In recent years, the FP&A function has clearly become the “cool” group within the Finance department. FP&A is forward-looking and has become a key business partner.
Organizations are increasingly relying on this team to provide the business with the information needed to remain agile – and to react quickly to changes in the business environment. So what does the day-to-day role of FP&A look like in today’s landscape, and how has it evolved? How can the executive team best support and invest in the FP&A function?
This was the focus of a recent Argyle/CFO webinar sponsored by Host Analytics. During the event, a panel of two FP&A experts shared their insights on the current state of the FP&A function, the forces driving an increased need for accurate planning and forecasting, and where the function is going in the future.
Key Challenges Facing FP&A
There are several challenges facing FP&A in 2017. The biggest is the level of uncertainly in the global economy and the business outlook. Of course, there’s more data than ever available to analyze and understand key trends.
As a result, FP&A teams are often challenged in gathering, managing, and gaining insights from all of the data that’s available from internal systems, websites, social media, and other sources. Part of the challenge here is having the time to perform their normal work planning and reporting on the business, doing meaningful analysis, and partnering with key executives across the business.
How the Role of FP&A Has Changed
FP&A teams have certainly gained more visibility in recent years, and the role has become more important. It’s no longer just about pulling together the annual budget and reporting on variances. FP&A teams are now taking the lead in ongoing planning and forecasting, as well as in scenario modeling. And the techniques they’re employing – such as driver-based planning, rolling forecasts, and predictive modeling – are getting more sophisticated.
FP&A has become more data-driven, taking a leadership role in supporting strategic planning at the corporate level and across lines of business. From a reporting standpoint, FP&A can now deliver results to management via graphical dashboards and mobile devices that can put real-time metrics and key performance indicators (KPIs) in the hands of managers, anytime, anywhere.
Being a Better Business Partner
Most FP&A departments are now supporting the lines of business and helping them to improve performance. From an organizational standpoint, many FP&A groups are assigning their team members to specific functions or businesses – which helps to form a strong bond and provide the opportunity to truly understand the business. New technologies are also helping here, including some of the reporting tools mentioned earlier (cloud-based planning solutions), as well as analytic applications and tools.
Investments in FP&A
While many organizations have been adding staff in FP&A, sometimes shifting them from other Finance functions, they’re also investing in technology to improve FP&A productivity. This includes the following investments:
- Upgrading ERP systems
- Employing robotic process automation (RPA)
- Adding enterprise performance management (EPM) applications designed to integrate data from ERPs and other systems and to support more efficient planning, forecasting and reporting
Companies are now better understanding the ROI from investments in Finance technology – including the time and resource savings in processes such as the financial close, planning, and forecasting. The panelists expect continued investment in analytic tools and cloud-based applications that can complement existing systems, as well as dashboards, and mobile capabilities. One of the advantages of cloud-based platforms is that they make powerful applications more accessible and affordable to small and mid-sized companies, in addition to large enterprises.
What Lies Ahead – Skill Sets Required
The panelists agreed the future is bright for the FP&A function. As the focus in Finance continues to shift from back-office support to front-office strategy, FP&A will continue to be the source of analytical support for the entire business. In larger organizations, it could even evolve into a formal “center for performance analytics” that is a resource for the entire enterprise.
From a skill set standpoint, FP&A departments will need to continue to train their teams, or add new talent, to beef up their expertise in strategic planning, risk management, data analytics, business acumen, and communications.
To learn more, check out the replay of this webinar, titled “The Evolution of the FP&A Function.”