FP&A Models

'Business Analytic' Model Life Cycle

by Michael Coveney, co-author of "Budgeting, Planning, and Forecasting in Uncertain Times"

Analytic models are rarely static. Their aim is to model the organisation in such a way as to allow managers to investigate what is actually going on and to assess changes to the way it operates. These changes may include looking at price/cost structures; the way in which departments are organised; partnerships; outsourcing; or introducing new products/services into new territories.

In each investigation, the model being used will evolve as new information is uncovered that impacts into what is being analysed.

Analytic Model Vs Spreadsheets

by Michael Coveney, co-author of "Budgeting, Planning, and Forecasting in Uncertain Times"

Spreadsheets are without doubt the ‘killer’ application that turned the PC into an indispensable business tool. Before then, computing was the preserve of geeks and specialists who spoke in a language few accountants could understand as they served expensive, inaccessible machines locked away in their own air conditioned environment.

7 Key Analytic Models

by Michael Coveney, co-author of "Budgeting, Planning, and Forecasting in Uncertain Times"

The role of planning is to help manage what can be controlled (i.e. the organisation ’s business processes, the resources it applies to those processes,  and the volume and quality of work done in those processes) to produce outcomes that will achieve organisational objectives, within an uncontrollable and unknowable external environment. From this, it can be seen that an organisation’s business processes are central to Business Analytics.

To plan and monitor performance effectively requires a network of analytic models.  Most organisations are too large and complex to have a single model, and so the models I will describe may be implemented as separate but linked physical entities.

20 Key Financial Modelling Definitions

By Rob Trippe, MBA, Financial Modelling Veteran

Financial model definitions can be tricky. Financial models are often dependent upon numerous functional areas and academic disciplines, such as accounting, finance and statistics. These disciplines may have differing uses of the same terminology. Model risk management has also drawn on numerous disciplines in its evolution. The result can be communicating at cross purposes.

No one academic discipline may lay claim to how a financial model’s terminology is defined. Financial model's output is often either a corporate finance concept or an accounting concept, while a driving calculation process may be statistical. Therefore, terminology should be defined among developers, owners and users as early as possible.

London FP&A Board: FP&A Analytics Maturity Model

By Larysa Melnychuk, Managing Director at FP&A Trends group

Introduction

The future is unpredictable, the current business environment is harsh, competition is fierce. In these times of change, modern FP&A is both exciting and challenging. It is exciting because it utilises better and more sophisticated tools than previously, can embrace automation and the incredible power of online collaboration. However it is difficult because old finance management practices are still alive: they are inadequate for the modern world, but FP&A professionals continue to live from a deadline to a deadline and have no time to stop, change, re-write, and reconsider.

Analytical transformation reduces finance departments’ costs. e.g. robotics and automation, shared services, centers of excellence have already processes of many finance departments. But what about FP&A? In many cases, it still lives in the 20th century. It is a well-known fact that Excel continues to be the prevalent analytical tool used by finance professionals. The quality of data for FP&A analytics remains poor and the FP&A time wasted on the data reconciliations and cleansing. The financial analysis task thus takes on the form of “firefighting”, leaving no time to re-think and re-design the existing non-value adding processes.

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