We gave a high-level overview of successful implementations in our previous article, “Laying the foundation for continued success with FP&A product implementation.” But each key area — process harmonization, data rationalization, and change orchestration — demanded further elaboration. So, in this article, we dive deeper into data rationalization.
Let’s start by unpacking how data behaves. It’s not just a uniform resource that a business accumulates over time. Data is also made more complex and inharmonious by the ever-evolving dynamics of departmental needs. Take the example of an Event company that deals with payroll data, event ticket data, multiple expenses data, point of sales data for merchandise, vendor data, and so forth. All these data are needed to create meaningful and actionable insights in the FP&A process. From these divergences, people acting in isolation establish processes in isolation for systems in isolation — compounding organizational inefficiencies over time. Therefore data rationalization is essential in the FandA transformation before migrating to a new system.
Before you rationalize your data, you must thoroughly understand it.
Data rationalization follows a very structured approach. To keep yourself on track, ask yourself the following questions:
- What are the stakeholder’s needs in achieving the FP&A transformation intiative’s vision?
- What data is available to us, and the gap?
- What data enhancement opportunities exist?
Understanding stakeholders' needs
As covered in the intro, data grows more inharmonious through siloed manipulations over time. Start by reversing course and taking a cross-disciplinary view of every department’s data needs. Thoroughly understand the decisions that are made using the data and the metrics that are currently being tracked.
Going back to the event company, FP&A transformation aims to improve profitability decisions for each event through a collaborative planning process among FP&A, production, operations, and marketing. FP&A will bring cost and financial insights to the whole process, and align them with marketing and profitability goals. To achieve this vision, it is essential to understand the drivers, metrics, and insights, which are essentially the data points needed by the departments involved in event planning.
We recommend that this process involve all your stakeholders as it will lay the foundation for cultivating internal advocates and the spirit of collaboration that’s vital to a successful implementation.
Mapping data sources and structures
With clarity on the data needs, you can start designing the new data structure. To do so, you’ll need to tap your accounting team for all information about their data sources and structures. What information is available to you through the CRM? Where are there gaps in the data you’re collecting? Is the data currently failing any of your needs? Once you’ve thoroughly investigated your data sources and structures, diagram out your ideal.
Back to the event company, a few examples – does my current department structure support planning and analysis by stages, production, health and safety, etc. Do I have vendors appropriately coded in the source system so we can plan by vendor and run our analysis against actuals for better negotiations and settlement?
Identifying data enhancement opportunities
By understanding various data needs and filling the gap, you already aligned with the vision and roadmap. Now it’s time to introduce growth which often needs more analytics and perspectives. Increased analytics will always call for enhancement to data. Data enhancement is a crucial step, which is easily skipped because these data are not originating from the source. Never hesitate to make the FP&A process/product the originator of data enhancements and cascade as the single source of truth.
With the event company again, there is a significant opportunity to improve profitability decisions when events are analyzed from perspectives like number of days, brand, location. These enhancements can be layered in as event attributes within the planning system, if not available in ERP.
There is much more to explore in the topic of data rationalization — so much so that it’s easy to get too in the weeds. But these questions can help you and your team stay focused throughout your own rationalization process.
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This article is contributed by Finance Transformation Specialist Ramya Krishnaganth, UVID Consulting.
