Financial planning and analysis (FP&A) teams have a key role in post pandemic recovery. But are they ready for the challenge?
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Survival of the fastest
How BMW is accelerating to keep up with a changing world
In an uncertain business environment, how can data analysis and shared risk management partnerships stop organizations from losing out? Michael Kreeft, CFO of BMW Japan, tells us how the past 18 months has pushed financial planning and analysis (FP&A) to adopt swifter, more flexible decision-making processes.
How have the demands on FP&A changed over the past 18 months as a result of COVID-19?
Business has had to adapt quickly to the new, post-pandemic environment. To adapt to uncertain situations and changing environments, every function has to be flexible. And scenario planning has become increasingly important over the past 18 months.
But this is a change that was happening even before Covid. New technologies such as robotic process automation and artificial intelligence were coming into the finance functions. And there was a move from focusing on the past – your balance sheet, profit and loss – to a more predictive environment where you steer the business in an analytical way.
To make these predictive forecasts, we need to invest in new systems and technologies. But the skill sets needed by the accounting and controlling functions are also changing. It isn’t just about gathering data – we also need people who can properly analyze that data and give guidance to the business about how to respond to it.
When it comes to decisionmaking and planning, how much do you rely on data instead of experience and intuition?
You can never completely sideline experience, but I'm working toward being more data-led. I've worked at BMW for 35 years, so I've seen all kinds of different scenarios, and I’m increasingly asking for data analysis to confirm whether the choices made using experience are right. I also use data to look deeper to see whether there are factors below the surface that are causing trends.
In Japan, data analytics is used daily in sales and financial planning. But it isn’t available in all areas: on the overhead side, things are less predictive and more traditional – they are based on plans and budgets.
What technology are you looking to invest in over the next 18 months?
We’re developing robotics for accounting processes and digitizing invoices. In Japan, this is more challenging, because there are three alphabets – hiragana, katakana and kanji – which are all used at the same time. So we have to consider that when we digitize invoices.
And then there’s making the customer experience digital. A digital customer journey is going to end with a customer ordering a car and paying for it, but also parts being ordered and stored. So there are lots of background processes, and a completely digital customer process will have to be connected to the back office as well.
Is there an appetite at BMW to find a new way of working?
The appetite for change is there. We realize as an organization that we are in a digitally accelerated world: changes are happening that may otherwise have taken another 10 to 15 years.
If we want to stay competitive, we have to move quickly as an organization. Only the companies that move fast will survive.
What role do you think third parties can play in helping FP&A in this changing environment?
We tend to perform logistical processes by ourselves, and this is an area where we could use external parties. For example, the automotive industry is facing big supply issues and shared services could give us a quick way to perform risk analysis of the supply chain.
Developing everything internally is never the best solution. If there are experts and organizations that have expertise in certain areas, then why not use them instead of trying to come up with your own internal solutions?
Managing an organization or department shouldn't be about the number of employees or managers that you have. It should be about efficiency and being able to provide the best service internally to your organization. If that can be done better with a third party in a certain area, then why not use them? To use a car analogy: you need to be in the driver’s seat, but you don’t have to build every part of the car.
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