FP&A has seen a significant transformation with the rise of new technologies and data tools. Yet, despite these advances, there’s a critical segment of the process that relies heavily on human interjection. This is “Last Mile FP&A,” defined as the effort required from the point of system extraction to final outputs, analyses, and dialogue. Like last mile delivery for logistics providers, it is the hardest part of the process to standardize, the source of the most variability, and critical for overall success. After all, the package either gets successfully delivered or not!
What Makes the Last Mile Critical in FP&A?
Last Mile FP&A bridges the gap between source data and various tools and outputs, regardless of the sophistication level of the organization’s systems, software, and technology. While technology has made it easier to aggregate and analyze data, it can’t replace the unique ability of finance professionals to package and synthesize information, and structure the dialogue cadence for maximum impact. Finance is and will remain a people sport!
According to The CFO Alliance 2024 Mid-Market CFO Sentiment Study, 51% of CFOs identified critical thinking and data analysis as a top 3 skill gap within their finance teams. These teams are filled with competent and educated professionals, so why is there such a gap? The answer is simple: time. Finance teams are often bogged down with processing tasks and fire drills, leaving them with little time for deeper analysis and strategic thinking.
The ripple effect is significant. Stakeholders don’t get the insights they need to make proactive decisions. Finance professionals miss out on opportunities to engage in higher-value activities, which are crucial for professional development and career growth. The biggest consequence? Static finance functions start to lag behind, as technology evolves, while outside expectations for finance teams continuously grow.
Skillsets for Success in Last Mile FP&A
Given these challenges, how can finance teams turn the Last Mile into a competitive advantage? The key lies in focusing on specific skillsets that technology alone can’t provide. Here’s what modern FP&A professionals need to master beyond the spreadsheets:
- Process Building: Arguably the most important senior FP&A skillset outside of analysis, critical thinking, and cross-functional socialization, FP&A professionals need to be able to design and implement scalable, repeatable, and transition-able processes from scratch. Even when the systems and embedded tools get you 90% of the way there, the path from 90% to 100% is a scratch process.
- Data Collection: If the data is important enough, but not captured within existing systems, writing it down on a napkin is better than not collecting it. The ability to create collection templates that are centralized, controlled, and accessible is an underappreciated, though integral, skill.
- Data Extraction: When systems can’t generate the analysis and outputs demanded, you have to get that data out and build it yourself (hello Excel, we just can’t quit you, and really we don’t want to). FP&A should be leading the interaction with IT and third party vendors to understand extraction capabilities, formats, report-scripting, and additional connectivity points.
- Data Aggregation and Transformation: Copy-paste is dead, and has long been the enemy of efficient process building with drill-down paths back to source data. Available tools have exploded over the past decade, and represent required learning for up and coming FP&A professionals. Low-code/no-code ETL is arguably the biggest change to FP&A since the invention of Excel, and is re-shaping the skillset composition of finance teams.
Community Insights: Addressing the Time Constraints
Time is a significant barrier for finance teams. The need to respond to fire drills often prevents professionals from working on higher-value activities that contribute to their development and advancement. To combat this, finance teams told us they are taking proactive steps:
- Investing in Upskilling: CFOs are focusing on equipping their teams with the technology, time, and resources needed to master Last Mile skills. This includes strategically leveraging third parties for skillsets that don’t fit within the capabilities or roadmaps of existing team members.
- Defining Good Last Mile Processes: The level of process automation from the point of system extraction to final outputs is inversely correlated with the pain of fire drills! Less time processing mean teams can produce more and minimize the pain of multiple updates, while also focusing on higher-value activities like analysis, socialization, and decision-making.
- Designing an Advancement Roadmap: Many FP&A professionals are taking charge of their own growth through self-directed training. Encourage them to research new tools and skills and engage with them on a regular cadence about how applying new technical knowledge can advance their career development.
During a conversation with the CFO of a clinical research start-up, he emphasized the importance of finding the right people for your organization, and then investing in them with opportunities to grow and learn additional capabilities. “It’s not easy to find the right people to fit culture, circumstance, and current team construction. Fit a good person into the puzzle, and then invest in the skill development to maximize the payoff!”
FWF Applications: Flexing Last Mile Skills
We’ve worked closely with multiple PE-backed companies, particularly in the critical phase following their initial investment. Many of our partner companies struggle with the limitations of a single ERP system which often can’t meet the full spectrum of stakeholder reporting requirements, especially for PE sponsors. Our team has mastered system-agnostic approaches to bridging the gap from source systems to comprehensive stakeholder reporting outputs.
While challenges often exist with a single central system, they are exponential when dealing with multiple systems for source data, mapping files, adjustment tables, etc. Common applications are tracking EBITDA adjustments for multiple financial presentations, and unifying accounting source data across multiple systems/instances, especially in the context of add-on acquisitions.
This process requires establishing central sources of truth (CSTs), where there is no debate as to what serves as the source for a variety of processes and outputs, as well as extract-transform-load (ETL) skills that serve to unify data from disparate sources/systems into structured datasets which become their own CSTs.
The Result? Clear and consistent flow through of source data information to outputs, automated update processes, and quick drill down back to transactional source data for attribution and other analyses.
Takeaways
Based on countless conversations with finance leaders and our experience working within the finance function, one common theme emerges: No single system will provide for all your FP&A needs, so finance teams must be proficient in bridging the gap from systems to outputs. To succeed in Last Mile FP&A, finance leaders must transform teams around targeted skillsets, including process building, data collection, data extraction, and data aggregation and transformation.
Investing in these skill sets and building robust processes is critical for modern finance teams. The purpose of data is dialogue, and while technology is a powerful enabler, finance is and will remain a people sport.
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First Water Finance (FWF) is a finance solutions platform supporting finance leaders, business owners, and capital partners through FP&A, Corporate Finance, and Community. FWF has supported over 100 management teams and sponsors, concentrated in emerging and mid-market enterprises, professionalizing and accelerating the finance function in pursuit of growth, acquisition, and/or sale objectives.