Top 5 FP&A Trends and Challenges
The past 5 years have seen significant transformations in the FP&A world.
I have been fortunate enough to have travelled extensively and seen these changes. I observed many restructures, system implementations, analytical insights and innovations, redundancies, frustrations, deadlines… In other words- I saw a lot of changes in the FP&A World first-hand: both successful and painful. I met a lot of FP&A professionals – hard working, exciting, inspiring and often burned out.
In this article, I want to share my list of the Top 5 FP&A Trends.
1. Quality of FP&A data
Good quality FP&A analytics starts from clean and reliable data. In other words, data quality is an essential characteristic that determines the reliability of data for making decisions. When different systems and tools do not speak to each other, finding "the one source of truth" can be a very time-consuming and expensive exercise. Lack of good quality FP&A data is a renowned reason for many FP&A inefficiencies. When the valuable FP&A effort is spent on data cleansing and reconciliations, there is not enough time left for analytics. In the new year, we will continue to see many projects focusing on improving data quality.
2. Flexible and Dynamic FP&A Models
Traditional budgeting, planning, and forecasting have always been too detailed. Many companies still plan and forecast to the level of their General Ledger. Such a detailed planning process leaves no time for decision-making and improvements. In the near future, we will see more companies re-adjusting their planning models to driver-based, less detailed, more flexible and dynamic ones.
3. Shorter FP&A Cycles will improve decision-making process
If your company is still involved in a lengthy and inefficient planning and forecasting battle, it is time to reconsider your process. If your forecasting cycle is more than 3 days and your annual planning process is longer than 3 months, you are most probably not realizing the true potential of your FP&A capabilities. Decision-making has a lead-time and FP&A process should be capable of supporting it. In the near future, many companies will restructure their FP&A processes in order to decrease the planning and forecasting cycles.
4. FP&A and Strategy Execution
Historically, FP&A often stayed away from the strategic planning process. Today the FP&A world is becoming more involved in long-range planning processes. We will continue to observe the gradual harmonization of these two processes. Modern systems can help FP&A to connect Strategic and Business planning through drivers and collaborative routine.
5. Modern FP&A Education will be in High demand.
There is a high demand for fresh FP&A talent in the market place. The demand drives the supply. In the near future, we will see a high interest in modern FP&A education. The world needs a new generation of FP&A professionals: bright, analytical, communicative, strategic and influential.
Enjoy the challenges that lie ahead of us. At the times of black swans and perfect storms, the FP&A world needs these changes and disruptions.
“Great innovation only happens when people aren’t afraid to do things differently”.
--George Cantor, the founder of Set Theory