This is the first of four articles on The Analytics Business Partner (ABP) defining how Finance should operate in the 2020 and beyond. Analytics Business Partnering outlines how Finance move from delivering the “table stakes” of clean and concise historical reporting, to become an active strategic participant in the business delivering insight and foresight for data driven decisions. It’s like going from being a passenger in the backseat of the business car to the driver, and even more important, the one who is part of charting where the car will go.
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THE 3rd GENERATION BUSINESS PARTNER
The role of Finance has evolved over the past 30 years, and with new labels as the Modern CFO, Next Generation Finance, and Agile Finance new requirements for Finance in the 2020s emerge. Finance needs to adopt a new skillset and toolbox to master the new requirements.
Stepping out of the role as the Record-keeping Accountant several decades ago and into a partnering role to the business, Finance is now entering into its 3rd generation partner in the 2020s. In the 21st millennium Finance has felt humiliated if someone calls them Accountants or Bean-Counters. Finance wants to be seen as partners who adds value to the business and not just a score-keeping reporting center. But how much value does Finance really add today?
Most Finance organization still operate as a supporting partner, using a strong financial backbone combined with business acumen and collaboration to get a seat at the table. However, not many Finance groups are challenging decisions using financial information, and fewer use advanced analytics to generate insight and foresight to impact the strategic direction.
This must change, with the introduction of the 3rd Generation Partner, The ABP. This concept, depicted in the evolution chart below, sets the bar for the partnering role of Finance that engages emerging technologies and broader skillsets.
A BRIEF HISTORY OF FINANCE
30 years ago, Finance had the monopoly of reporting numbers to the business, as The Record-Keeping Accountant with focus on book-keeping and making sure numbers were submitted to accounting standards. Skills that are still relevant but a lot of new capabilities should have been built on top over the past 20 years where Finance has started calling itself Partner and not Accountant.
As we entered the millennium, the first wave of Finance Transformation projects were launched, and focused on how to move Finance into a partnering role; i.e. getting closer to the business and be more efficient with reporting. Efficiencies were generated through technologies like Business Intelligence and visualization tools to automate standard reports, and creation of shared service center hubs, often on low cost locations, to separate routine transactions from the new partnering role. Finance could now focus toward understanding and collaborating with the business and play the role of The Supporting Partner. As such, Finance got a seat in the business car as a passenger on the backseat from where Finance stayed close to the business leadership and contributed to decision when necessary.
As we got closer to 2010 the term, Finance Business Partner, became mainstream and even positions in Finance were given that title. Finance Business Partners both contribute to and influence business decisions. The most mature Finance Business Partners used market insight and competitive intelligence to challenge business performance. Finance moved from the back seat to the passenger seat of the business car and the best in class Finance Business Partners would even sometimes take over the steering wheel.
THE ANALYTICS BUSINESS PARTNER
Standing on the entry to 2020, Advanced Analytics has become the new buzz-word in the Finance community, and it is hard to open a Finance related article without running into Big Data Analytics, Artificial Intelligence, Predictive Analytics, etc that are all areas the Finance must find out to master in the next decade. Advanced Analytics is here to stay, and Finance is at risk of getting side lined as other departments (sales , operations, marketing, and even HR) will usurp major parts of the Finance job description if Finance doesn’t advance its analytics capabilities. As such, a new skillset and toolbox needs to be adopted for Finance to become an ABP.
Analytics Business Partners masters the tools and techniques that provide analytical insight and foresight. Elements which Finance delivers to enable the business to take data driven decisions that will impact future performance. As such, Finance has to evolve into a predictive powerhouse that predicts future events and evaluates unseen risks and reveals unknown opportunities of future events.
Finance operating as this level will be seen as the glue in the organization who the business leaders always use when strategic decisions are made. Finance will move to not just steering the business car but also decide where it goes. Analytics Business Partnering will become the Finance path to job security, job satisfaction, and the most important the pay-off for implementing an analytics culture is large on topline growth for the company.
In the second article we will describe the exact competencies required to master Analytics Business Partnering in the 2020s.
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This article is a collaboration between Robert J Zwerling and Jesper H Sorensen from the organization Finance Analytics Institute (www.fainstitute.com) and is an excerpt from their book, Implementing an Analytics Culture for Data Driven Decisions – A Manifesto for Next Generation Finance. Robert and Jesper are the content creators behind the Analytics Academy and will teaching at the Academy in September!
Copyright 2019 Finance Analytics Institute, Robert J Zwerling & Jesper H Sorensen. All rights reserved. No part of this document may be reproduced without this copyright notice.