Back in 2012, when Michael High was heading up corporate planning across 30 countries for Shell, the energy company’s CFO made it known that it was time for Shell’s business leaders to reconsider their ritual of renegotiating annual business targets.
To that end, Shell’s finance leader let it be known that the business units could skip the company’s corporate planning process in the coming year, as an affirmation of their commitment to the targets they had agreed to the year before.Read More
“I actually think that this was the right insight at the time, but it generated a ton of knock-on consequences over time,” explains High, who commends the finance leader’s willingness to take head on what’s recognized in business at large as one of the budgeting process’s greatest vulnerabilities: target renegotiation.
Still, the consequences were real.
“When we went to turn on the planning system in 2014, most people didn’t remember how it worked. There was a series of intricate steps—something like 146 steps and different jobs required to get the IT application to do everything that it was supposed to. And, of course, if you do it only once a year, nobody remembers all the right steps,” comments High, who notes that the circumstances also exposed how IT talent often factors into corporate planning.
“If you think about the FP&A community and the IT community that supports FP&A, you realize that these tend to be high-turnover roles. They tend to be career-developing roles. So, you’d put people in them for maybe 2 to 3 years, typically. Well, by the time we got around to doing business planning in 2014, 80 percent of the organization that either had facilitated the planning process or controlled the IT systems had turned over,” recalls High.
Today, High views as a painful lesson the subsequent late nights and weekends required to get Shell’s corporate planning process back on track—times when many members of Shell’s FP&A team paid a high price. “I was accountable for the process, so it was a leadership failure on my part,” he states.
However, High observes that something more did arise from this consequential episode. Over the next few years, High says, he began to note how a shift was under way inside organizations as the ability to easily customize cloud application tools made them an attractive alternative to traditional ERP systems. Meanwhile, when it came to corporate planning, he became focused on how the talent demands of certain IT systems had traditionally put the planning process at a higher risk.
According to High, he was determined to “de-risk” technology in planning and eliminate IT complexity.
To better evaluate some of the new cloud applications, High began attending different conferences, including the annual gathering of the Association for Financial Professionals (AFP)—where the cloud vendors always highlighted how they were zeroing-in on corporate planning’s pain points.
This helped High to see how the adroitness with which certain cloud applications can access, correlate, and display company data could once and for all put an end to certain planning rituals such as the renegotiation of targets.
Concludes High: “What you have the potential to do today is to really change the nature of the performance conversation and the results discussion. You can go from having a static set of numbers produced outside of the room to a discussion during which you can pull up live data and talk about it and actually seek answers to questions on the spot.” –Jack Sweeney
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CFOTL: Tell us about Deep Water Gulf and how it fits into the world of Shell …
High: What the Gulf of Mexico unit entails physically, geographically, is a series of assets that stretch from the Mexico-Texas border and go about 400 miles east, almost all the way over to the Alabama-Mississippi-Louisiana border of the Gulf Coast. So, it’s about 400 miles across. Across this, we have eight major assets, producing assets, that are there, and we have a number of projects that are under way. These can come in two flavors. One would be building an outright brand-new facility. You could think of this as like putting up another factory, if you will, out in the Gulf of Mexico. The other option that we have is to actually develop a number of wells nearby an existing asset or factory, if you want to use that analogy, and simply tie them in via pipelines and other equipment to be able to produce from these through an existing asset. Over time, the industry has been shifting a bit more toward the second option, what we call subsea tiebacks, where there tend to be quicker cycle times to be able to produce and not nearly as much capital investment required.Read More
We have had a lot of crises to deal with as a business, particularly with the ups and downs of commodity prices for our industry, with obviously COVID, and—I’m on the Gulf Coast, of course—with things like hurricanes. My attention has been mostly on the business, and I probably haven’t paid enough attention to my finance organization over this past year. So, this will be a priority for me going forward. For me, I think 2022 needs to be about re-creating a deep sense of belonging for our people and of helping others to understand their “why?,” especially in an industry that’s been going through a lot of change.
Eliminating extraneous work is important, so that what remains is meaningful. This means more digital transformation. The last piece is what I would call rejuvenating our business opportunity and transformation funnels. The world is going to to be uncertain. It’s important to have things in your toolkit that you’re ready to be able to trigger if things go up or if things go down. Having this on the shelf ready to go is pretty important, I think, as we go into what’s going to be an up-and-down world.
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