Ep. 86: Mitchell Powell - Financial Performance Management

Contact Mitchell Powell:
https://www.linkedin.com/in/mitchpowell2/


FULL EPISODE TRANSCRIPT
Mitch: (00:05)
Hello and welcome back for episode 86 of Count Me In on your host
Mitch Roshong and I'm happy to bring you another engaging
conversation on this accounting and finance podcast. Today's
guest, Mitchell Powell, joins my cohost Adam to talk about
financial performance management. Mitchell is the CFO at HJ
Russell company, construction services, business, specializing in
construction program management and property management. In this
conversation, he introduces the concepts and uses for financial
performance management software, and he also offers insight into
how it can benefit your operations. So to learn and hear more,
let's go over to the full episode now. 
 
Adam: (00:51)
So can you give us an overview of what financial performance
management software is and how it is beneficial? 
 
Mitchell: (01:03)
Absolutely. So, I could talk all day about this stuff, generally,
you know, in tech, finance generally and financial performance
management particular, because, let's see, I probably started
using this about 15 years ago and it has continued to evolve in
terms of the sophistication and capabilities as well as pricing.
So, you know, these products are now available to, you know,
wider variety of companies that used to could afford them if you
will. But for me, it's, you know, it's kind of financial
performance management is just, you know, kind of one tool in the
toolbox. If you think about all the tech involved in the finance
operations, obviously the ERP systems to Excel, you know,
whatever, this is just another one of those tools, but it's, it's
kind of a critical one because it's kind of the glue that pulls
everything together. And I guess as we talk about it, I'll
illustrate with some examples, but it's funny, I actually came up
with an analogy just before this call, and it's kinda like a
carpenter, right? So all carpenters have their tools and there's
some basics, right? So there's some fancy gizmos, not all of them
need, but you know, you've got to have a hammer and you’ve got to
have a saw. And so to me, it's like, if you see a carpenter with
a handsaw spending all day, you know, kind of sawing wood and I
show up and say, well, why don't you get an electric buzzsaw
circular saw and you can do in 10 minutes, what you did, what's
taking you all day. So it's really applying the right tech to
what is a pretty complex operation, ultimately trying to pull
together a lot of information in one place. You know, as I look
back over the three years, I've been with my current employer
and, you know, close to 10 at the previous, butwe do and I have
to credit financial performance management applications with
this, probably twice as much work if you will, in terms of,
reporting and information provided, but we do it with less
people. And so in the transformation that can be enabled through
the appropriate application of technology in general, and in the
case of this conversation for financial performance management
properly implemented, it's a tool that really pulls together, all
of your information in a single database. And so maybe what I
should do is just give you just a broad overview of kind of what
performance management software is and how it works. So, you
know, many of your listeners have probably either had some
exposure or have heard of some of the brands out there. There is
Anaplan, Oracle, Hyperion, Adaptive planning. We use IBM Planning
Analytics, which used to be called TM1 And it's subsequently been
rebranded as IBM Planning Analytics through our acquisition, but
that's the class of software that this is, and, you know,
properly implemented, it pulls together in one place, all of our
actuals from our GL and pulls together or budgets. And so you
have a one place, the ability to kind of drill in and report with
an agility and flexibility that you just couldn't, if you either
had your data sets and different disparate places like budgets
and Excel and all your actuals in your ERP. So this enables that
kind of flexibility. So that in a nutshell is what financial
performance management software is. Maybe what I should do is let
me give you a kind of an example. It is, financial performance
management software is a multidimensional database. So you, when
you, when your data comes in, it's categorized, according to the
typical ways you typically think about it in your business. And
I'd say probably the five usual suspects, are of course the
entity or company, the accounts, the period versions, whether
that's a budget or a current forecast or actuals or whatever,
more on that later, because that's a very powerful capability.
And then lastly, the measure, he's talking about balances,
activity so forth and so on. And so when data comes in, either
through your budgeting process or your ERP, it's already,
pre-calculated internally, according to the hierarchies you set
up in those various dimensions. So obviously we have hierarchy
set up for periods often for the companies and consolidations,
obviously there's an account tree. And so to put all that in one
place and then kind of categorized in those ways enables quite a
bit of flexibility. So that, that's one of the two components
generally in terms of how these various packages work. Is it's
based on dimensions. and it's a typically called a
multidimensional structure. The second is it's kind of like a
blank slate.. So there are various BI packages that you can often
buy. Some are associated with the various ERP systems. Some are
offered by third party vendors, and often they are directed at a
particular industry vertical or a particular solution. The class
of products I'm referring to on the Anaplan, the IBM Planning
Analytics, Adaptive planning, those are really more of a blank
slates. So if you think about opening up an Excel spreadsheet,
you have a blank slate. You can do anything you want to with it,
and so these are products that you can, the sky is kind of the
limit in terms of the kinds of things you can do with it in the
same way as you think about an Excel spreadsheet. So it's
extremely flexible to set up however you want to meet the needs
of your particular business. So in terms of, you know, typical
uses for these, I'd say there's probably two main things that
they're often used for, reporting is a big one. I mean, it's a
great reporting package. People struggle with reporting the
export data to Excel and manipulate it, and so, you know, once
your data is in this system and categorized correctly, and
especially if you have, if whatever product you end up with
operates through Excel as a reporting interface, which I think
most of them do, certainly the one we use.Then you have a very
flexible reporting interface, a very agile, and you can do some
great ad hoc reporting. So reporting is number one, and then
budgeting and planning, forecasting is the second kind of major
category that people use these products for. And so I could talk
all day about, you know, kind of the things that it will help you
do to streamline your budgeting process, but maybe we'll talk
about that a little later and then some other benefits besides
those two main buckets, we have found that to be a tremendous
benefit in streamlining our monthly close. We have found it to be
a benefit in, various, consolidation exercises, ad hoc query and
drill downs, great for that. And it's lastly a great, great
control mechanism, both in the monthly close, as well as I could
go through a whole list of stuff I probably will later. And it's
also a great control mechanism. So in a nutshell, it's the place
that everything comes together. It's kind of the glue that pulls
your disparate data sources together and gives you a great deal
of flexibility and agility on your reporting
&nbs...