It is fair to say that Larysa Melnychuk did not have the expected start to a career which has since seen her emerge as the biggest transformational force in the FP&A profession
Larysa was born in the former USSR in Siberia to a Ukrainian family. Opportunities in the USSR were limited. She was resigned to give up on her childhood dream of international travel (“It was absolutely certain that I would never be able to travel.”). Eventually, Larysa and her family moved to Ukraine where she studied engineering.
However , it was her skills in finance that brought her opportunities.
She moved to the UK more than two decades ago through a British government initiative for talented finance immigrants that set her on her career.
In the UK, she gained a chartered management accountant from CIMA and spent 15 years leading FP&A teams including at a subsidiary of HSBC Bank and at multinational engineering company Invensys (now part of Schneider Electric).
Today, as founder and CEO at FP&A Trends Group and the International FP&A Board, Larysa is pushing FP&A to new levels, having launched 27 chapters across 16 countries hosting webinars, posting resources and championing the industry.
In this episode Paul Barnhurst speaks with Larysa about:
- Her career from the USSR to international finance leadership
- Definitive new findings around the real impact of the pandemic on FP&A
- Scenario management compared to scenario planning
- How to assess FP&A maturity in your organization
- The new role of FP&A Data Scientist and how to get there
- How companies including Microsoft, Swiss RE, and Deutsche Bank are capitalizing on of AI to change their FP&A approach
- Best practices towards using external data to forge new FP&A analysis
- How the horror of war in Ukraine has affected her personally and impacts her perspective
- Why it is vital for anyone starting in FP&A to be the Agent for Change, rather than complain about routine
Paul Barnhurst
Hello everyone. Welcome to FP&A Today. I’m your host, Paul Barnhurst, aka the FP&A Guy. And you are listening to FP&A Today. FP&A Today is brought to you by Data Rails, the Financial Planning and analysis platform for Excel users. Every week we welcome a leader from the world of financial planning and analysis, and discuss some of the biggest stories and challenges in the world of FP&A. We’ll provide you with actionable advice about financial planning and analysis today. This is going to be your go-to resource for FP&A. Today, I’m thrilled to welcome our guests, Larysa Melnychuk , who lives in the UK and is originally from Ukraine. She’s known throughout the world for her FP&A knowledge. She earned her FP&A certificate from the Association of Finance Professionals. She’s a chartered management accountant from CIMA. She has nearly 15 years of various FP&A experience, and nearly the last 10 years she’s been helping move the profession forward. First she worked for AFP, and then she also now runs her own business, FP&A Trends Group. Larysa, welcome to the show. We’re really thrilled to have you today. So maybe can you start by just telling us a little bit about your background? Tell us a little bit about yourself and how you ended up where you’re at?
Larysa Melnychuk:
Uh, Paul. Uh, first of all, thank you for inviting me. So excited to be at this program. And you, you are doing fantastic work for FP&A professionals around the globe. A little bit about my background. So my first education was very technical, scientific, believe this or not. But from year 17 until 23, for six years, I studied physics of materials, mathematics. So I have an engineering background. I’m also a British Qualified Accountant, a member of the Chartered Institute of Management Accountants. I’m CGMA. I was one of those who, uh, volunteered to develop an FP&A certification for AFP. And actually I have always been working for somebody else, working for big corporations as an FP&A Director or Head of FP&A for those leading companies. And just 10 years ago, I went outside of the corporate world and I created my own company. So at the moment, I’m founder and CEO of, uh, FP&A Trends Group and International FP&A Board. So this is very briefly my background.
Paul Barnhurst:
Great. No, and that, that’s where I know you from. I know we met through FP&A Trends. Maybe can you tell our audience a little bit about how that came about, you know, what it is and how it, you know, provides value to the FP&A community?
Larysa Melnychuk:
Uh, Paul the way it came about actually it’s from my passion about FP&A and from my practical experience. You know, when you are, uh, running an FP&A process go for the whole globe, when you are responsible for the whole Europe, you working for different companies, you come obviously to different experiences. You know, you can see how FP&A could be very, very powerful, or it could be really weak depending on culture and many other aspects. Yeah. So to me, I remember especially during those times in the office, I always had the question, of how other companies are doing this? And how, what can we do together in order to maximize the environment of change? The environment of positive FP&A experience and how we can remove all of those behavioral and cultural issues from FP&A.
Larysa Melnychuk:
Because we all know where is the budget there, there are a lot of games. Yeah. it all came from my curiosity, you know, and the first meeting in London that we had, And by the way, at that time, we had this in collaboration with the AFP. It was all about this. So what are the trends? What are the experiences? And so on so far. What we also realized is the collaboration of people, you know reading the books, it’s important. Receiving your qualifications is important, but it’s such an incredible environment of change that it’s so important for us to meet and to exchange and to learn from each other. Yeah. And because FP&A this is such a subject that different people see different pieces. We have to put this together.
Larysa Melnychuk:
So when I started to do this independently International FP&A, both in London, you know, it was just a meeting for several people. And then it became so popular that we started to expand this to different countries, believe this or not. But at the moment it has 27 chapters In 16 countries on four continents. And I’m very proud of what we managed to achieve. Generally speaking, it’s all about education. Our website has more than 650,000 subscribers. We have a community, so those digital and face to face events. We have research those, our surveys and research papers and white papers. We have an FP&A committee, and some advisory services as well. So, in brief, this is where we are.
Paul Barnhurst:
No, that’s great. I appreciate you providing us with a summary and just, you know, to tell a little bit of my experience with FP&A Trends and Larysa as I was getting started. I mean, I think I wrote my first article for somebody about six years ago, and then it’ll probably have been about four years ago. I kind of came across the FP&A Trends group and joined it. And one point I had offered to help moderate, I think that’s where we first started to interact. Every, you know, once a month or so, I’d post a couple posts on some different subject and kind of moderated the commentary. And that’s where I started to get to know people. And I know then you invited me to be on a webinar. I did a couple different webinars, you know, and out of that and other experiences is really kind of where my, you know, my brand and my business has come.
Paul Barnhurst:
So I really appreciate what you do. I’ve enjoyed being, you know, a part of FP&A being part of the LinkedIn community, having been on a few of your webinars, you know, been involved in some of your research. I really value what you provide for the community. So I appreciate you explaining that. And I know I’m, I will always be grateful for the organization you have because it’s helped me kind of find an audience and helped me find my voice in FP&A you know, add my piece to the community, so to speak. So appreciate that answer. But maybe if you could talk a little bit, I know the last few years have obviously been challenging for FP&A, you know, challenging you for you, for all of us, But how have you seen the pandemic? You’ve gone around and talked to different people and, you know, watched that unfold. How have you seen that impact FP&A just organizations in general?
Larysa Melnychuk:
Uh, Paul, such a great question and timely as well, because just one month ago I came back from my one month trip to North America and we started our face to face meetings at the end of April from London, actually, altogether 12 meetings, eight in North America, four in Europe, exactly on this subject, you know, And, a room full of, uh, those senior decision makers, directors from different companies. The main conclusions are that obviously the pandemic accelerated the need for analytical transformation and FP&A and of course the world of FP & A, uh, at the moment of pandemic, it was divided. Divided from the point of view of those that already managed, uh, to implement analytics, managed to restructure. And those actually who had their budgets and unrealistic focus. And they spent probably the last six, seven months in order to finalize it.
Larysa Melnychuk:
Yeah. So this is the first one. The acceleration and also the understanding of what is needed. The second one, it’s very, very fundamental for our profession. You know, like as a qualified chartered management accountant, the classical way that you have to have your budget, your quarterly or monthly focus, you have to do your variance analysis. And the reality is such at the moment that actually changes everything fundamental for our, uh, management accounts and practices. So what we have to have now, we have to look at the world from the point of view of different scenarios, aligning not only those three scenarios we always get, but those scenarios that you can play on demand at different levels of an organization. We call this not scenario planning. We call this scenario management. And we emphasize that this is the mindset. This is the mindset.
Larysa Melnychuk:
This is such a fundamental change to organizations. And I wouldn’t say that every organization is ready yet because I have some, uh, insights, uh, from my, um, from our survey FP&A Trends 2022 surveys. So only 6% of organizations are able to run scenarios in real time. But actually altogether, 49% or half of those, say they either don’t run this at all, not able, or if they do, it’s very, very difficult. So this is about scenario management. And of course what happened happened, uh, it’s not only in FP&A, but FP&A in particular, the way how we work with our team, this new generation of people that are working remotely. And now we are starting to go back to the offices, but there are a lot of opportunities actually to hire the best in class talent. And not exactly in the US If you’re in the US, it could be anywhere, Yeah. But it requires a new way how we build our team, how we progress with our F P A business partner requirements. So those are the main things. And of course the need for transformation is there, but as I said, the companies are at a different level of this transformation.
Paul Barnhurst:
No, that makes a lot of sense. And if I can recap and just make sure we kind of capture that, it sounds like, which isn’t surprising analytics and just the need for data, the need to be able to do analysis and have data-driven decision making, you know, that that’s really been, been accelerated. The, you know, scenario, and I really like the term you use scenario management to think of it as a mindset. It’s not just about running a best, worst and base case and being done. It’s about thinking in scenarios and thinking about the different range of possibilities and being able to prepare and plan for that. Makes a lot of sense. And I think, you know, the other two things you mentioned is obviously the change in how we work. So many people can work from home. And, you know, two examples I’ve seen recently that two friends of mine that have always worked for Utah companies, you know, they’re here in Utah, they’re now, you know, I think one took an FP&A job to head a company in the Bay area, but from here, right?
Paul Barnhurst:
He’ll travel occasionally, but you know, he’s doing the job remotely. And another one, I think he was, he either had an offer or he took it with the Bay Area company. You know, and these are great leaders that five years ago they may never have gotten that opportunity, but the pandemic has changed what you’re willing to hire and where you’re willing to hire. So definitely that. And then the last thing you mentioned is just accelerating the digital transformation, the need for, uh, well thought out and planned technology stack. It goes beyond Excel, it goes beyond just having an ERP. There’s, you know, that business intelligence, there’s data science, there’s the planning tool. You know, there’s so much that now falls under the CFO. So I appreciate you sharing that. That makes a lot of sense. So what would you say are maybe the biggest challenges you’ve seen as you’ve talked to all these organizations, you’ve talked about the changes, but what are the biggest challenges they’re facing now in trying to change and embrace, you know, this kind of this new environment?
Larysa Melnychuk:
Paul? The thing is that the new challenges, they’re not new for us at all. And as the result of the pandemic, we realize through our survey that there are challenges with data, with data quality. It’s even accelerated. And I will give you examples. So, 56% of our respondents said that they make decisions based on data. It’s not bad, isn’t it? But then you are the question, what is happening with those 44? So what is happening with them? But actually when you look at the progression over the last two years since the pandemic this figure decreased by 10%. So it’s in the year 2020 when the pandemic just started it was 66. So what it means for us, it means that, and also we look at, uh, that, uh, people still have, people still spend a lot of time on data validation on data cleansing, Yeah. And when we are asking the questions, we realize that, it’s not only the quality of data, it’s also the fact that historical data with all of those changes in business models, changes in business environment, they’re not exactly the indication what is going to happen in the future.
Paul Barnhurst:
<affirmative>,
Larysa Melnychuk:
Because it’s not only data problems that we identified. We identified that less people are satisfied with their forecast quality. So at the moment, uh, of, and we just finalized this survey, so it’s very, very fresh data for 2022. So 39% of people are satisfied with their forecast, and it’s decreased 15% from the year 2020. So, and again, we are not surprised because okay, focus quality, what focus quality you’re talking about, when it’s not one focus, you have to scan the environment. You have to have this environment where you can play this on demand quickly at different levels of organization. So those are the biggest challenges. Obviously, uh, there are many artists, but we can talk about them as we speak.
Paul Barnhurst:
Sure. Yeah. No, and I’m not surprised by either of those, Right? Data, I mean, I, I know roles where I’ve spent most of my time cleaning data. You’re like, okay, I just wanna get back to actually doing the analysis and driving the business forward. But often if you don’t have good data, you can’t drive the business forward until you figure that out. And I thought it was really interesting. I was listening, Somebody had shared on LinkedIn . He specializes in data. He’s written a book about data analysis. And he was listening to an expert who said, you know, even with all these low code and no code tools, he sees data getting more complex because there’s so much of it, it’s gonna get harder, not easier to analyze, which is kind of the opposite. Everybody thinks, well, all these great tools are coming, it’s just gonna get easier and easier.
Paul Barnhurst:
But the challenge is the amount of data is growing exponentially at the same time. So you gotta get even smarter at what data you need to look at? How do you need to think about data? Because we can’t analyze it all. Obviously we can use machines to help with that. But I’m not surprised that you mentioned data, just, you know, from what I hear from people. And then the quality of the forecast. Again, when you’re in an environment you’d never been in before, it’s really hard to be accurate. I mean, it’s hard enough to be accurate to start with, right? The planning process isn’t about getting an accurate number. I always like to say, if I could be that accurate, I’d be sitting on a beach somewhere. Because I would’ve made a fortune on the stock market. But I can help you think through your plan and make smart assumptions. But I’m not, I’m not a, you know, a fortune teller. So those make a lot of sense.
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New Speaker:
So what else kinda have you seen as you’ve gone around and talked, you know, in these different organizations, have you seen different things in different regions? Like, you know, some regions of the world you found have been doing a lot better on certain things? Or have you found it pretty consistent across the board that everybody’s struggling with the same, you know, same challenges?
Larysa Melnychuk:
Well, it’s an excellent question and I would say that without 27 chapters over the last five years, the main conclusion is that the trends are global. But obviously each chapter has its own features. And just from the latest experience, uh, what we noticed that especially, um, painful is cash flow. Cash flow planning. For New York and London. Yeah. And believe me, all the other cities, uh, and I said that we already had 12 meetings. They mentioned cash flow, but it wasn’t, uh, as painful as for London in New York. I would say that each city has a different industry and big and old small organizations. And obviously, uh, they’re a different level of maturity. It’s very much dependent, even not on the city or region. It’s very much dependent on the maturity of the company, in terms of FP&A and we, we will talk about maturity as well.
Paul Barnhurst:
Yeah, no, that, that makes a lot of sense. And kind of speaking to that on the maturity, I know you’ve done a lot of work around that. You have, uh, you know, with your chapters, you build a maturity model. So maybe can you talk a little bit about how you think of maturity for an FP&A organization? How you think about assessing an organization’s maturity?
Larysa Melnychuk:
Before I do this poll, I would like to add something in order to understand the overall maturity. Yeah. Again, those are the results from the latest survey. 58% of our respondents use Excel for their planning. What it means is probably they have some tools, but predominantly it’s Excel. And unfortunately it’s increased by 4% from last year. It’s even increasing. And we understand why. Yeah. Because of this frustration and, uh, all of those yeah. Um, in terms of the technology transformation, it’s only 19% of the total, the use of technology. Actually it’s up 8% from last year. But it’s still, if you think about this, only 19% of the respondents have cloud technology. And then we checked those that actually already implemented technology, implemented AI and ML and they were incredible results. They really already cracked the code for FP&A, They can place scenarios practically in real time.
Larysa Melnychuk:
They’re talking about data driven decision making. So that’s great. This is about, uh, maturity. Maturity is changing, but it’s not changing as quickly as we would like to. The best way for us to do this, uh, is to use, uh, our international FP&A board maturity model. You know this very well. You were part of this research. Thank you so much for sharing your experience with us, Paul. But the history of this model was first created in London more than four years ago. And then without 27 chapters, we looked at this maturity model where companies could be depending on where they are on different aspects. Yeah. So what I want to say is that this model is the collective conclusion of so many decision makers around the globe. And we just finalized our research.
Larysa Melnychuk:
You participated in this in order to see what pandemic did to this. So generally speaking, you can find the maturity model. It’s quite popular. You can find this on our website FP&A Trends.com. But the idea is that we are evaluating the company from six different points of view. From their people, from their processes, from their technology, from their data analytics, and leadership. And depending on this, there are five different stages. And of course those companies that are at the leading stages. There are those companies that already have everything okay with scenario management. Scenario management, this is the ultimate goal at the moment for every organization with the push of the button, we run this scenario quickly.
Paul Barnhurst:
And that makes a lot of sense. I like how you said, you know, it’s not so much about location, it’s really about where they are on the maturity. And you know, you mentioned, you know, the majority of the companies aren’t on the cloud. Most are still using Excel. And you know, honestly that doesn’t surprise me because I’ve been with big companies and we’ve had tools, but we’re still doing most of our modeling in Excel and loading it to the tool. I think that’s been very common. Just, you know, Excel is incredibly flexible, but you, you’re not doing, very few people are doing any kind of ai ml real, you know, real time scenario modeling on an Excel platform. And that’s the challenge. That’s where that technology, you know, of being leading edge. Do you see most of the leading edge organizations? I’m curious because this has been a kind of debate that we’ve seen in a lot of FP&A circles about, you know, data science. Should we be doing data science? Should we be having data science sitting in FP&A or should it be kind of its own organization? What have you seen with some of these leading organizations and taking advantage of, you know, data scientists in that, in that realm? What are you seeing there?
Larysa Melnychuk:
We see some fantastic results. Actually, what we did for the last couple of years, we analyzed those that started to use, uh, AI ML and also cloud compared to the average ones. Yeah. And we have more details in our survey, but just to give you the idea that 63% of those AI ML implementers are driving more accurate forecasts, you see, compared to the average, which is very low. Yeah. So from this point of view, we definitely need to call them FP&A data scientists. The biggest problem between those two worlds, The world of financial planning and analysis and the world of data science is similar to what we see between different functions. Yet we are not speaking the same language yet. And this is definitely the time now when we have to create the bridges. This is why we are talking about the new role.
Larysa Melnychuk:
And it was part of our research as well this year. We call this FP&A data scientist. Not the classical one, not with the degree from a top American University who has no idea what is finance and FP&A, we need bridges. You know, so this person could be not exactly the data scientists, but the person who really can speak both languages and who can create the bridges. So this is the new role that we need. You probably know that we’ve been running an AI ML FP&A committee for three and a half years, absolutely not for profit. And, uh, it happened after my travels. I saw that some companies have already started to use it. So our committee is more than three years old at the moment. And we looked at some case studies of Microsoft, of Swiss Rail. We looked at the case study of Deutsche Bank, and many others. And the conclusion is that definitely, this is the way to go. It’ll help to automate, it’ll help to unhide those hidden drivers we never knew existed. Yeah. So the question is how we should be doing this? And each company is doing this differently. We are still learning.
Paul Barnhurst:
No. And that, and that makes a lot of sense. Every company’s gonna try a little different, their culture, their structure. I mean, you look at FP&A and it’s not the same in two companies. So why would the way it implements data science within FP&A be the same? But two interesting things I saw is, one, I got the opportunity to meet with somebody who started the FP&A data science group at Facebook. And they were the first data scientists they hired and she told how through using, you know, data science means they were able to get to the point where they were able to predict their daily revenue within 1%, one to 2%, Right? With traditional means, without using data science, I can’t imagine you’re gonna be able to forecast something as complex as Facebook with all its revenue and its different businesses to that level of accuracy.
Paul Barnhurst:
I saw that real value. And she said, you know, by the time she left, I think now the team is like 20 people. Now most companies aren’t gonna have 20 FP&A data scientists, but then, you know, most companies aren’t that big either. And so it’s just really interesting to see that it helped them. And the second one I saw is, I was talking to a company this week that they focus on companies using external data. So they take their internal and really focus on marrying it with, hey, inflation, what’s happening with oil prices? What’s happening with, you know, weather, whatever it might be for that business. And strategically helping the leadership improve their forecasting by thinking of the external environment, which is something historically, FP&A hasn’t, you know, been good at. A few people here and there have done it, but not much. Would you say, you know, what’s your experience when it comes to using external data? Have you seen many companies have much success with that?
Larysa Melnychuk:
Paul also very, very valuable observation. Thank you for this. We’ve been talking about both internal and external, uh, drivers for many, many years. Yeah. And we always emphasize both are important and in FP&A we always used external drivers such as oil, price or exchange rate and so on. Yeah. Yeah. The main, fundamental equation is until, uh, those breakthroughs in predictive analytics machine learning for data for FP&A, we probably were running this with our human intelligence. But I remember that in 2007 before the big crisis, actually in my company, we already saw that something was coming. We already saw a lot of changes. And I was lucky that in my department. I worked in a bank. At that time we had very analytical, very mathematical people.
Larysa Melnychuk:
And we created this in Excel. We didn’t have technology at that time, you know? Yeah. We call this survival mode of our portfolio of loans. And we managed to create powerful analytics even in Excel. Yeah. But now think about this, you know, uh, there are limitations to human analysis. There are limitations to Excel. And with this new technology, we definitely can marry, for example, customer behavior. This is one of those powerful things. Yep. You see, we can model what is going to happen, for example, with your own portfolio, with all the change of this behavior and with more younger generations taking loans, for example. So it’s something that we never will be able to do without human intelligence, how intelligent we are. So I believe in the power of human intelligence and artificial intelligence going together. But I also don’t believe that actually the role of accountant or finance people will be in the past, it would be modified, it would be changed. That is why we have to change as well. But this is the power and this is what makes our profession so interesting at the moment.
Paul Barnhurst:
You know, I like what you said there, and I agree it makes a lot of sense. You know, people have been using external data forever, but this machine learning and being able to take what the machine tells you and using the human, because obviously there’s times when the machine’s gonna get it wrong. It’s not gonna understand nuances and you have to help train it, and you have to have that subjectivity and you know, the strategy and things that the human element can bring. But when you combine the two together and really take advantage of cutting edge technology, you start to see best in class FP&A that can really, as you mentioned, help move a business forward. Right. You have good data or at least you know, good enough data that you can make decisions is never gonna be a hundred percent. Nobody’s data’s perfect, but, you know, you leverage that technology with smart people and it’s amazing what can be accomplished.
Larysa Melnychuk:
Absolutely. You know,
Paul Barnhurst:
What you see,
Larysa Melnychuk:
I also wanted to, uh, to add a very interesting trend that we started to observe, uh, at our committee, you know, um, so those early, uh, artificial intelligence, machine learning FP&A projects, normally this is the algorithm of one data scientist and very often CFO finance directors. They were really scared that you created a black box for us. What we are going to do is this. It’s not even my forecast. It’s more accurate than my previous one. So I think, and it’s already started to happen, the next level of development of AI ML for FP&A is defining those hidden drivers, both internal and external. It is not only external. There are so many new very important internal drivers that we have no idea they exist. And we discovered this even before all of those in one of my companies. Yeah. So, um, machine learning, predictive analytics will help us to identify it and to create the decision making machine for everyone to understand. Not the black box that a data scientist creates for you. Nobody knows what is going on. This is the next step and it’s already happening.
Paul Barnhurst:
No, thank you for sharing that. And that makes a lot of sense. You know, we gotta make it so everybody can understand, right? There is a time where it’s like everybody was talking past each other. You have the data scientist and they got out there and started talking. You’re like, What are they talking about? Speaking of that, I have a book called Becoming a Data Head, and it really talks about kind of bridging that gap of being able to communicate in data without having to be a data scientist. Right? And that’s so important in FP&A, whether you’re the person who’s the data scientist or the analyst or the architect being able to have an understanding of data under, you know, basic understanding of ML and AI and those things. So you can be a part of the conversations, even though you may not be building the full model, but you can understand what’s going on and provide value.
Paul Barnhurst:
And that’s what I really like about that book, is he tries to bring it down to that level to help everybody understand so we can be part of the conversation together instead of having the black box, as you mentioned, which we’ve all seen. Right. I’ve been part of some of those models where you’re trying to explain ’em to somebody and they’re just looking at you like, you lost me. I don’t know why you have these 50 different things. That’s what you wanted . But so that, that, that’s a really important part you speak about there. So, you know, kind of speaking about maturity in organizations, they’re all over the place, but for companies that are looking to, you know, I think most companies are to improve their maturity, how would you recommend they kind of go about that? Would you recommend them going and doing an assessment with the tool you have? And how should they maybe think about that? If they’re a company that really hasn’t assessed their FP&A and you know, they’re listening to this and thinking, I really need to assess it and kind of come up with a roadmap to improve my organization. What advice would you offer them?
Larysa Melnychuk:
Paul, the biggest question that busy FP&A people have is what is the best practice or better practice Yeah. And how other companies are doing this? And I know from my own experience, when you’re running a very busy FP&A process, there’s practically no time at all to even to stop and to go and even, uh, to go to those conferences. But at those conferences, not enough time to look at this. That is why I’m talking about the power of collaboration, the power of communities that create this together. So, FP&A both a maturity model, a collective tool is absolutely free. It’s available, It was created for FP&A teams in mind. And it will give a very quick check of where you are comparing where you should be. Yeah. So at first you evaluate And what is interesting, uh, I did this, those exercises with different teams and there could be different results for a management team.
Larysa Melnychuk:
And for those people that are running FP&A management. It’s also very, very interesting also what may happen that different, uh, chapters of your organization or even different business units, different countries or even different products, they could be at different level. And it’s not surprising because companies are growing by acquisition. What is important is to understand where you are approximately and to understand what is the best in class FP&A. Don’t worry if you are not a decision maker, don’t worry if you say that the head office is deciding, but you are one of those regional cfo, finance director, finance managers. What we observed, there are different ways you can improve it. And the best thing is to start. There are some actions that could be the step change in your maturity. You know, for example we observed how, um, to create the simple driver base model even in Excel, but to understand all of those internal and external drivers, how we can move the company from maybe basic to the next one.
Larysa Melnychuk:
Yeah. We have seen a situation where implementation of modern flexible FP&A technology can move a company from really even two steps to the advanced level. You see. So my suggestion would be start somewhere, um, start, uh, to, to to improve it, uh, in your organization, in your particular business unit. Create the difference, communicate this. I’ve seen situations when the change in regional offices created a wonderful transformation, uh, in the entire organization. Of course not every company can afford to spend half a billion US dollars. Like, for example, Swiss Re analytical transformation. It’s not a problem at all. There are even changes in your models, uh, even a change in the way you collaborate with each other. It can move your maturity.
Paul Barnhurst:
No, that’s a great point. And I saw that firsthand at one of the companies I was in. I remember I first learned about the maturity model when I was with this company and I shared it with one of our CFOs and we got a new regional CFO and I shared it with him. And one of the first things he did is he sat down and said, Look, your models are not driver based in general across the company. And he had us rebuild all our models. We took like two months, it was one of the first things we did. And my first attempt at that model was the most complex model I did, they had to bring in somebody else to help me cuz it was a really challenging business, a lot of moving parts. And we spent six months working on that model and I got done and I’m like, we still, I didn’t understand the business well enough.
Paul Barnhurst:
I’m like, this still doesn’t quite work. Right. And it was 10 times better than what we had. But I went through, and this was still Excel. They hadn’t given us a planning tool, rebuilt that model and got to the point where I could sit down with the business and understand different customers, understand different products, understand all the key inputs and how timing impacted things. And I was really able to sit down and plan with them. Like I was able to give our product team things they’d never had about the products and the margins. And that all started with really thinking about a driver based model and just continuing to iterate. Did I ever get in a fancy planning tool? No, I never even got a new billing system. We were a ton of different companies kind of duct taped together, so to speak, from all the acquisitions. And so I can really testify that you can make a lot of progress on the maturity model without spending money. Now are there some limitations? Sure. You’re not gonna be able to do everything you want. But it’s really, that mindset goes a long way toward overcoming the different challenges is what I’ve found.
Larysa Melnychuk:
Absolutely. Great examples Paul. It’s all about mindset.
Paul Barnhurst:
Yeah, no, thank you. I agree. It really is about mindset and that’s what I love about what you do and all the different organizations. You get to talk to people about mindset and they get to see other people and see how that mindset helps them drive organizations forward. Cause you know, we’ve been hearing the term digital transformation for what, 15 years now. So obviously it’s about more than just technology. And I think you know, that key piece is mindset
Larysa Melnychuk:
Much more. This is why our model maturity model, this is six dimensions. Yeah. And it’s only the model, the real life. It’s more dimensions. Yeah.
Paul Barnhurst:
Yeah. exactly. You can never in a model capture every dimension you’re trying to approximate reality. So a lot, a lot of great information there. I’ve really enjoyed kind of talking to you about, you know, what you’ve seen during the pandemic. You know, how organizations can mature and grow and what we’re seeing in FP&A. But shifting gears here a little bit, gonna ask, you know, a couple, couple more questions here. But one is a little bit about you. What’s something unique about you that we couldn’t find online? Something you might be able to share about yourself for our audience?
Larysa Melnychuk:
Uh, you see, uh, I’m a modest person. But I definitely have a very unique background. Not every FP&A professional has this. I was born in the former USSR in Siberia to a Ukrainian family. I moved to Ukraine and was educated there with a background in technology with a background in engineering moved to the UK 24 years ago. I never considered myself to be an immigrant. It was one of the projects that was called the Chancellor Financial Sector scheme. And I came to the UK as one of those who had the opportunity to work and to study. And after this I received two job offers. So to me it’s always, uh, realizing my potential and looking for the next one. I think what is unusual also about my organization that um, the fact that we are quite small, but we are very global.
Larysa Melnychuk:
The fact that every single chapter 27 together, I opened by myself and have been in multiple meetings. And I think probably it’s allowed me to accumulate the local view and this helicopter view, which is very, very important. Yeah. And of course the unique thing is that practically all my admin team, my project managers, are from Ukraine, and with the start of this unfortunate war, we are supporting Ukraine. So part of our revenue is going there. I would say that the world for me, like for any Ukrainian, it’s changed completely. And I would say that the most important thing in FP&A in our life, it’s inspiration and love and not allowing the evil forces to change our world, to change our freedom and democracy.
Larysa Melnychuk:
So this is very brief. Another thing Paul, uh, actually I always dream to travel. Yeah. And you can imagine a girl who was living in the former USSR. I remember very well, you know, like in my teenage years, uh, I really like to read books, travel books, and information about different countries. And I remember very seriously I was thinking it’s a pity I will never be able to be in Paris, in London, in New York. And it was absolutely at that moment it was absolutely certain, yeah, that I never will be able to travel. That is why I was my, this incredible travels. Uh, I don’t take this for granted. Like other people who were born with this privilege. So what I want to say is to always dream, always create, it’s so important and the dreams are coming true.
Paul Barnhurst:
Thank you for sharing all that. A lot of, you know heartfelt uh, sentiment there and you know, all of us are with the people of Ukraine. I know you have the yellow flower there, the blue, you know, the flag colors. And I know it’s very personal for you to have a family, hiring people from there. I’ve talked to many of the people you’ve hired and worked with them on projects and they’ve all been professional and you know, so definitely, you know, all of our heart goes out to everybody impacted by this conflict and we’re all, you know, hoping and praying that we could have a peaceful resolution to what’s going on there because it’s just, you know, that that’s a sad situation. But you know, even beyond that, I appreciate you sharing your background. Something I’ve noticed is engineering physics, people with a strong math background often make some of the best FP&A professionals.
Paul Barnhurst:
I’ve always enjoyed working with people with that background. I’ve worked with a few because they have a really good knowledge of math and they’re often really good critical thinkers and they make great FP&A people. So when you shared that, I was like, that doesn’t surprise me. You’re so good at FP&A because I’ve always been impressed with people in that background. So thank you for sharing that. And you know, I’m glad you’ve been able to travel the world. That’s great. And I hope you get to continue to travel and, you know, make a difference for the community because you do, you make a big difference in what you do. So this is a fun question we like to ask everybody. And so we ask all our guests and it’s kind of been a little bit of a kind of fun, almost a competition. Sometimes we’ll joke about it. And what’s your favorite Excel formula? Do you have a favorite?
Larysa Melnychuk:
Paul? Um, I think in FP&A, Goal Seek is one of those powerful ones you see, not especially now, but even before this, to run your sensitivities, to understand where you have to be at this particular parameter, a drive in order to achieve that and that. So to me it was really one of those that I like.
Paul Barnhurst:
That’s great. You know who also said that, you know Brian Lapidus, right? He mentioned Goal Seek. That was, that was the one he listed. He goes, Yeah, I ran around the office and not everybody was as excited as I was when I found out about it. It was kind of funny how he was joking.
Larysa Melnychuk:
It’s an amazing one
Paul Barnhurst:
That’s a great one.
Larysa Melnychuk:
Analysis. Yeah, it’s amazing
Paul Barnhurst:
Work. No, thank you. I I think that’s one that, you know, everybody can learn. There’s a benefit from Goal Seek, so that’s a great one. So, you know, as we move forward, what do you see going forward is the biggest challenge for FP&A and what do you see as the biggest opportunity?
Larysa Melnychuk:
Uh, we already discussed this, that, uh, more data we have, more challenges we have. And unbelievable for the last five years practically at each meeting, like 90% of people problems have problems with data, problem with data quality finding, uh, data that we can analyze and that we can believe in those data. Yeah. So continues to be, uh, the biggest problem. But, um, the way how I see it, uh, it’s obviously, um, not only analytical transformation for FP&A Yeah, but, uh, this is this change management. This is the change of this mentality, because definitely it’s happening because FP&A is going outside of just finance. It’s becoming more strategic and influential. More and more we can see how FP&A is running models for strategic planning. So we have this hope that the strategy execution gap would be served as well.
Larysa Melnychuk:
Yeah. It would be less and less and less. So it’s all about strategic and influential FP&A and the strengths of people that are implementing it. You see, it’s not easy to do this change management and fFP&A has a leading role to play. So this is, in terms of the challenges. You see the opportunities are tremendous. The reason why I’m doing all of this is because from the beginning of my career I learned that this is the best part of finance. Maybe other finance people will excuse me, but I think if they’re not doing FP&A. But To me, this is the most creative part of finance. Forward looking requires your modeling, that requires your business acumen, but also, um, you know, everywhere where you have creativity everywhere, when you have curiosity, you are doing this to the best.
Larysa Melnychuk:
And this is not dry finance when you have to close accounts and to follow specific procedures. Yeah. I would like to say that just to take this opportunity, love what you do, um, be strong, um, because we definitely have quite difficult times ahead of us. You know, I just recently read, somebody said a fantastic phrase that the difficult times, uh, create difficult people. The difficult people create easy times. The easy times create easy people and easy people create difficult times. Yeah. What I want to say is that there are difficult times for all of us ahead from the political, from the economical point of view, from business point of view, from professional point of view. So we definitely need strong leaders everywhere and in particular FP&A. So, uh, I would like to advise people to be those leaders ot just to read and to agree with this, but question all the time and go out there and try to learn, uh, try to be FP&A data scientist or FP&A architect or an FP&A storyteller, you know, and run your organization to this, environment when you can, um, play your scenarios quickly and make your decisions easily.
Paul Barnhurst:
Thank you. That’s some great advice. And I like, you know, there’s so much opportunity out there and I agree with you as well. I think FP&A is the place to be, especially when you’re on the leading edge. You’re helping to drive strategy and create value and doing those things that really allow FP&A to benefit the business versus, you know, just building a budget in a silo and reporting on it each month, which we’ve all seen. And that, you know, that’s not FP&A. And so I, I appreciate your answer there and I definitely challenge no question. Data is a huge challenge for all of us. That doesn’t surprise me. We’ve talked, you know, a fair, fair amount about that. But just one last question here and then we’ll let you go. I know we’re coming up at the end of our time. So if someone was starting FP&A, they were just starting out their career today, what advice would you offer to someone starting their career?
Larysa Melnychuk:
Be curious. Be strong. You would need a lot of courage. And another thing because we still observe that there are a lot of, uh, boring and non value-add activities in FP&A due to the reasons we discussed, be the change agent, not the complainer who says that FP&A is not interesting because it’s so routine. Yeah. Make FP&A not routine, make this the next generation FP&A. So it would be my advice, but also, uh, not only finance professions are important, everything at the moment and in between all different areas as we discuss data science, FP&A, IT FP&A. You know, modeling value creation. So just look at all of those different additional subjects. Very difficult to find FP&A people that are, just outside of this routine FP&A , you know, be the change agent. This is the main one.
Paul Barnhurst:
I love that. Be curious and be the change agent. That is great advice. And I recently had the pleasure a couple weeks ago of interviewing three college students on FP&A. They’re, they’re, you know, they’re all just doing internships and getting ready to go in their career. And I was really impressed. And they said some things similar to what you said about the importance of, you know, being change agents. And it gave me comfort to know we got a lot of really smart, good people coming up. And so that’s great advice because, you know, we, if it’s gonna change, we have to be the ones to change it. So I appreciate that advice and I’ve really enjoyed the time with you. Thank you for, you know, carving out almost an hour here to be with us and I’m really excited to share this with our audience. Good luck in your travels and, you know. One last thing. If anyone wants to learn more about FP&A Trends, just real quick, where should they go? Where’s the best place to learn about all the exciting things you’re doing?
Larysa Melnychuk:
Uh, of course our website, https://fpa-trends.com/
Paul Barnhurst:
Okay. And we’ll make sure we put that in the show notes so everybody can find you. But thank you again, appreciate you having on the show. Good luck with your future travels and I’m sure we’ll be talking again in the future. Thank you.
