Taking on FP&A as a career path seemed pretty sensible to me, a self-proclaimed finance buff & data crunching enthusiast. The job description at a global multinational fit right into my strengths, and I was naturally selected for the position. To my dismay, this dream role didn’t bring me much satisfaction. The day-to-day banalities of repetitive tasks and unending spreadsheet organization wore me out quickly. It wasn’t just me though; the office was filled with overworked (albeit) under-utilized staff.

The problem lay not with FP&A as a function, but with the industry-standard lack of automation.

Bottom-line climactic

Times are changing; data flows galore and business planning has proven to be more time-sensitive than ever before. What with flat sales, emerging competitors and tightened margins, hitting profit targets and maintaining budgets are challenges for small and big organizations alike. In the aftermath of such bloodbaths, effective planning and risk management remain key differentiators of triumphant corporations.

The role of traditional FP&A has been clearly outlined above, whereby experts are tasked with deriving meaningful insights from past performance data, coupled with current trends, to drive planning and business decisions. However, the new-age way of doing business (accentuated by modern challenges that came with the COVID era) has exposed further vulnerabilities in the system, thereby requiring the FP&A function to rethink and reboot itself.

McKinsey outlines a modernistic approach adopted by the planning team of a large food manufacturer in a waning market. The members had a disagreement on the forecast figures, which were traditionally arrived at on a plus-minus approach based on aggregated SKU data. The customary steps in the forecasting process laid heavy emphasis on historical information and had inherent biases built-in.

The FP&A team decided to take the road less travelled and started defining major business drivers and their respective impacts on top- and bottom-line business performance. Forecasts were then put in place in conjunction with the planning team, thus bridging existing gaps and arriving at realistic figures grounded in a practical plan of action.

Contrary to consensus, planning time as a whole was reduced by half and the company was able to materialize an additional one to two points of growth as well as 100 basis margin points.

Brain food or leg work?

Needless to say, the FP&A function has moved up the league tables to emerge amongst the most indispensable departments in any organization. Their status has been elevated to that of a data scientist, storyteller and architect combined, yet these professionals often find themselves in a rut. Due to the gross discordance of technology adoption amongst companies, the playing field for FP&A sways on rickety grounds.

The caveat can be explained by simple statistics: FP&A professionals spend 75% of their time “gathering data and administering finance processes”, down just 2% from a decade ago.

The value added by FP&A experts lies in their analysis of financial and business information, yet the lion’s share of the work is confined to the mere organization of unstructured data. Month after month, they’re faced with the daunting task of extracting convoluted data from different sources, organizing them into the right folders, prepping it for ease of use and employing fancy Excel formulas to make sense of them. Whatever time remains, if any, is used for generating critical business insights.

As expected, these expert data crunchers often feel like mere typists and Excel workers rather than invaluable stakeholders. While long-standing experienced FP&A professionals stand to add immense value to an organization they know sweepingly, it is definitely dispiriting that their median tenure spans just 6 years!

The fly in the ointment

FP&A experts are overworked in an environment that is undergoing root-and-branch reform. The industry is propelled by several drifts, key of which are:

·   Novel forecasting and collaborative budgeting methods

·   The need for greater flexibility and agility

·   Continuous updating of key business drivers

·   Radicalization of the FP&A function (to encompass xP&A, BP&A etc.)

It is quite unfortunate then that a whopping 53% of business professionals are unhappy with the existing organizational planning technologies and solutions.

The caveat here lies not in the people but in the tools that they are equipped with. In any finance role, spreadsheets are equated to divinity and professionals are encouraged to be wholly devoted to its truths. But a spreadsheet is a mere document and not in any way a database or a smart tool. FP&A professionals know all too well the impending sense of doom that follows every additional journal entry made after the preparation of a month-end report. 

Alas, it’s time to restart the 15-step process that precedes any sort of meaningful analysis! What if an error is discovered, or another dimension is to be added to the model? Is playing around with Excel really the best use of invaluable time?

The same research that measured happiness levels of FP&A professionals also found that those using dedicated planning technologies (instead of Excel) are much happier in general. The reasons are, of course, plentiful.

Spreadsheets neither facilitate data management nor contribute to effective workflows. Often, business planning and analysis is a multi-disciplinary task, but is there ever enough time to prepare time-consuming reports and share them with other functional heads who may not even know what a SUMIF formula stands for? What about the horrors that come up with transferring data-heavy files via email, considering that only 12% of organizations use cloud technology for their FP&A function?

We’re human after all. When faced with mindless work, we tend to zone out or multitask. The result? 88% of our omniscient spreadsheets come with errors!

Reading the tea leaves

FP&A professionals are crippling under the weight of everything that isn’t financial planning and financial analysis. In the age of collaborative planning and forward-facing forecasts, it becomes all the more imperative to build fit-for-process solutions and models that don’t need to be updated from scratch every time a new business driver comes into the picture.

Ergo, technology is a critical enabler of FP&A’s ability in creating and adding value. The following table, which shows the results from the AFP Financial Planning & Analysis Benchmarking Survey, brings things into perspective.

Weeks’ worth of effort (compounding to 83% additional time) could be saved from grunt work by automating and standardizing finance processes. Add that to the billions of dollars that could be saved from avoiding spreadsheet-related errors and you can see the huge potential awaiting a transformed finance role.

Living up to the acronym

The misnomer that is FP&A isn’t without a light at the end of the tunnel. Since we’ve established that spreadsheet-based budgeting is a recipe for disaster, here are a few ways in which corporations can win at their finance function:

1. Auto-piloted reporting
   FP&A works best when data is translated to actions the quickest. It stands to significantly benefit on account of time and cost savings that accrue from automated data extractions and formatting that fits standardized reports. With the right integrations, connecting with organizational data becomes possible at the mere click of a button.

2. Cloud-based solutions
   Prompt decision making becomes so much more effective when information is on the cloud. Real-time data updates that translate directly into dashboards serve as a repository of truth devoid of human errors. FP&A teams can now collate key information for real-time viewing by CXOs responsible for organizational performance.

3. Dynamic modeling
   The ability to update business drivers and reformat plans on the go alchemizes the FP&A role. By testing different scenarios and alternate strategic moves, FP&A experts are able to draft the case for key changes along with the whys, hows and whens. What earlier took weeks can now be done in less than a day.  

4. Collaborative capabilities
   Inclusive planning is sustainable planning, yet departmental plans often tend to become disassembled from the overall corporate strategy. FP&A can add immense value as business partners that steer cross-functional teams in the strategic planning process, thus ensuring greater alignment of results to targets.

5. Unified platform
   From accounting systems to ERPs to spreadsheets to data visualization services, finance teams are often caught up toggling across multiple platforms to update just a single figure. In this regard, a ‘super app’ that consolidates service offerings goes a long way in doing away with the ramifications posed by interlinked (yet) disaggregated data across multiple platforms.

Causal bridges this gap exactly, by considerably freeing up finance teams and bringing them closer to stakeholders via an alternative and smart solution to cumbersome, static spreadsheets.