Thoroughly Modern Metrics: Selling Donuts and Databases

Using information to anticipate what may happen rather than simply evaluate what did happen. JL

Alix Stuart reports in the Wall Street Journal:

Increasingly, the real power behind numbers isn’t accounting, but financial planning and analysis, or FP&A. Employees in these groups work on everything from forecasting sales, earnings and buybacks to employee raises.
Selling doughnuts and website names require similar skills that are rapidly gaining relevance in company finance departments.
When domain name seller GoDaddy Inc. GDDY -0.69 % aimed to expand internationally it was able to zero in on specific growth metrics to allocate marketing dollars among the nearly 40 countries where the business operates. Dunkin Brands Inc. DNKN 1.75 % mined loyalty data to encourage customers to buy coffee and doughnuts throughout the day and make bigger purchases.
Increasingly, the real power behind the numbers isn’t accounting, but a function known as financial planning and analysis, or FP&A. Employees in these groups work on everything from forecasting sales, earnings and buybacks to employee raises.
“We stick our hands in absolutely everything,” said Dunkin Brands Group Inc. CFO Paul Carbone.
The 36 people who work on FP&A projects at Dunkin Brands’ helped push same-store sales up 2.2% in the first nine months of 2015, while foreign sales at GoDaddy grew to 26% of revenues within three years because someone in the group zeroed in on the right growth metrics and used them to allocate marketing spend across its business, the companies said.

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“The execution is happening three times as quickly because of FP&A,” said GoDaddy finance chief Scott Wagner.
The specialty appears to be coming into its own in part because of a credentialing program launched by the Association for Financial Professionals (AFP) two years ago.
A person must have two-to-three year’s of work experience to enroll. There are no required courses, but participants spend about 72 hours preparing before taking a two-part test that involves basic financial knowledge and free-form spreadsheet modeling.
About 1,500 people so far have registered for the test, and 366 people from 24 countries have passed it, according to AFP executives. The exam fee ranges from $875 to $1,425, depending on when participants register and if they are AFP members. Materials, such as textbooks, cost about $1,000.
“Most companies don’t have a professional development track for these roles, and no other professional organization supports this group,” said Jim Kaitz, AFP chief executive.
Because of its overarching and strategic nature, financial planning and analysis also is becoming an important stepping stone to the top finance position in many companies. Mr. Carbone was vice president of FP&A at Dunkin Brands before taking the CFO seat in 2012.
The skills required for FP&A roles “are highly critical if one desires to become a CFO,” said Scott Simmons, an executive recruiter with Crist|Kolder Associates. “It’s the forward-looking skill vs. the rear-view skill of accounting,” he said.
Yet the advent of the certification highlights the challenges FP&A professionals face in the workplace. With hybrid roles straddling headquarters and field operations, many struggle with hazily-defined mandates and a lack of influence over business leaders.
In a recent survey by consulting firm CEB, 61% of FP&A directors said decision makers used their analyses only selectively. That’s because many FP&A professionals “tend to be perceived as financial bureaucrats” who spend more time focused on missed budget projections than improving profitability, said Tim Raiswell, CEB finance research leader.
Jake Bailey, director of finance for Tana Exploration Company, a closely-held oil and gas exploration firm, worked his way up from traditional accounting roles into more analytical, business-focused ones. He joined Tana in June after getting his FP&A certification and found it easier to hit the ground running. The certification, he said, is an “objective data point” that tells employers he has specific skills.
Parexel International Corp. PRXL 1.04 % , a contract research organization, supports the certification. Three of its 25 FP&A employees already have attained the certification and others are in the process of doing so. The company pays for an instructor to lead a prep class during work hours, said Richard St. Francis, vice president of financial planning and analysis for the Waltham, Mass., company.
He sees it as one more career-development path to offer employees, with the hope of retaining them.
“For a person who’s maybe not pursuing an M.B.A. or C.F.A., it’s our way of saying ‘here’s another pathway you can take to be successful in our company,’ ” Mr. St. Francis said.
He also would like hiring for these jobs to get easier. “Especially as I’m hiring around the world, this gives me a standard I can measure against,” he added.
Not every CFO sees the benefit of another credential.
Mr. Wagner of GoDaddy said it is “a really nice idea, but we don’t look at it, nor will we,” when hiring. He said he prefers building a “phenomenal” FP&A function.
But as the certification gains traction, at least one entity stands to benefit: the AFP.
Certification programs almost always have profit potential, said Mickie Rops, a consultant who specializes in helping organizations develop such courses.
AFP typically relies on large numbers of test-takers to help recoup the upfront development costs. The AFP declined to provide hard numbers on its financial position.
Mr. Kaitz said development costs have been “in the millions” during the past five years and the organization is “getting close” to breaking even after two years of offering the test.