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How to stop Finance & FinOps from taking over Revenue Planning

The lines between financial planning and analysis (FP&A) and revenue operations (RevOps) are increasingly blurred, and as organizations push for greater efficiency and alignment, there's major shifts happening to change the way the businesses operate and where teams are sat.


With departments like FinOps appearing with the aim of to addressing this, bringing a more cost focussed approach and accountability to operations, it means that teams are coming for RevOps's dinner, and most importantly their Revenue Plans. As we found in our state of planning report however, this might not necessarily be a good thing.


The key isn't in stopping it, it's simply a case of making sure it's done correctly.


So how can you navigate the internal pulls and politics and ensure that the right teams maintain control over revenue planning and forecasting?


Let me explain:


FinOps & FP&A


Historically the preserve of enterprise businesses, Financial Planning and Analysis (FP&A) departments are a critical function that focus on performance analysis and future-looking initiatives such as budgeting, forecasting, and planning.


The primary objective of an FP&A department is to use current and historical data to drive business performance, prepare management and board reports, and accurately forecast a company's revenues, expenses, and cash flows, the end parts being a critical move away from traditional role responsibilities of RevOps teams that are far more deal and revenue focussed.


FinOps takes this a step further by being a little further reaching and strategic, building and managing key initiatives vs. simply reporting them and supporting planning.


The challenge is that the information that these teams work with are the backbone of strategic decision-making, and as businesses scale it become less about pure revenue growth and more into profitable & sustainable growth. Now that we're past the ZIRP era of cheap money however, it's also becoming a priority for earlier stage scale ups also.


Finance teams and planning


FP&A teams play a crucial role in the financial planning process, collaborating closely with senior management, making sure the financial forecast model correctly reflects each department across the company. Their primary aims are pretty simple:


  1. Provide a clear view of the company's financial trajectory

  2. Help identify potential risks and opportunities

  3. Enable strategic decision making


FP&A teams also own the annual budgeting process, which entails breaking down the financial plan for the upcoming year by months. Rather than a top-down exercise, it is a bottom-up build of the financial plan for the upcoming fiscal year.


Role in Revenue Planning


This is where things get blurry - They are already doing bottom up models from a financial aspect, and budgeting is naturally entwined with headcount planning, which is a critical part of capacity planning, and so it becomes sensible for it to extend out to a model of revenue & sales capacity.


But here's where we hit a snag:


Our revenue survey found that tech businesses are most likely to miss target when finance teams run the planning - RevOps teams are almost twice as likely to produce succesful revenue plans.

At face value, it means that it's potentially risky for businesses to rely on financial teams to look after planning, however it's an inevitability as businesses scale:


Our report found that as businesses grow in ARR, Sales planning moves away from the stewardship of Sales Leadership, into the hands of RevOps which quickly grow as a department, before moving over to Finance teams at later stage.

To us this makes complete sense, as the complexity of planning and modeling increase exponentially with the scale of businesses, from territories, markets, segments and products, the need to model correctly grows and grows.


So where does it go wrong?


The key area where these plans are falling down is how it is modelled. Whilst technically they are seen as bottom up reporting, there's fundamental issues in the way that revenue is modelled vs. how it's modelled by RevOps.


This comes from the closeness to sales teams, and the understanding of how the sales process works - This has a material impact on how revenue is modelled.

For example:


A finance team may bottom up model with SDR output based on targets

A RevOps team may bottom up model with actual SDR performance


This difference again can come as a result of the maturity of the company, as with scale it becomes increasingly difficult to find and utilise the required data to build out that level of granularity.


However, RevOps are so close to the ground with an appreciation of how much that can swing the outcome of the plan, and are less likely to allow for BS assumptions to silently slip their way into a plan.


Not all bottom up planning is equal


I've seen many instances where businesses believe that they run bottom up planning, however the reality of their approach is that it's primarily top down, but working up to how many opportunities they generate.


No marketing layer

No outbound layer


True bottom up planning comes from working from the very top (ironically) of the funnel, working towards revenue outcome, from there adjustments to the plan should be made until the output hits a desired level.


Ultimately, if changing the company targets changes anything other than attainment, it's probably not a bottom up model.


What this means


This means that whilst this isn't about keeping sales and revenue planning under the remit of RevOps, it is about ensuring that as businesses scale and mature (which naturally sees a shift towards more finance led initiatives), RevOps remain involved in the process.


It also means that there should be active work to preserve the nuance of bottom up planning, even as teams and territories scale, instead leveraging things like software to help reduce the burden and workload, as opposed to simplifying the models and assumptions at play.


How do we get RevOps and Finance working together?


Getting teams working together at any layer beyond the surface can be challenging as they serve different teams, and report into different C-Suite.


One key aspect of harmonizing FP&A and RevOps is the adoption of standardized data reporting, especially around revenue. By establishing a single source of truth for key metrics and performance indicators, you can ensure that both teams are working with consistent, accurate information. This alignment helps to minimize discrepancies and enables more effective decision-making across the organization.


You can consider implementing a centralized data repository that integrates information from various systems, such as your CRM, marketing automation platforms, and planning & financial software. This approach allows Finance, RevOps and leadership to access real-time insights and conduct comprehensive analyses that span the entire customer lifecycle.


All of this is pretty par for the course, however there is one other route that can help drive a more cultural bond between the two teams:


Have RevOps report into Finance


This might not be a popular stance, however it makes sense - The skillsets and data are pretty shared, and with the drive towards PEG (Profitable Efficient Growth), driving revenue is no longer a volume game, it's about doing it with a far greater eye on cost efficiency.


With RevOps sometimes aslo described as the referee between Sales and Finance, there's also a case for them to be sat entirely separately to sale or finance, under the office of COO. With the rise of FinOps teams also, could we see Ops teams sitting under a COO with both Finance and Revenue remits?



Conclusion


There's still a lot of right-sizing to go on in the world of tech and SaaS, and so there's still no clear path as to how modern finance and revenue teams should operate. With technology also moving forward at pace, the process of planning is also starting to look a whole lot different, with less spreadsheets and more dedicated tech to do the heavy lifting.


Having finance look after planning isn't necessarily a bad thing, however it's should be a flag for RevOps to provide assistance, verify models and sense check outputs.


Overall, it doesn't matter who looks after planning, provided that the models are closely tied to the actual performance and workings of the sales team, with active bottom up modelling driving a view of revenue vs. planning solely from target.

Clevenue's Capacity Plan Guide


We've written an extensive guide on how to capacity plan, which covers everything from sales quotas through to bottom up modeling, to help everyone involved in the planning process to better understand how to approach it with a view to accurately simulating sales.


You can read it in full here:




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