with clean, organized, and processed data.  How you transform your data is critical to this, in terms of both process and how.  FP&A is assembled by analyzing complex and diverse datasets that need to be cleansed, blended, and shaped into final form.  Often times this involves high degrees of collaboration between data engineering and analytics teams.  It also requires rich data documentation to back up compliance processes.

Datameer is a powerful SaaS data transformation platform that runs in Snowflake – your modern, scalable cloud data warehouse – that combines to provide a highly scalable and flexible environment to transform your data into meaningful analytics.  With Datameer, you can:

  • Allow your non-technical analytics team members to work with your complex data without the need to write code using Datameer’s no-code and low-code data transformation interfaces,
  • Collaborate amongst technical and non-technical team members to build data models and the data transformation flows to fulfill these models, each using their skills and knowledge
  • Fully enrich analytics datasets to add even more flavor to your analysis using the diverse array of graphical formulas and functions,
  • Generate rich documentation and add user-supplied attributes, comments, tags, and more to share searchable knowledge about your data across the entire analytics community,
  • Use the catalog-like documentation features to crowd-source your data governance processes for greater data democratization and data literacy,
  • Maintain full audit trails of how data is transformed and used by the community to further enable your governance and compliance processes,
  • Deploy and execute data transformation models directly in Snowflake to gain the scalability your need over your large volumes of data while keeping compute and storage costs low.

Learn more about our innovative SaaS data transformation solution, Sign up for your free trial today!

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