Digital Transformation » Technology » The challenges ahead for FP&A

For many financial planning and analysis (FP&A) professionals, multiple challenges lie ahead. FP&A departments are under ever greater stress to deliver high quality information to senior management to make strategic, operational, and tactical decisions.

Yet the professionals in these departments are often having to work with limited resources – including outdated technology – because there is simply not enough investment in the FP&A function.

As a result, these professionals are relying on a traditional planning culture that is not always up to the task at hand – with often limited data quality.

Part of the issue is that on the one hand senior management teams are having to address an ever more complex and challenging world, where the best possible insights are required for making effective decisions.

That’s because as the external environment grows more uncertain, financial volatility increases and the markets become even more competitive, disrupted by new technologies, new business models and the digitisation of the economy.

On the other hand, however, the FP&A professionals at the sharp end of bringing those insights to the top tier are being stymied by legacy systems that limit the quality of information available, and therefore the quality of the management team’s decision-making.

This is partly because the capability of the tools available has outstripped the time needed for analysts to master them. The result of this is that Excel and the rest of the Office suite of products continues to be the tool of choice for routine reporting, even where significant investments have been made in planning software, as well as business intelligence (BI) software.

It is also because there is an abundance of advice on what to measure, but relatively little guidance given on how to analyse the results and communicate them in an effective way.

New tech needs

Many FP&A professionals will agree that one of the main challenges ahead is the need for improved forecasting, with many companies seeking a real-time forecast of its performance. With that comes the need to streamline and optimise the forecasting process to reduce cycle times, enhance agility and flexibility, and improve the company’s ability to proactively address changing market conditions.

There is also an onus on driving greater ownership and accountability for key operational business drivers and establishing a driver-based, rolling forecast process.

Another key challenge is understanding how to use analytical/cognitive tools to automate and increase efficiency. The goal is to ensure that FP&A spends less time on the reconciliation of financial performance data and more time on analysis.

In that regard, FP&A will have to find its role relative to this development and how it can help organisations to deal with the data overload by incorporating more advanced analytics into regular planning and decision-making activities.

It also needs to consider leveraging business acumen to identify opportunities where analytics can drive performance, and harnessing big data and more advanced and accessible modelling techniques.

Failure to put these opportunities in place can lead to any number of negative outcomes. There might be forecasting errors that can arise when people collaborating inside a large organisation confuse versions, miss important data, or place heavy burdens on data collection.

Some of these elements may result from an ability to achieve a unified view of data, which may result from using out-dated technology. Without certainty, it becomes difficult to consolidate inputs from multiple sources that can be analysed and communicated in a form that can be understood and respected by decision-makers.

Talking talent

Along with the need to develop better technology comes the requirement to develop a workforce that is tech-enabled with the new digital equipment available. That means finding people that can harness advanced analytics tools so that finance departments can generate more accurate and reliable forecasts.

Despite the recognised value of good information for decision-makers, there has been a finite amount of enthusiasm for investing in the necessary staff to create tech-enabled FP&A professionals.

Instead of nurturing talent, many companies have hired from peers to build out their team. As a result, the talent pool of good FP&A professionals is not growing – leading to shrinkage if anything –  as competition comes from other internal teams that are interested in skills such as database querying and data mining.

So it leads to the question of how FP&A professionals can develop their skills with the technology available, such as becoming better business partners capable of providing more advanced analytics through implementing techniques like visualisation and predictive modelling.

With the right technology and skill sets to harness the capability on offer, FP&A professionals can provide meaningful and reliable information to support decision-making in a fast changing environment.

By co-ordinating with other departments and functions, as well as external sources, they can deliver analysis when and where decision makers need them. FP&A professionals can expand their roles to deliver on all these expectations, provided they have the means to do so.