Digitization and change of FP&A
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Rafi Wadan gave a presentation on the impact of digitization on the role of FP&A (finance, planning, and analysis). Digitization is driving changes to FP&A tasks and processes through automation, use of big data and advanced analytics. It is also enabling new business models that require changes to traditional FP&A roles. The presentation analyzed trends in job advertisements, skills requirements, and tasks to show how FP&A roles are evolving to require stronger technical, analytical and soft skills as the function shifts from data processing to business partnering, decision support and helping shape digital transformation.
![7Rafi Wadan | Digitization and change of FP&A
Digitization and FP&A
Definition of digital transformation
Quote from G. Kane (Professor for information
systems) from „Achieving digital maturity“ (2017)
“Perhaps the most common understanding –that
digital transformation is about the implementation
and use cutting-edge technologies is likely the
most misguided […] The best understanding of
digital transformation is adopting business
processes and practices to help the organization
compete effectively in an increasingly digital
world.”
Quote from Freistühler and Kempkes from
„Controller and data scientist in practice“ (2019)
“The objective is not so much to replace the data
scientist in his function as a technology expert, but
rather to promote long term cooperation through a
common understanding of the possibilities of
modern data analysis.”](https://image.slidesharecdn.com/digitizationandchangeoffparafiwadan-201103233447/85/Digitization-and-change-of-FP-A-7-320.jpg)
Digitization and change of FP&A
- 1. 1Rafi Wadan | Digitization and change of FP&A Digitization and the change in FP&A
- 2. 2Rafi Wadan | Digitization and change of FP&A Agenda Presentation objectives The objective of this talk is to answer following questions: 1. What is the general impact of digitization on FP&A? 2. How are tasks in FP&A evolving? 3. How is the role of FP&A analysts changing in the future?
- 3. 3Rafi Wadan | Digitization and change of FP&A Academic foundations: • Doctorate at the chair "Corporate Accounting and Controlling" at the TU Chemnitz about "Influence of digitization on the role of FP&A". • Master of Science in Business Administration at the University of Goettingen Focus: Corporate Management and Controlling • Bachelor of Science in Business Administration University of Hamburg Focus: Corporate Management Industry experience: • CEO & Co-Founder – Stargazr (Hamburg) • Financial Analyst – Lufthansa Technik (Los Angeles) • Controller – Beiersdorf (Hamburg) Rafi Wadan
- 4. 4Rafi Wadan | Digitization and change of FP&A AI-powered software for FP&A
- 5. 5Rafi Wadan | Digitization and change of FP&A AI powered software for FP&A Value Driver Model & Sentiment Analytics Predictive and Prescriptive Analytics Collaboration Feed Analysis Forecasting Reporting
- 6. 6Rafi Wadan | Digitization and change of FP&A Digitization and FP&A What is the digital transformation?
- 7. 7Rafi Wadan | Digitization and change of FP&A Digitization and FP&A Definition of digital transformation Quote from G. Kane (Professor for information systems) from „Achieving digital maturity“ (2017) “Perhaps the most common understanding –that digital transformation is about the implementation and use cutting-edge technologies is likely the most misguided […] The best understanding of digital transformation is adopting business processes and practices to help the organization compete effectively in an increasingly digital world.” Quote from Freistühler and Kempkes from „Controller and data scientist in practice“ (2019) “The objective is not so much to replace the data scientist in his function as a technology expert, but rather to promote long term cooperation through a common understanding of the possibilities of modern data analysis.”
- 8. 8Rafi Wadan | Digitization and change of FP&A Digitization and FP&A Finance and FP&A plays an increasing role within the digital transformation ... Digital transformation: The CFO´s role McKinsey & Company (2019) “In the future we don’t need any controller more” Weber & Schäffer (2015) CFO - Fox or hedgehog? Enzenhöfer & Reimer (2020) Source: McKinsey, 2018, etc.
- 9. 9Rafi Wadan | Digitization and change of FP&A Digitization and FP&A ... but what impact does it have for finance and FP&A? New Opportunities for existing processes New business models Monthly Reporting High amount of repetitive Work High amount of automized Work Monthly Reporting • High assets • High production cost • Fast revenue approach • No assets • Low production cost • Slow revenue approach Room booking/ Car production Room sharing/ Car sharing
- 10. 10Rafi Wadan | Digitization and change of FP&A Digitization and FP&A FP&A is forcing the transformation from two main areas Optimization of processes and tasks New Business Model New services and new products Changes of current business model Improvements of Tasks Improvements of Processes
- 11. 11Rafi Wadan | Digitization and change of FP&A Digitization and FP&A Improvement of processes and tasks + internal and external data
- 12. 12Rafi Wadan | Digitization and change of FP&A Digitization and FP&A New business models Source: Volkswagen, 2019
- 13. 13Rafi Wadan | Digitization and change of FP&A Digitization and FP&A “Industry 4.0” is the increasing digitization and automation of production systems from humans and machines as well as their networking among themselves (Kagermann et al., 2013)
- 14. 14Rafi Wadan | Digitization and change of FP&A Digitization and FP&A Source: McKinsey, 2018 Big Data RPA Cloud Computing Machine Learning Deep Learning Predictive Analytics Pricing model New competitors New customers Technical perspective Strategic perspective
- 15. 15Rafi Wadan | Digitization and change of FP&A Digitization and FP&A Car is turning into Computer due to Digitization
- 16. 16Rafi Wadan | Digitization and change of FP&A Evolving Tasks in FP&A Source: McKinsey, 2018 What tasks are affected by digitization?
- 17. 17Rafi Wadan | Digitization and change of FP&A Evolving Tasks in FP&A Source: McKinsey, 2018 What tasks are affected by digitization?
- 18. 18Rafi Wadan | Digitization and change of FP&A Evolving Tasks in FP&A 1980 Analyzing Data Crunching Reporting Storytelling Presentation Planning • Interface between the finance function and management • “Bean counters” à Support in Decision-making • Preparing financial statements • Measuring company's performance • Providing decision related information (Cokins, 2013). 1990 2000 2010 2020
- 19. 19Rafi Wadan | Digitization and change of FP&A Evolving Tasks in FP&A Time Analyzing Data Crunching Reporting Storytelling Presentation Planning • Interface between the finance function and management • “Bean counters” à Support in Decision-making Impact of Digitization
- 20. 20Rafi Wadan | Digitization and change of FP&A Evolving Tasks in FP&A Trends of big data reduces time for analysis processes ... administrative work (1h) lunch (0.75h) data handling (5h) analysis (1.25h) Before big data administrative work (1h) lunch (0.75h) data handling (6h) analysis (0.25h) After big data
- 21. 21Rafi Wadan | Digitization and change of FP&A Evolving Tasks in FP&A ... ideally new tools could change the function of controllers towards business partnering administrative work (1h) lunch (0.75h) data handling (3h) analysis (1.25h) business partnering, experiments (2h)
- 22. 22Rafi Wadan | Digitization and change of FP&A Changing Role of FP&A Analysts Statements from Prof. Weber & Schäfer: • Controllers need to develop their skills profile! • Controllers must master the analysis of Big Data • Possibly, Data Scientist will be enough as interface between management and companies data
- 23. 23Rafi Wadan | Digitization and change of FP&A Changing Role of FP&A Analysts Analysis Method Exploratory job advertisement analysis for the DAX30 companies • N=75,455 à 1923 positions (2,55%) articulate FP&A Analysts/ Management Accunting positions • Results analyzed in relation to total job advertisement between Jun 2014 – Jul 2017 of German Dax 30 Companies • Correlation analysis was carried out in order to derive answers
- 24. 24Rafi Wadan | Digitization and change of FP&A Changing Role of FP&A Analysts 0,00% 0,50% 1,00% 1,50% 2,00% 2,50% 3,00% 3,50% 4,00% 6.2014 7.2014 8.2014 9.201410.201411.201412.2014 1.2015 2.2015 3.2015 4.2015 5.2015 6.2015 7.2015 8.2015 9.201510.201511.201512.2015 1.2016 2.2016 3.2016 4.2016 5.2016 6.2016 7.2016 8.2016 9.201610.201611.201612.2016 1.2017 2.2017 3.2017 4.2017 5.2017 6.2017 7.2017
- 25. 25Rafi Wadan | Digitization and change of FP&A Changing Role of FP&A Analysts Decision-makers faced with the problem of the amount of information in the reports
- 26. 26Rafi Wadan | Digitization and change of FP&A Changing Role of FP&A Analysts FP&A analysts are facing impact on three competency/skill areas (Schäffer and Weber, 2015) IT Competences Technical and methodological competences Soft Skills
- 27. 27Rafi Wadan | Digitization and change of FP&A Changing Role of FP&A Analysts 24,2% 13,9% 8,7% 5,0% 1,9% 1,3% 0,9% 23,5% 15,3% 7,5% 6,8% 2,2% 2,3% 1,1% SAP MS Excel SAP ERP|R/3 MS PowerPoint MS Access Visual Basic, VBA SQL IT Competencies of MAs 8.2014-7.2015 8.2015-7.2016 7.2016-6.2017 100 519 44 22 292 978 105 78 python java php ruby Programming Languages 8.2014-7.2015 8.2015-7.2016 7.2016-6.2017 50 336 120 34 10 24 74 354 115 54 52 49 R MATLAB SAS SPSS Tableau Qlikview Statistical Software Programs 8.2014-7.2015 8.2015-7.2016 7.2016-6.2017 IT Competences
- 28. 28Rafi Wadan | Digitization and change of FP&A Changing Role of FP&A Analysts IT Competences 54 11 8 45 9 67 9 20 72 165 64 17 79 20 108 106 hadoop hive mapreduce pig cassandra spring mongodb nosql Big Data Technologies 8.2014-7.2015 8.2015-7.2016 7.2016-6.2017 7 25 42 8.2014-7.2015 8.2015-7.2016 7.2016-6.2017 Automation 1 14 42 8.2014-7.2015 8.2015-7.2016 7.2016-6.2017 Digitization
- 29. 29Rafi Wadan | Digitization and change of FP&A Changing Role of FP&A Analysts 16,0% 15,0% 9,0% 6,9% 5,6% 5,2% 4,1% 4,0% 3,9% 4,0% 3,1% 2,1% 1,7% 8,9% 10,3% 15,3% 14,1% 8,4% 7,7% 6,6% 5,0% 4,2% 4,1% 4,1% 3,8% 3,0% 2,2% 2,0% 9,3% 10,1% Analysing Planning Reporting Budget Decision Deviation Forecast KPI Financial Statements Investment CalculationProfitability Predicting Costs Control Aufgaben Controller 8.2014-7.2015 8.2015-7.2016 7.2016-6.2017 Methodological competences Tasks FP&A
- 30. 30Rafi Wadan | Digitization and change of FP&A Changing Role of FP&A Analysts Methodological competences 16,0% 15,0% 9,0% 6,9% 5,6% 15,3% 14,1% 8,4% 7,7% 6,6% Analysing Planning Reporting Budget Decision Aufgaben Controller 8.2014-7.2015 8.2015-7.2016 7.2016-6.2017 Tasks FP&A
- 31. 31Rafi Wadan | Digitization and change of FP&A Changing Role of FP&A Analysts Soft Skills 0% 5% 10% 15% 20% 25% Job Experience EnglishSkills AnalyticalThinking Team orientation Com m itm entFlexibility Com m unication Load-bearingcapacity Presentation Skills Assertiveness Readinessforaction M otivation Self-confidence Own responsibility Senseofresponsibility Independence Perception SocialCom petenceCreativity Custom erorientation 8.2014-7.2015 8.2015-7.2016 7.2016-6.2017
- 32. 32Rafi Wadan | Digitization and change of FP&A Changing Role of FP&A Analysts Soft Skills 5,8% 2,9% 4,9% 6,7% 3,5% 3,6% Communication Presentation Skills Resilience 8.2014-7.2015 8.2015-7.2016 7.2016-6.2017
- 33. 33Rafi Wadan | Digitization and change of FP&A Changing Role of FP&A Analysts
- 34. 34Rafi Wadan | Digitization and change of FP&A Lesson Learned FP&A is strongly impacted by the digitization • Older business models are affected à rethinking of FP&A à help shape digital transformation • Questioning the business model, resource allocation and culture • Automation potential in corporate management • Capabilities must expand: The importance of social skills in terms of communication and presentation skills is increasing • FP&A must strengthen the analytical potential of their company!
- 35. 35Rafi Wadan | Digitization and change of FP&A Thank you for listening! Hamburg, Germany +49 40 35564907 rafi.wadan@stargazr.ai www.stargazr.ai