FP&A Software Implementation
Note: This article is sponsored by Capitalize Analytics
“Only 31% of software projects are deemed truly successful (delivered on time, within budget, and meeting expectations).” Why 70% Miss the Mark
“A staggering 19% of projects fail outright—completely abandoned or scrapped before launch.”
Everyone who has worked in finance has a horror story about implementing a finance tool. Glenn Hopper, my Future Finance podcast co-host, once humorously summed it up this way:
There are two things that will get you fired as CFO
Fraud
Suggesting you want to implement a new ERP 🤣🤣🤣
One of my first experiences with a major implementation project was a major failure. The Navy implemented SAP, and the whole thing was a high-profile failure. One news article I read was titled "Navy Spends $ 1 Billion on Implementing SAP and Has Nothing to Show for It." While the above examples are tied to ERPs, the complexity and challenges of ERP implementation apply equally to Enterprise Performance Management (EPM), or planning tool, rollouts.
Implementation failure is a real challenge for FP&A professionals. Today, I hear from CFOs and FP&A professionals who have selected a tool, spent six months implementing it, only to realize they are no better off than when they started and will have to abandon the project.
The truth is that not enough emphasis is put on the implementation phase of the project. Many people think selecting the right software is most important, but the reality is that no right software exists, and several tools will likely meet your needs. That is why getting the right partner and preparing for a smooth implementation is just as, if not more important than, the tool selection process. If implementation is so important, how do we increase the chance of success? In this article, I want to discuss five keys to a successful implementation:
Define success before you start
Choose your implementation partner with care
Phase the project, don’t rush it
Involve the right people
Change Management
Define Success Before You Start
When you decide the time has come to implement a planning tool, start by asking yourself what the core problems are that you are trying to solve. If you do not have a clear understanding of the pain points you need to solve and what success will look like, then do not do product demos. Without a clear understanding of what success means, you will be drawn to cool features and great salespeople. Start by listing your FP&A team’s biggest pain points, and then determine which ones a planning tool can address. Once you have a list, then define what success will look like for each of these pain points.
I recommend breaking it into three sections 1. Planning 2. Reporting 3. Consolidation. These are three of the most common areas that planning tools help solve. From there, you can break them into subsections, but always make sure to define what success looks like for each section and for the project as a whole. Once you have a clear understanding of what success looks like, you can move forward in the selection process. For more details on running a successful selection process, check out my free course.
Choose your implementation partner with care
"Software installations, in my opinion, largely failed because of the partner... all of these softwares out there, there's a lot of parity. Like, they do amazing things. But if you're not gonna be with a partner who is intentional about understanding what you want to do with the software and takes real interest in deploying it the right way, it's gonna fail regardless of what software you choose. - Christopher McKay, Director, Digital transformations, Capitalize Analytics
Christopher’s point about selecting your implementation partner with care cannot be understated. I always tell people if you are not 100% comfortable with your implementation partner, find a new partner or select a software where you are 100% comfortable. Getting 100% comfortable requires you to focus the selection process not just on the software but also on the partner. A few things to focus on during this process to increase your chance of success:
Require the software vendor to provide details about the implementation partner, whether in-house or external. Experience, resume, etc. Ask for references.
Meet with your implementation partner and make sure they have general knowledge about your industry/business, and that you feel comfortable with them
Do your homework and make sure you have a full understanding of your requirements
Remember, implementation takes time and money if you spent a year and $500,000 in labor costs building your financial model, do not expect your partner to do it in two months and for $20K. Focus on quality support, not the lowest price.
Once you are comfortable, you have selected an implementation partner that is committed to your success and has a strong understanding of what success looks like, then proceed forward with the project.
Phase the project, don’t rush it
"Phase, phase, phase, phase all day. It's a really, really key component of our delivery methodology. - Christopher McKay
As a kid, I remember being asked in a Boy Scout meeting how to eat an elephant. I had no idea what the answer was and said as much. I was then told the only way to eat an elephant is one bite at a time. Implementing a planning tool is like eating an elephant; you must do it one bite at a time. If you want to increase your chances of success, phase the project and don't try to do it all at once.
As you look at phasing, one of the best places to start is implementing your data in a flat file. This allows your implementer to begin understanding your data and get the project going; from there, you can involve IT and build direct connections to your data. As you build out the additional phases, think logically about the order of your process and focus on what is most important within that order. Remember, you do not have to use all the software from day one to get value. Personally, I think two of the most logical places to start are consolidation and reporting, and once you have them working, you can focus on planning and building because you will have accurate historical data.
Involve the Right People
Make sure you involve the right people from finance and the broader business. I remember a senior leader telling me his CFO tasked him with implementing a planning tool. They went through the selection process and implemented the tool. After implementation, they went to the business, and the business told them the tool was no good and that they were not going to use it. The CFO told them to start over. A lot of time and money could have been saved had they involved the right people from the beginning.
Every project should have, at a minimum, an Executive Sponsor, an FP&A subject-matter expert, and primary users from finance and the business. Involving a team of finance and business users will ensure the implementation addresses the concerns of everyone involved in the project. Involving the right people will also make the change management process easier as your project team will also be some of your best champions for the project.
Change Management
Communicate, Communicate, Communicate, and then Communicate some more. Obviously, this might sound overstated, but managing change requires communicating to the right people at the right times. Communication needs to be about a lot more than just updates on the project or what training will be offered. You need a communication plan that helps people understand the why behind the project and how it will benefit them.
Conclusion
Getting the right software is not about finding the perfect tool. It is about selecting a tool that can meet your needs and then implementing it correctly. Implementation requires a concerted effort by your team. Do not allow it to just be another project people are expected to do with a full-time job. The cost of getting your implementation wrong over the long run is more than the cost of having someone work part-time or even full-time on the project for six months. In this article, we discussed 5 steps to focus on to increase your chances of a successful FP&A software implementation:
Define success before you start
Choose your implementation partner with care
Phase the project, don’t rush it
Involve the right people
Change Management
If you want to go deeper on the subject, check out the interview I did with Christopher McKay as part of my FP&A Software Selection & Implementation Course here. You can also reach Christopher McKay and his team at Capitalize Analytics directly at their website.