AFTERPOD: Putting a Fine Point on FP&A | An Interview with Grant Halloran, CEO, Planful

(A shortened version of this interview was originally released on CFOTL Episode #564. The following transcript is an edited version of the extended Interview.)

CFOTL: We’re happy to catch up with our guest Grant Halloran this week. Grant is a course CEO of Host Analytics, which this week is rebranding as Planful. Now when a company as keenly focused on the finance function rebrands, it says something about that evolution underway.

CFOTL: If you don’t mind, let’s begin there: Why “Planful”? Why at this place in time?

Planful CEO Grant Halloran believes too many FP&A professionals are wrongly viewed as “service” personnel.

Halloran:  Yes, it’s a really big milestone for our company. As you mentioned in the intro, we’ve rebranded the company to Planful, from Host Analytics. And there are a couple of reasons for that, but the biggest one is that we feel that the market is really at a stage right now where cloud planning platforms, or financial planning and analysis (FP&A) platforms, have really taken off in terms of adoption. We have a vision which is all around continuous planning. I think we’ll get to explain that a little bit today.

For me, the biggest reason is that I like a business name to connect with the primary audience that we are serving. And that is financial planners inside companies; the FP&A teams. We obviously have users from the broader office of the CFO. But our primary audience is the financial planning team. Everyone in the business today does analysis, but the superpower of those people is planning. So we felt from some of the research we did that this name, Planful, was going to resonate with them. And I might just point out to the audience that it is not a commonly used word, but it is actually a real word: “planful.” It means to be rich in plans and to be systematic and methodical. And that very much resonates with the folks that we serve. So we’re super-excited about it and we’re looking forward to rolling that out in the weeks ahead.

CFOTL: Grant, one of the phrases I’ve heard you use and different FP&A professionals use to highlight some of the challenges they face is “planning gap.” And I think it’s a good label because one organization is different from the next and one organization’s planning gap may be different from another’s, but there are some commonalities here when it comes to the planning gap. And what contributes to them? What are the primary contributors to the planning gap in your mind?

Halloran: Yes, it’s a few things, Jack. Firstly, if we look at some of the symptoms that we see that are pretty good signals that they need our platform, the first is that a lot of businesses are operating their planning and financial decision-making in silos. Departments are not working together. They don’t have a connection between the data, and between each other. Their numbers are not freely flowing to each other

So the first thing for someone who’s listening on the podcast to think about is doing a traditional annual operating plan, a corporate planning process – how difficult it is to get all the folks involved, on the same page, and able to connect the different aspects of the plan. Because, as we know, modern businesses are really just an interconnected web of activities, right? Yet silos have developed over the years. So that’s the first thing that I would point out.

The second is that cycle times are too slow. Now I hear this all the time. You ask anyone in business: Are you fast enough? Very specifically, when you talk to folks that are involved in planning processes, they say “It’s just too slow.” For a lot of the folks that we work with, an annual planning cycle might take four or five months, and that’s just outrageous in this dynamic business world that we operate in.

The final thing that I would say: Another really big symptom here is if the FP&A team still feels like they are service providers to the business rather than empowering the organization with data and the technologies to deliver that data in a more ubiquitous, high-frequency fashion. If you still feel as though your FP&A team’s message is “We’ll respond to questions, we’ll do some analysis, we’ll come back with an insight” – versus empowering budget owners, decision-makers and the company to get access to that information and insight themselves – then that’s another really big sign of what I would call a planning gap.

CFOTL: If you’re a champion of continuous planning – and many finance leaders would love to characterize themselves, probably, like that – what are you putting a stop to, and what are you encouraging or bringing forward in your organization? Can you give some thought to that? What would you tell us?

Halloran: Yes, let’s address the concept of continuous planning as a starting point for your audience, Jack. I might begin by just saying that, historically, planning has been seen as what I mentioned: the annual operating plan. That more strategic kind of process that you go through for many months with all the different budget owners. You do the top-down and bottom-up — this big dance that you go through in the organization. It’s incredibly inefficient. Nobody looks forward to it every year. When you talk to people about financial planning, that’s really often what they think of; that’s the lens that they look at planning through.

Well, continuous planning actually represents the way a modern business works today. And that means that there is planning happening in every pocket of the company on all these different types of datasets and all these different use cases or business processes throughout the company.

So firstly, it’s ubiquitous. Planning is ubiquitous, it’s happening right to the edges of the company and it’s high frequency, happening every day. Now, a good example of that is workforce planning. You set your plan for the year that the board signs off on, and then you’ve got to go out and execute against that. Now if you’re a division leader or department head and your business is “who’s ahead and who’s behind” – and often for our customers workforce is their biggest expense – you need to be able to replan and, on a very tactical planning basis adjust your workforce hiring plans. Whether that’s the number of people, the level of people, the salary, locations or whatnot, it’s all these different dimensions of workforce planning. So you can imagine that across a larger organization that is a very high frequency planning use case happening every day.

Or take sales planning: readjusting territory and quotas, doing revenue planning, or merger and acquisition planning. So this is the first thing to understand: Continuous planning is a representation of that broader lens in which all of this planning is happening across the company.

The second thing I would say folks have to understand is that planning is an amalgam of decisions. At the end of the day, that’s really what it is. A plan is an amalgam, it’s a manifestation of a whole bunch of questions and decisions that are made as part of that process. I often talk about how we are a planning and decision-making company. That’s what we’re trying to help people do. And that’s a very, very important distinction to understand. So it’s not just about answering questions for people if you’re in FP&A. Back to your question about being a leader – what I would do is have a vision of how you can provide strategic capability to the company that helps them make financially smart decisions. And part of that vision is all about planning as well.

The final thing I would say is that we’ve talked a lot about maturing capabilities within an organization. The smartest CFOs and heads of finance that I talk to see themselves as strategic partners to the business. They see themselves as elevating the financial IQ of the whole company. That means doing the things that we just talked about. So that’s a really nice vision that I would suggest to heads of finance and CFOs: think about how you elevate the financial IQ of the whole company. That means technology and data and training and empowerment of all of those folks so that they can democratize the planning process and help them make faster, easier, more frequent decisions on their business.

CFOTL: In your observation, Grant, what is it that’s preventing certain finance teams from more quickly embracing and realizing the fruits of continuous planning?

Let’s start with that vision we talked about: being a capabilities elevator, empowering the organization, starting with that vision. Because if you don’t have that vision as the leader, if you won’t commit to that and embrace that, you can’t bring anybody along with you. So start with that.

The second is to redefine the modality in which your team operates. If you are in a kind of question and answer mode where your finance department is operating in a little bit of an historical mode or legacy mode – where the businesses come to us and they ask us questions and then we just give them answers and we have SLAs with them – you have to recognize that that’s an old working modality.

So how do you change that? The first thing you do is define what the new behaviors look like. Now one thing I have seen – and I highly recommend this, we do this inside our own company here at Planful – we send our finance people out to the business. There’s always liaisons out to the business units; we send our finance people out into the business units to learn the business. We want them to spend at least a week each year shoulder to shoulder with those departments.

A good example is a modern software company which has a very scientific approach to its marketing and sales; that is, it’s highly technology-driven. We’re doing a lot of digital marketing, Jack. You get these digital signals. There’s a lot of data and there’s a lot of instrumentation, there’s a lot of tracking and all of that. That’s a very complex environment. Often these companies have 30, 40, 50 different types of systems and they’re integrated and so on. So how on earth is an FP&A liaison into that business unit going to possibly help them if they don’t understand the business? So go out and do that, empower that team and give them the resources and the time to learn what their business partners are doing.

The second thing that comes from that is that they then earn the respect of the business units. So they can say, “Hey, knowing your business, knowing the sorts of objectives that you guys have and the issues and challenges that you’re working through, I would like to suggest that we empower you with some additional data and create some new views on that data. We’re leveraging some new technologies that will enable that data to flow to you on a more frequent basis.”

That’s where, if you’re going to move towards a continuous planning paradigm, you’ve got to be able to get the buy-in from the business units, because finance has to break this old mode of being in that kind of response method.

So there’s just a couple of suggestions. The other thing I would just say is hiring folks in finance that have a business orientation, like MBA degrees. You’re seeing this more, and you’re an expert in this field, Jack, I know. You’re seeing this more and more; CFOs are coming from more of the general management business backgrounds, more of the finance side of the house, investment banking. Those types of backgrounds. They’ve gone to business school to do general management studies. This is really important: to take that idea and cascade it down to lower levels.

CFOTL: I wanted to touch on fast growth firms with you. As someone who has closely observed and actively helped build fast growing companies, what are some of the biggest challenges you see as companies scale? How does planning help address, perhaps, some of those challenges?

Halloran: I’ll come to the last aspect of that. I’ve been building a lot of companies over the years, and I’m really excited to be leading the Planful team here. We’re going through a lot of that. We’re a high growth company, we’re expanding our business internationally and it’s challenging. To go back to something I said earlier: silos can develop inside a company. I do think that continuous planning and using a platform like ours enables you to sort of lubricate the flow of information in the company as a person. If you can connect all the relevant data points in the business, the data can kind of flow. I think of it as a lubricant.

The second thing is that you foster greater collaboration because you’re all working in the same platform, off the same data, so you can collaborate more easily with each other. I think those are fundamentally important because the biggest challenge with scaling a company is speed, and the biggest impediment to being able to go fast is your ability to make decisions and make those decisions within the context of all the interconnections inside the company and the dependencies on those decisions. Having a platform that gives you that visibility and that connection and collaboration can really enable you to go faster in scaling the company.

Finally I would just say, as a CEO, that culture is a huge thing. As you scale the organization, invest pretty religiously in understanding what makes your culture successful and ensuring that you’re hiring the right folks around that. Be very overt and intentional about the type of culture that you want to continue in the company.

That’s a couple of thoughts. There are obviously a lot of other things – making sure you use capital very wisely, and so on and so forth. But there’s just a couple of initial thoughts.

CFOTL: This continuous planning culture – what does it mean for them? How do they spend their time? How do they bring value to the company? Can you give us a better sense of who that person is, and what their day-to-day is like?

The first thing is that they’re going to get a very, very sizeable productivity benefit. You think about the data flowing and being at the fingertips of all the different people in the company that need it. What that enables them to do is to not be in that service provider mode all the time. How they redeploy that time is among the things that we talked about earlier: being very strategic, getting out amongst the businesses, going to a deeper level of questions and helping the different business units continuously improve and get to another level in terms of the way they operate and the outcomes that they’re trying to achieve. So productivity is really important.

The second is just speed and efficiency; getting the cycle times down. We have customers that reduce their typical planning cycle times by up to 80%. That’s always good for everybody, is it not? We’re operating in a highly dynamic world where you need to be out with your plans and acting and executing faster than ever before.

The next thing I would say is when you’re in execution mode and your business is operating, you need to be nimble and responsive. Businesses are more complex today than they have ever been. Mergers and acquisitions are at record levels; companies themselves are just more complex. And so they have more unforeseeable events that occur inside their business. And then of course we have these exogenous shocks occurring all the time, whether it’s a geopolitical change or some kind of issue that’s causing a supply chain problem. Whatever it is, businesses need to be much more nimble and responsive to those changes throughout their execution cycles.

So this is helping the FP&A team advise the business in those scenarios in a much faster way and a much more accurate way. So I would say that those are a few things that ultimately lower the cost of business.

Finally, better decisions –faster, more frequent decisions – have a real, meaningful impact. A lot of our customers are able to quantify revenue impacts to their business by creating the capabilities for continuous planning, and also significant cost savings as well.

CFOTL: The notion of a continuous planning platform. Some of us probably have a good idea what that means. Others might have an entirely different one. When you speak of a continuous planning platform to us what is some of the functionality users enjoy or can leverage?

Halloran: Our platform is what we call an end-to-end financial planning, FP&A, platform. Obviously you’re starting with your structured planning, your corporate planning, and being able to come into a cloud-based system, with no software; you can just log straight in. And we maintain data centers around the world to enable this to happen.

A lot of our customers have been using Excel for a long time and continue to do so. You’re able to build plans using Excel syntax via a browser. You pump in data from the general ledger, you build that taxonomy and then run your structured corporate planning in that environment, which enables everyone to work on the same common set of data. And obviously that eliminates the need to to do that via spreadsheets, which are disconnected, error prone, very slow in aggregating.

So that’s the first thing; just imagine grids of data inside a system, effectively eliminating the need for the Excel spreadsheets, once you go through that process and collaboration around getting that plan established.

The other thing that we talked about is dynamic planning: all these different use cases. We have a bespoke modeling engine where you can go and create your own data model and your own interfaces and share that out for people to do different types of fine-grain planning, whether it’s workforce planning and so on. You have an interface to enable you to do that. Of course financial reporting is really important. Once you’ve actually transacted and you get to end of period, our system enables you to bring those actuals back into our system. It produces out-of-the-box financial reports.

Then of course there’s management. They’ve got a lot of questions and they want to drill down and drill through. So we have really strong visual analytics in there where you can see charts and dashboards, you can drill into the data, and really understand what’s happening in the business at a much more granular level. It’s very much a full end-to-end process.

The other final thing that we have, which is a great value-add, is we enable consolidations and a lot of actuals adjustments to happen inside the Planful platform. That enables you to close the books faster, which is part of the whole narrative and vision of continuous planning; you don’t want to be stuck in that hiatus where you haven’t shared out the actuals and the variances to the business. So the faster you can get that process down and close the books, the better it is for you in terms of speed to get that information out to the business so they can replan and reforecast and make new new levels of decisions. It’s about spitting it all out, managing that whole.

We have some customers that have thousands of users doing this inside our platform. And we have smaller customers with tens of millions of revenue that may have five or ten users. The platform is very scalable, very user friendly for all different types of businesses, regardless of their industry and their size.

CFOTL: We’ve been speaking to Grant Halloran, CEO of Planful. He wants your FP&A team to be an empowerment team, not a service desk. Grant, thank you for being with us.

Halloran: Jack, thank you so much and all the best to you and your audience for 2020