In this, the third of four articles, we look to understand the Skillset and Toolbox needed for Finance 2020. Here, we explore a two dimensional business partnering framework and describe in deeper examples how to develop as a business Partner to climb ”The Capability Ladder” to become an Analytics Business Partner.
The information in the article and more will be covered at JPK Group’s 2020 Analytics Academy. Click here for more information.
The Mindset Model
As described in the earlier article series “Mindset – The Start Button for World Class Strategic Partnering”, Finance operates across four personas; Reporter, Commentator, Advisor, and Strategist. Ranging from record-keeping Trusted Score-keeper to a value creating Strategic Partner, Finance use its Mindset to support, contribute, influence, or impact decisions by providing different levels of information to the business.
The Capability Ladder
The journey from the Reporter towards the Strategist starts with a detailed understanding of the skillset and toolbox needed to master all four personas as an Analytics Business Partner.
By linking the Competencies (Basics, Acumen, Influence, and Strategy) described in article two in this series “The Analytics Business Partner (ABP) – Competencies of Finance 2020” with the Mindset Model above, Finance is provided with The Capability Ladder framework in below figure, which defines the capabilities and tools to master for each persona. When Finance masters all capabilities it has earned the notation: Analytics Business Partner.
How to advance the capability ‘Report and Analysis’, from a Reporter to Strategist, is laid out below
- The Reporter supports the business by providing reports containing standard hindsight compilation of data. The Reporter understands and utilizes financial reporting systems and establishes processes that ensure compliance. This persona has demonstrated expertise with Excel and BI or other reporting tools, and spends most of its time capturing data from different data cubes/spreadsheets/transactional sources to consolidate into spreadsheets. Reporters are focused on delivering timely and accurate information (often numbers heavy) on regularly scheduled intervals. The Reporter is typically inefficient in delivering reports, and puts no scrutiny to the efficacy of the reports to deliver better decisions.
- The Commentator adds visualization to reporting and introduces analysis to explain trends and movements in performance. Data is turned into better information (beyond high-level variance analysis) through detail explanation of the historical trends and deviations that contribute to decisions. Finance, at this level, has automated, eliminated, and elevated reporting by using Centers of Excellence and Data Visualization tools.
- Advisor adds more complete knowledge of internal data, competitors, and the market to challenge the business, and provide insight that influence their decision making. Finance provides insight in the form of deeper information; like correlations and clusters between current performance and other financial or non-financial data, by using desktop statistical tools to tell the business something it does not know.
- Strategist impact strategic decisions by providing predictive information in the nature of foresight to explain what might happen and how to make it happen. Finance at this level, provides advanced analytics from simple smoothing to the most sophisticated techniques like big data analytics using machine learning, Systematic Intelligence™, and other Artificial Intelligence (AI). Strategists use Discovery, Visualization & Analytic tools to understand its own, competitors, customers, and vendors strength and weaknesses to gain insights and predict future events and performance. When modeling, the Strategist can simulate high/low cases with Monte Carlo simulations.
The same “walk” as for the capability ‘Report and Analysis’ above can be done for the other 7 capabilities on The Capability Ladder.
How to get started on the journey towards Analytics Business Partnering
Today, with few exceptions, every Finance organization has mastered the persona of Reporter, thus delivering accurate, timely and in compliance standard reports. While not efficient, the Reporter has strong knowledge of how to utilize the finance reporting systems, and communicating financial reports clear and concise.
When Finance master that level move on to automate, eliminate and elevate reporting and analysis, to free time to focus on entry level analytics like trending visualization from times series data. Commentators start using business terminologies when communicating – a skillset the Commentator gains from team-working with the business, which has also enabled the Commentator to have strong understanding of the business operation model (Business Acumen).
It is important to emphasize that Finance organizations can become stuck at the Commentator persona, which will mean Finance has no influence to the strategic decisions and holds a muted seat-at-the table (if at all at the table). The Capability Ladder gives Finance the framework to advance beyond the Commentator towards Advisor and Strategist by mastering the advanced personas.
A journey where hard skills as an Advanced Analytics skillset and toolbox becomes crucial to provide insight and foresight that business leaders take data driven decisions from. As Finance advances the hard skills it simultaneously elevate its soft skills like advancing from clean and concise communication using business terminologies to being able to simplifying complexity when communicating advanced analytics finding to executives and in teamwork creating an environment that encourages innovation and measured risk-taking.
Without getting out of its comfort zone, Finance cannot advance beyond the Commentator. A stagnation at the Commentator will certainly relegate Finance to compliance, standard reporting, and simple variance analysis. If Finance cannot transform from a hindsight looking spreadsheet driven accounting & reporting center to a value-add insight generating and predictive hub it risk getting sidelines or shrink in its FP&A role as other departments in the company will steal the analytics agenda.
Observations and What’s Next
It is important to highlight that Finance cannot leap from Reporter to Strategist but has to take one step at a time up the ladder. A journey where Finance simultaneously peruse to improve different levels of the hard capabilities (Report and Analysis, Business Insight, Risk Management, Innovating Finance) and soft capabilities (Communication, Business Acumen, Teamwork and collaboration, Strategic Leadership).
In our next article we will provide an assessment for where Finance is in their Journey towards becoming an Analytics Business Partner. Please spend 3 min taking the survey https://www.surveymonkey.com/r/analyticsbusinesspartner to enable me writing that article. Participants will also receive the Research Paper “The Temperature of Finance 2020 – The Analytics Business Partner Journey” which will be released at the end of 2019.
If you are interested in this topic, then join us at the next Analytics Academy!
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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.