Many articles have been published on Finance as the Trusted Advisor, the Modern CFO or the World Class Business Partner, but common for all is they don’t describe the “How”. How Finance becomes a better partner is not something just described with wordy articles. A framework is needed to illustrate how Finance builds its skillset and toolbox. In this, the second article, we will describe how to do Analytics Business Partnering and the competencies to master. 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 Core Skills are important but need to be upgraded
It is important to emphasize that we haven’t forgot about the core capabilities. Without being able to communicate clear and concise, report numbers timely and accurately, and understand the business operation, Finance cannot be a business partner. The core skills of reporting & analysis, communication, business acumen and teamwork are the groundwork for ABP and fulfill the Basics and Acumen for the business partner type who Support and Contribute to decision making – The first two steps of The Capability Ladder below.
But to be able to Influence and Impact decisions, an additional skillset is needed. Finance needs a Mindset where the focus is moving from reporting hindsight information to provide insight and foresight from the use of advanced analytics including predictive and prescriptive analytics. Finance who can make this transition moves from a Finance Business Partner (FBP) into achieving the notation of an ABP.
New competencies within Intelligence and Strategy need to be adopted to influence decisions and impact the strategic direction for the business which will assist Finance to challenge business decisions and play a more strategic role.
The eight Capabilities to reach the Top of the Ladder
The four competencies have two capabilities each leaving a total of 8 capabilities to be mastered by the ABP. Please note, the notation ABP can only be achieved if Finance has mastered all steps on The Capability Ladder. This implies that Finance needs to develop both “soft” and “hard” capabilities on its way to be seen as an ABP. The below overview will illustrate what is expected from Finance at the top level of the The Capability Ladder.
The Soft Skillset for The Analytics Business Partner
Soft capabilities are Communication, Teamwork, Business Acumen and Strategic Leadership.
- Communication simplifies complexity when communicating an advanced analytics message. Communication is also about how to speak to executives to make sure the insight and foresight provided has an impactful effect at the executive level.
- Teamwork is the glue in the organization that drives change management. It is also about being active in the business leadership team and not just check out after having done the financial update.
- Business Acumen requires understanding how changes across lines of business impact performance, the competitive landscape, and how industrial and economic factors weight in.
- Strategic Leadership grasps the complexity, ambiguity, and interplay of the internal and external environment to guide the business on strategic decisions.
The Hard Skillset for The Analytics Business Partnering
The hard skillset for ABP include Predictive and Prescriptive Reporting & Analysis, Business Insight, Risk Management, and Innovating Finance that impact the strategic direction.
- Predictive and Prescriptive Reporting & Analysis is using advanced analytics for unbiased forecasting, long range modelling, and being able to predict future events.
- Business Insight builds upon Predictive Reporting with elements like cluster analysis, correlations, etc. that tell the business something not known, but if known is valuable and used to take date driven decisions from.
- Risk Management models the future using advanced techniques such as predictive analytics and Monte Carlo Simulation to have a probabilistic conversation with the business on its high and low cases.
- Innovating Finance means going beyond hindsight dashboards, BI, and spreadsheet tools to more powerful analytics tools utilizing AI (as described in our article series from Average to World Class). Even if Finance has the most advanced Mindset it cannot do the role of the ABP without the advanced toolbox (and vise versa)
With an advancement of the Skillset and Toolbox, Finance is ready to enter the 2020s. In the next article we will describe in deeper examples how to develop as a Partner to the business and climb up The Capability Ladder to become an ABP.
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.
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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.