Insight

Five ways to turn your FP&A function into a business planning and analysis partner

Does your finance function have what it takes to agilely respond to disruption?

Sanjay Sehgal

Sanjay Sehgal

Principal, Finance Transformation, KPMG US

+1 216-875-8113

Brett Benner

Brett Benner

Partner, Finance Transformation, KPMG US

+1 267-256-2959

No company on earth was adequately prepared to effectively respond to the COVID-19 outbreak in its earliest days. But now that the dust has settled a bit, it’s the right time to ask: does your finance function have what it takes to help your business agilely respond to other black swan events, government-driven policy changes, massive product recalls, or other major disruptors?

Most don’t. That’s because their financial planning and analysis (FP&A) professionals spend the bulk of their time forecasting for the long term, instead of helping the different functions in the business understand what they need to do in the short term.

Having the right operating model is the key underpinning of FP&A’s ability to deliver the insights sales, marketing, or operational planning need to address any type of event or scenario that will affect the company’s competitive position and strategic vision.

For example, a global consumer markets company with historically strong financial performance was struggling to grow. That put a premium on increasing the efficiency and effectiveness of its finance function, especially its FP&A group, as that was identified as a strategic priority. The outcomes generated by the new future-state operating model we designed for the company’s finance organization included:

  • Enhanced speed and flexibility to help deal with an ever-changing environment
  • Improved forecasting accuracy by focusing on key drivers and assumptions
  • Target savings of 48 percent across the FP&A organization

Just as importantly, the new operating model laid the foundation for FP&A to increase its scope from just “reporting up” to executive leadership to “reporting out” to the business. This broader, more strategic, and agile capability is what we call business planning and analysis—or BP&A.

There are five areas that FP&A should focus on in order to be true strategic partners to the business and evoke the BP&A moniker:

Rapid strategic modeling: This is a sustainable way to leverage internal and external third-party data, run on-demand what-if scenarios as often as necessary, and get the needed results, often in the same day.

Continuous forecasting: Instead of focusing on the annual budget process, any significant event or disruption—such as COVID-19, new regulations, or policy modifications—that could change a company’s business drivers should trigger a planning process.

Value creation: Part of BP&A’s goal is to position finance as the function that can drive business value throughout the entire enterprise. So, BP&A needs to be customer-centric and focused on creating value, driving data-based decisions, and supporting the competitive strategy.

Leading technologies and platforms: To turn disruptor-driven insights around on a dime, BP&A professionals must have advanced technological capabilities at their fingertips. Technologies and platforms that can enable dynamic planning and analytics across the business include data storage and ingestion, cloud, predictive analytics, digital labor, and data visualization tools.

New and amplified skills: Financial planning skills are no longer enough. The professionals on the BP&A team must have business acumen to contextualize what they’re working on, be skilled in new data analysis technologies, think critically about the type of data the organization should be looking at, and understand the correlation between the data and its impact on the business.

For more insights, visit our Future of Business Planning and Analysis page.

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