Welcome back to Count Me In,

IMA's podcast about all things affecting
the accounting and finance world.

This is your host Adam Larson,

and I'm here with you again to preview
another insightful conversation about

financial planning and
analysis. Here in episode, 171,

Mitch spoke with Larysa Melnychuk
about trends in modern FP&A.

Larysa is a leading FP&A
professional and influencer.

She held senior roles at top organizations
before establishing the international

FP&A board in 2013,

which has since expanded to 27
chapters in 16 countries across Europe,

the Middle East, Asia, Australia,
and North America. In this episode,

she discusses how FP&A has
evolved and explained some trends,

including XP&A and digital FP&A.

Keep listening to learn more as we
head over to the conversation now.

Larysa with your international FP&A
board project and speaking with

you previously, I understand you've
traveled through many countries,

16 countries. There are 27 chapters
for this project, across Europe,

Asia, Australia, the Middle
East, North America. You know,

this is a wide covering project
when it comes to the topic of FP&A.

So you've obviously seen a lot. You've
heard a lot. To start things off.

I would like to first get your
definition of modern FP&A,

and how does it kind of vary
across these different regions?

Thank you, Mitchell. first of all, thank
you for inviting me, to this podcast.

It's especially pleasant, to
talk about, trends and FP&A

at the beginning of the
year, when we all look ahead,

in order to understand what is happening,

with our environment and
with our profession. So,

there are really a lot of definitions,

of FP&A from, different account and
boards from, different practices,

practitioners. The one that I
really love, it came from one of

our meetings and, it was the definition,

very practical definition from my
former CFO at Swiss Re in Zurich

in Switzerland.

This definition he shared
at our meeting and,

actually he shared that his
company really adhere to

this definition in terms of their FP&A,

so he said that,

FP&A helps to manage the value
of the company by five different

ways. First one is, helping to
understand the value of the company,

describing extraction steering,

and reporting it to the key stakeholders.
So fantastic definition that,

really described, the
strategic value of FP&A

and how it helps to
sustain the value of the

company. Our FP&A trends
definition that we

checked at, 26,

27 different chapters in 16
countries around the globe. It's,

that FP&A is a proactive
force that helps to manage,

the understanding of the business,

the understanding of the
value of the business.

It supports a decision making process
at different levels of organization,

and also it integrate,

organizational processes of strategic
financial, and operational planning.

It provides a critical, insights
for the decision making.

So this is my answer, what FP&A is.

That's excellent. And thank
you for sharing, you know,

I think in today's business environment,

as we really try to focus on our
management accountants, right,

the finance and accounting
professionals, you know,

that definition must be top of mind
because as everything that they're doing,

today on the job, it really
needs to be adjusted, you know,

if not totally transformed because of
the direction the profession is going.

So to follow up on your definition and
what you've shared from your experience,

what are some of the trends
and potentially some of
the challenges really that

go along with modern FP&A,

as you define and supporting
the transition in the
evolution of the management

accountants role.

First

of all, the trends I defined,

but this incredible business
environment that we all experience. So,

at the moment we are talking
about applying and forecasting,

in the environment of high
uncertainty and what it means,

it means that, our traditional
management accounting methods,

they're working only within
this span of predictability,

span where we can really, apply
our, variance analysis method,

one plan, one forecast. But, the problem,

with a current environment is
that the span of projectability

is decreasing. So we really have
to look at different methods,

how we can plan and forecast,
and make decisions under,

uncertainty from this point
of view, the first obvious,

and very important trend that we observe,

especially for the last
two years, it's moving,

not only to scenario planning,

I would call this scenario management.
So everything at the moment, it's,

about looking at,

futures and deciding what is
going to work. And of course,

organizations that are able, to
play, scenarios very quickly,

practically in real time at different
levels of the organization, really,

with analytical insights,

those organizations are at the leading
stage and they really are at a good pl

ace. We looked at many different case
studies and interesting to see that,

practically every organization at the
moment are trying to be there. But though,

in order for us to be,
at this, stage when,

scenario management works in agile
manner, we really have to look at,

the way how to achieve
it and, those stages,

those next trends that I would like
to outline here. They definitely,

those important trends that are
needed in order to be at this scenario

management stage.

I would say that the second
one and very important one,

is driver based planning
many would say, oh,

we are talking about
driver based planning. For

many years, it's not the latest
strength, but I would say that,

at this particular environment we are
talking about not traditional driver based

planning, where you have all
your defined and well known,

drivers, but actually it's trying
to look at those drivers, that,

you never realize exist. And
now we have to acknowledge that,

they are helping us to
define those drivers.

So with help of predictive
analytics, for example,

we can define even
behavioral factors, you know,

how,

behavior or expectations let's say
of our customers will change the way

how we do our business.
So let's put it this way.

A driver based planning that is at the
next generation driver based planning

that is based on identifying
those key driver,

20% of drivers that can
explain 80% of the results.

And also those drivers that, we
never knew they existed, and,

a lot of things happening
now with external drivers
as well, not only internal.

So this is the second trend.

The third trend I would say
of course, is, digital FP&A.

It's this, predictive prescriptive
technologies that are transforming FP&A,

it's artificial intelligence
machine learning that
helping us to automate things

and also to take into
consideration those things that

we can't do with our human
intelligence, you know, the

full strength. It's FP&A architecture.
What I mean by FP&A architecture

is the combination of
process and technology, how,

FP&A can really help, to be
this flexible and dynamic. Yeah.

So how to, create this
value chain, together with,

combining both technology and
process. And of course the fifth one,

it's the role of FP&A digitized, we call
this digitized FP&A business partner.

And also we have a lot of emerging roles,

to the classical role of FP&A analysts,

but we will talk about this
a little bit later. Mitchell,

those are trends if I'm
talking about, the challenges,

those are also quite
interesting. The first one,

I would say one of the biggest challenge,

which is very obvious in
this environment, it's,

disconnect between strategic financial
and operational plans in organization.

Amazingly, 60, 67
organizations. They say that,

they fail they're well
formulated strategy,

and only 2% of, leaders, are confident
that they will achieve their,

80 or 100% of strategic
goals. You see, and obviously,

it's a big problem for organizations.

And I would say that FP&A

has the role to play there, through
integrations, through using technology,

through using cascade of
drivers and so on. Another

challenge is, of course,
reducing span of predictability,

something that already mentioned the
third one, it's a traditional budget

and culture. It's still so much embedded
in, organizational culture. You see,

so all of those traditional plants,

when people try to negotiate targets
and allowances for the next year,

not thinking about, that the
environment is changing and of course,

data, quality, data
democratization put it this way.

It's one of the biggest problems as
well. And another one FP&A talent.

It continues to be a problem
to find well-rounded FP&A

professional. And it's not only true
here in the UK or in north America,

but actually travel in the globe. I
saw that it's happening everywhere.

So those are trends and
challenges that we see.

And you did a great job
summarizing everything. Thank you.

I know you mentioned briefly that
we'll talk a little bit about them,

later on in this conversation. I also
know that we spoke before this recording,

and we would love to jump back on again
and dive deeper into some of these

trends very specifically, but
for today, we will keep things at

a higher level and, you know, to get us
to that next part of this conversation,

I'd first like to take a step back,

because when you first
started your response,

you talked about how some businesses are
still operating with these, you know,

outdated processes, outdated technologies,

even FP&A cultures that are not up
with where they need to today to adapt

to these changes. So, you know, from
your perspective, from your experiences,

once again, in speaking with these
professionals across the globe,

what would be your advice on key steps
that are needed to initiate this FP&A

transformation, you know, is there
a practical roadmap or a way for,

FP&A professionals to lead
and jump on these trends?

It's a great question. And before,
I give my nine steps of FP&A

analytical transformation
or FP&A transformation,

I would like to share with you,

amazing results that we
see similar results on our

FP&A transformation, survey
for the last four years.

It started from year 2017. We don't see,

the improvement, in the, percentage
of value, activities, in FP&A teams,

you know, so starting from year, 2017,

the time that is spent
on value and activity

is only from 20 to 22%

in the last four, five years.

So it's amazing consistency that shows
us that the things should be done,

what could be done from the point of
view of analytical transformation and in

you that,

we're all in new environment when we

need, to play scenario
management techniques, to be
flexible and dynamic, to be,

really very quick with the
support and decision making. So,

I would say that, even simple
steps they would help. And,

I will,

I'm about to tell you about nine steps
that we defined at international FP&A

board. But obviously it doesn't
mean that they could be,

should be in this particular
order. They could be in parallel.

It's a good age year to start
at least from the first steps.

You know, the approaches
could be different.

So the first one it's
about analytical culture,

the interesting thing that,

if organizations still in
traditional budget and mindset,

sometimes they're not ready
for this incredible change.

So it's all starts from there.
It all starts from the top,

data quality, the obvious
one, makes sure that,

it's harmonization of data. It's,
it's democratization of data.

And many people say, oh,

we have so many problems that when
we fix the problems with data,

we, it probably would be in
the next three to five years.

I saw incredible examples when it
could be done in parallel when,

the short steps of improvement, they
really make incredible difference.

So just start and see what
you can do, of course,

collaboration, between different
parts of organization, you know,

between planning processes,
key drivers, we already,

talk about importance and the new
age of, driver based planning,

think about the key drivers and not
those traditional that you always

had, your models rely on, but
those that are really hidden,

we already talk about this. Many people
would be, really surprised to see,

how many hidden drivers are there, driver
based model. It's an important one,

implement the system, the

six step, automate with team, as much
as you can, it's quite easy to do,

with the modern technologies
and actually it's even not

so expensive. And of course, create
your scenario planning infrastructure,

in order to,

perform this scenario management and
of course support decision making.

So those are nine steps.
But I would say that,

those steps they're going in circle
they're, always, may be in spiral.

Yeah. So you are always after
decision making, you adapting,

your it's influencing
your analytical culture.

You are working on data quality
and collaboration, key drivers,

driver based model
system. It's all working,

in circle, I would say, yeah, with
the improvement at every stage.

Now, as we take these steps, and as you
said, may not be that specific order.

They may happen over and over again,

because there are so many different trends
and different things that you need to

adapt to. I'd like to take this
opportunity to then now transition,

take a step forward into some
of those trends specifically,

going back to 2020 Gartner
introduced a new term of XP&A.

And I believe you mentioned that earlier.

So I just want to get a little bit of a
summary as far as what is your view on

this, and is this something
that's completely new, you
know, going back to 2020,

obviously we're now, a couple years out
from the introduction of the term, but,

you know, what is your perspective
on what this means to today's FP&A

professionals?

Another great question.
Thank you. I would say that,

definitely the concept that
was introduced, it's not new.

We observed this for at least
the last seven to 10 years,

and it's about the fact that, FP&A

is becoming more strategic,
and analytical, and it's,

going beyond of just finance function.

So this is the main concept of this
extension that it's not financing

in FP&A,

is not the function just consolidate
and operational and strategic plans,

but actually it's doing this,

it's collaborating and it's
challenging and changing those.

I would say that, other
words, other definitions,

that are similar to the
concept of expanded planning
and analysis. This is this,

integrated FP&A where we have to
integrate plan from different levels of

organizations. And at the
beginning of this conversation,

I mentioned three important plans
that we really have to integrate.

It's strategic, it's financial and
operational. And if financial plan,

this is our traditional
role. Yeah. With, XP&A,

we are going to strategic function. We
are helping with strategic planning,

and we connect in these to financial
plan and operational plan and

also help in operational plans, to
realize through, one approach through,

analytical, and driver based
approach as well. So, and of course,

it's all about, the technology.
Gartner mentioned this,

that it's about IML. It's
about predictive and prescreen.

Definitely. This is the world
that is expanding at the moment,

and we should expect a lot of things
happening there. So this is my view.

Well, thank you. And, you know,

I want to continue on some of these
trends and things that you've mentioned

previously. So in many webinars,
different things that you've talked about,

different things that, you know, the
board and the project have discussed,

digital FP&A I know it's very
important to our audience,

you know, our members at
IMA, a lot of curiosity.

So I'd like to get, your
opinion on how AI, you know,

artificial intelligence machine
learning has changed FP&A specifically?

Oh, yes. We started to observe,

the first strengths when, FP&A,

started to use a IML, it's
happened approximately,

four and a half years ago. I remember,

at one particular
meeting in San Francisco,

one of the board members
shared the experience,

how they started, to,

experiment with a machine
learning forecasting process.

So from year 2018, we
created, our non-for-profit,

artificial intelligence machine learning
FP&A committee. So, since then we,

the number of meetings, all
meetings are, a digital format. And,

I must say that we looked,

the members are coming from
different countries and,

different leading organizations,
such as Maersk, Amazon, DWI,

government of Ontario,
Jaguar, all the Microsoft,

Pepsi and many others.

We looked at a number of amazing
case studies and normally what we do,

FP&A professionals and also
some thought leaders. We

look at, the trends, how it's changing,

where we are at the
moment. What is the gap?

The main conclusion is that definitely
it's already happening. Definitely it's,

creates a lot of opportunities,
especially I mentioned to you that,

we still continue to spend
a lot of time in FP&A

in non-value activity. Yeah. So one case
of Microsoft, it's definitely, worth,

looking at, we had several
presentations from, Microsoft people,

both in Japan and also in,
America, in Europe as well.

So in Microsoft, something
that was done, by,

many people within several months at
the moment it's automated and done by,

maybe one or two people
with push of the button.

So practically the revenue
forecasting, and one of the biggest,

company in the world,

it's automated at the moment
and it's automated to really,

granular level. And when people
say that, oh, we are quite complex,

we are quite big. It's not for us.
It would be difficult to do this.

I always say that if it's possible for
one of the biggest company in the world,

it's a huge, huge
message to all of us. So,

but the main conclusion is that,
artificial intelligence machine

learning matters, they create
additional, opportunities for us in FP&A,

because they release time, they allow
us, to move away from that boring,

firefight and, jobs,

where we look at a lot of spreadsheets
where data are not working,

we really can move our profession to the
next level, because our belief is that,

it's artificial intelligence and
human intelligence that really

create, the best in class of FP&A.

Now, as we take a step in
the direction of, you know,

adapting to these trends and
everything, you just mentioned,

what it really means to the professional.

I think our listeners need to really
understand not just the concepts and the

theories of what's out there,

but what does it actually mean to them
as an individual? So as far as, you know,

the skills and the capabilities
of today's FP&A professional,

you just talked about it a little bit,
as far as the technological skills,

the human skills, but, you know,

what should our listeners
really be focusing on far
as personal development when

it comes to adapting to
these emerging roles?

Thank you for this question.
What I would say that,

our traditional role in finance
in management accounting is

analyst. Yeah, we are really
good analysts. We are,

in FP&A we're really
good at, model buildings

in Excel, at understanding the
main methods and all of these.

But the reality is that our traditional
role of analysts is expanding. So,

really to be, at the age
of FP&A professionals,

we have to develop the skills, but
at the same time, I don't want,

to say to people that they have to become,
data scientists and, influencers and,

you know, they have to be
programmers. It's not the point.

What we have to understand that FP&A

department, it's a
multidiscipline department.

This is department of
different specialized roles and

different general roles as well.
So, the T shape FP&A professional,

it's quite a popular, subject
at the moment. Isn't it?

So the reality is that, yes,
there are some emerging roles,

and I'm about, to share those with you.

We identified five key roles
that should be at each FP&A

department in order for this department
to be a functional in order for this

department to be a really effective
in this incredible environment.

But what I want to say,

it doesn't mean that you have to have
minimum five people in your department bec

ause people can combine roles. Yeah.

And what I want to say that
when you listen about this,
please don't think that,

oh, I don't have a chance because,
you know, I don't have time,

or I don't have capabilities
in that particular role.

It's about the team. it's
about how it goes. So,

let us start from some very
interesting, roles that we,

identified at the marketplace.
The first one is FP&A architect,

emerging role, the role that previously,

at least here in the UK was
called system accountant.

Or I can see that in
the us it's called FP&A

model, or in different countries
it's means different things.

But what I want to say
that, FP&A architect,

it's not only system accountant or
modeler, it's much wider than this.

So the term architect,

so this is the building
of, this infrastructure,

decision making process that
consists of, not only technology,

but the process in order to
make sure that we implement and

the drivers from the raw data, it goes,

directly to the systems to driver based
model. the system analyze it, transform,

is to decision sets where let's say

storytelling, platforms,
and decision makers.

They look at these at different levels.
So obviously in order to create such,

infrastructure, it would
require, not only technology,

but also the process.

So FP&A architect is the bridge
between IT and many other departments

and the person who can do this. Yeah.
So this is the first role emergent role,

another role, we call
this FP&A data scientist.

It's not a classical data scientist
with university degree in quotes and,

so on so far,

but this is the bridge between
fine and data science function.

So this is the problem of, today's
world that, we have so many,

different disciplines,

and we don't have translators bridges
between those disciplines. So,

FP&A data scientist is
someone who is skilled

in using predictive technologies,

such as IML to uncover those
drivers and trends that will

be used for the planning models
here, but at the same time,

this person can really
translate, the land,

which can be translated
between in data science,

world and FP&A world, other
roles, that we identified,

there could be more like from
the IT side, of the shape,

of course, FP&A storytelling,

it's FP&A influence in particular
influence and without the authority.

Yeah. So those are the
roles they should be fueled.

But please remember that depending on
the talents and abilities people can

develop in one of, or
two of those, and always,

could be at the age of this profession.

And, you know, lastly,

now that we have introduced maybe
some new trends to our listeners,

maybe some new roles, you know,

maybe the listeners have heard
about these different topics,

but need to know more,

what are some additional resources that
you would recommend as far as staying up

to speed with FP&A, and everything
that we've talked about today?

I would say that there are a lot of
resources available at the moment. Yeah.

And, I know that at IMA,

you have a lot of resources
that are so relevant for FP&A

recently we started,

to collaborate with your Institute
as well at some of the webinars.

And of course, I would like
to recommend our FP&A website,

where we have a lot of,
articles and videos and,

practically every week have,

webinars and digital FP&A boards.

You also can download some of the, papers
that we do, research papers, survey,

inside papers. And of course,

there are a number of books.

Some of them I can
recommend, I really love,

book by Steve Morlidge and Steve
Player is called Future Ready:

How to Master Business Forecasting.
It was written some time ago,

but I think it's a fantastic
classical book, in order,

to understand the forecasting
world. Yeah. from my side, with

my colleague, Michael Ko,

we are writing a book that is based

on the, results of the
travel to 16 countries,

27 cities around the globe. Hundreds
of meetings with FP&A professionals,

looking at hundreds of case studies and
actually looking at the trends around

the globe. It should be
ready somewhere this year.

So it's another thing
that I would like to share

with people. Thank you.

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