Is your FP&A function living up to all elements of its name and fulfilling a strategic role?
If most of your team’s time is spent number-crunching and handling – rather than analysing – data, there isn’t going to be room for a focus on truly value-added tasks.
A 2016 report from the AFP shows that investment in technology has a huge impact on the time required for routine tasks such as collecting and manipulating budget data. Companies investing less than 10% of their FP&A budget in technology were spending on average 384 full-time man days on these processes. This is in stark contrast with those companies spending in the 10-20% bracket, who were completing the same tasks in less than half the time.
These numbers are supported by the PwC report we shared at the beginning of the year, which identified that 30-40% of time spent by your finance function could be saved through automation and behaviour change. The same report shows that in top performance finance functions, 75% of business analysts’ time is spent on developing insight. This strategic approach is only possible once your team’s capacity has been released from basic data gathering – technology is the key to freeing up that resource.
A highly effective financial planning and analysis function has always been important, but crisis and the prospect of an ongoing challenging economic situation renders this work more crucial than ever. As organisations seek to navigate the current turbulence, the cultivation of a single version of the truth and the ability to spend time running and testing scenarios to inform decision-making will be vital.
Technology upgrades traditionally come at a high cost and carry a high risk. Estimates place the failure rate of IT projects in the range of 30-60%, as measured by unmet goals, spend over budget, significant delays or complete abandonment. Most organisations are therefore hesitant to make big shifts, particularly in current uncertain circumstances.
As a result, FP&A functions face a challenge:
- The current environment demands that FP&A steps up and delivers its strategic potential
- Managing the value-added activity to drive profitable decision making requires technology to release resource within the team
- Technology deployment can be costly, time-consuming and risky
- Not implementing new systems will cost more time and money in the long term.
So how do you navigate past this catch-22 scenario?
Create a vision. Where do you want the FP&A function to be? What capabilities are you currently missing that would make the greatest difference to your planning and decision making? You don’t have to have all of the answers but this will be a good starting point to work backwards from, filling in the gaps as you go.
Seek iterative improvement. Look for small steps that will release immediate benefit, the aggregation of marginal gains doesn’t take long to deliver across the bigger picture. Identifying discrete, achievable actions and using them to deliver results is far more manageable than creating, selling in and delivering on a business case for a larger project.
Start with making things easier. Lose the spreadsheets! If gathering and consolidating data and keeping it up to date is creating problems for you, automate the process. This simple step will create the capacity to take a wider view of the overall system and approach.
Look at the services that finance provides to the business. Consider how technology could create the opportunity to better deliver them.
Create a road map. Using the momentum and capacity gained from initial successes, apply your learnings to guide delivery and minimise risk.
Our implementations often start by mirroring the existing disparate processes executed within Excel. This provides the immediate benefit of releasing your team from their regular, monthly pain-point activities and creates room for them to think and focus more on the valuable analysis.
Starting small in Planning Analytics gives you a platform on which to build. From the first steps of automation you can develop your models and start working with dynamic forecasting and scenario planning. Get in touch with us today to find out how your FP&A function can start to truly fulfil their strategic role with progressively improved production and provision of management information.