Ep. 171: Larysa Melnychuk - Modern FP&A Trends

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FULL EPISODE TRANSCRIPT:
Adam: (00:05)
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.
 
Mitch: (00:57)
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?
 
Larysa: (01:33)
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.
 
Larysa: (02:38)
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.
 
Mitch: (03:41)
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.
 
Larysa: (04:24)
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.
 
Larysa: (05:32)
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 place. 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.
 
Larysa: (06:36)
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.
 
Larysa: (07:43)
And also those drivers that, we never knew they existed, and, a
lot of things h...