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
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