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What does modern finance look like? Planful customers share financial planning field lessons

Jon Reed Profile picture for user jreed June 4, 2024
Summary:
Is modern finance a real thing - or a marketing creation? The best way to find out is directly from enterprise projects. Here are four views from Planful customers, via my interviews at Planful Perform.

Andrea Sorenson, Director of Finance at YMCA of the Greater Twin Cities
(Andrea Sorenson (YMCA) at Planful Perform '24)

Is there such a thing as modern financial planning? If so, how would we define it? Characteristics that come to mind for me include: real-time, collaborative, and spreadsheet-free (or, at least, full integration with spreadsheets for any auditable data). 

Cloud-based? I think yes, for the most part. Because otherwise we are firing documents back and forth, inviting hair-pulling data versioning problems ("you made changes to the wrong spreadsheet; check your spam folder" - yeah, that might be modern, but in a crummy way). 

And, though it's a phrase that nudges up against a marketing cliché, "fast time to value" surely has to be on that list. Generally speaking, if my finance leaders are spending less time validating data and more time digging, discussing, and acting on the numbers with their line of business leaders, I like what I hear. 

Modern finance - as defined by customers

Planful has framed modern FP&A in an aspirational context, via a "continuous planning" mantra. While most organizations wouldn't choose to continuously plan, stacking up your finance processes against that kind of maturity model is well worth it (e.g. some orgs managed to switch to monthly planning during the pandemic). 

But there is another way to get to modern planning: document the practitioners. After all, if "modern finance" is simply an elusive/feel-good concept designed to sell more software, we should push back. At Planful Perform 2024, I had a chance to delve into a number of customer projects (see my event review, Planful Perform 2024 - customers kick tires on AI, but will financial planning break down the decision silos?

After the event, I went back into the interviews, in search of standout examples of financial planning in action. Let's start with Andrea Sorenson, Director of Finance at YMCA of the Greater Twin Cities. Sorenson's team has worked through challenging pandemic circumstances, and emerged with new ways of working. When it came to a new financial planning tool, Sorenson knew it needed to be cloud-based; her internal IT team was not "robust enough" to put this on their plate. I asked Sorenson how long it took to achieve impact with Planful after go live. She responded: 

Immediate efficiencies once we implemented. A lot of those pain points went away. Our reporting, like I said, you'd have to cross your fingers that it ran overnight. We would find errors... So reliability was the immediate [benefit]. 

But of course, with modern finance, reliability is table stakes. It's what you do with that data. I asked Sorenson: is her team still caught up in finance admin, or are they able to dig into the data? 

We're digging into it. We're actually doing planning on each of our different business lines. We're doing five year strategic planning, business line by business line right now... We have childcare. We have a bunch of government funded programs, too. So, looking into the stability of all that, for childcare, it was: who are our competitors? What is our price? What is the government saying they're going to be subsidizing? 

Another candidate for the modern finance list: it should help organizations on tight budgets manage their lines of business in a sustainable way. The YMCA has multiple lines of business, including: 

We have the membership line for the gym and swim stuff. We have an equity innovation center where we go and do DEI work with different companies. We do a lot of cities and schools, and then some corporate too... So we just we said we need to prioritize, and really be checking in every six months with each of these business lines. And that's being done with data that's feeding from Planful, but into Excel-based reports so that we're updating it, including the non-financial data that we've brought into this whole plan. 

Less number-wrangling, more analysis

For Talyon Perry, Sr. FP&A Analyst, Together Work, having more time to analyze the numbers rather than compile them led to new insights. As Perry said to me: 

We found that as well. I'm thinking of one example where we have a tech vendor that we had significant spend. With our old Excel process, we would probably review some of our top vendors on a quarterly, and definitely more of an annual basis. And so to see the trajectory of how a cost was moving was harder to do.

Now, we have reports set up that our technology business partners have access to every single month, where they can look at variances and trends for all of those top vendors. So we've been able to identify places where we feel like there might be some way to either change the application, to have to use less of this vendor, or: do we change pricing structure to be able to get the margins on the certain products... As things move, dynamically, we can see impacts of that month over month, with usage of customers and things like that.

Flexible locations - and self-sufficient budget holders

Matthew Zabinski, Production Manager at the Center For Internet Security (CIS), found that COVID workforce adaptions changed their budgeting workflows for the better. As he told me: 

Pre-COVID in the office, we had maybe 30 virtual employees around the country. 90% of our company was in-person, in-office before COVID hit, but now it's reversed. Pre-COVID, I would be the one running those meetings and showing people what to do in the system. Then when COVID hit, everybody's virtual - now I need them doing it. 

With a tool like Planful, we're able to have our budget holders be self-sufficient in the system, with some guides, of course, from the finance department. So we've flipped the roles of in-person and virtual employees. Then being able to have our budget holders get in at any point in time on their own, and feel comfortable being able to get the information they need - drilling down into transactions and things like that; it's been great.

Accuracy in workforce management

Luke Metzger, Financial Systems and Reporting Manager at Workiva, is evolving their approach to Workforce Planning: 

It's been live on our workforce - new templates, a new way of adding new employees. We've built an attrition model to streamline some things, and a new hire model. So having that accuracy has been pretty awesome. In the first couple months of the year, as we turned this over, I think there was some hesitation. Looking at some year-over-year comparisons, things change year over year, especially when you're expanding in different areas, and new people are coming on board. 

We're working towards the next phase. We're doing revenue outside of Planful right now. Now that we've been getting the base of our business partnering down in structured planning, we're gonna try to move to that next phase of how to incorporate our revenue, our bookings forecast - we're bringing in those elements in to get a full picture.

My take

Whatever we consider "modern" in a financial planning context is going to vary by industry, and by organization. As these stories show, this is not an end state where you get a fantastical result automagically. The push towards a more continuous/collaborative planning model is going to force the issue internally. I suspect it will challenge Planful to deliver even more, especially in demanding industry scenarios. But stacking up wins along the way is the only way to ensure your project doesn't lose momentum (and funding). These stories show that when you do this right, you get results to fuel what's next. 

None of these customers were working with Planful AI yet, though the interest in evaluating such tools is almost universal. However, AI isn't going to suddenly justify your finance pursuits. I'm much more optimistic about finance leaders adding AI to processes that are already delivering results than betting on AI to save ourselves from spreadsheet chaos on its own. That's not happening. 

Updated, June 5, 6am UK time, with a few tweaks for reading clarity.

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