Best-in-class FP&A teams and how they are changing – report from FP&A Trends

The changes of the last two years – and their unprecedented speed and scale – have thrust Financial Planning and Analysis to the forefront of many organizations’ strategic priorities.

The FP&A role is increasingly growing beyond its roots as a discipline within management accounting, becoming a key part of integrated business planning for organizations across all sectors – Gartner has even recently begun referring to it as xP&A or “extended planning and analysis” to refer to its increasingly ubiquitous status:

Cloud xP&A consists of financial planning and analysis (FP&A) and multiple packaged operational planning solutions delivered on a single integrated, composable, data-harmonized vendor platform. It “extends” traditional FP&A solutions focused solely on finance into other enterprise planning domains such as workforce, sales, supply chain and marketing.

These changes have also been accompanied by an accelerating rate of digitization – giving FP&A teams the ability to plan with data coming from the entire organization rather than just the finance department. Technology is becoming a core part not just of how FP&A functions are carried out, but also a core part of how new FP&A functions are developed and integrated with wider business processes.

To cope with the rate of change, FP&A leaders across the world have been adapting rapidly to new realities and new demands from management. This means FP&A teams are experiencing a shift in their core competencies – moving from being a part of the finance organization to a multi-faceted discipline focused on corporate decision making.

Our friends at FP&A Trends recently conducted research – including interviews with 25 top FP&A practitioners and thought leaders, and cases studies from the world’s largest FP&A network – to capture how the FP&A department and the roles within them are changing.

Here are some of the top highlights from the report.

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1. FP&A departments are increasing in strategic importance

FP&A functions are rapidly becoming of central importance to driving big-picture organizational strategy. Interviewees describe it with terms like a “connector,” the “wise man,” the “conductor,” the “therapist” – even “ a digital X-ray machine.”

This strategic shift is a consequence of increasing digitization, which is permitting FP&A to evolve beyond a reporting function and into an analytical function.

As technology is deployed to automate traditional repetitive tasks like period-end reporting, more focus can be transferred to higher value-added tasks like insight generation that supports organizational decision making. Technological adoption also makes the synthesis of this kind of insight possible, giving already capable teams the capacity to do even more and achieve more. In line with this, FP&A has also moved from dealing mostly with financial data to a near 50/50 split between financial and operational data.

And some think that in the future, this split will be 80/20 in favor of operations.

The future of FP&A will require a great deal more data specialists, analysts, and strategic thinkers in the future. This also means that the modern FP&A function can work as a guide and mentor to business leadership, helping to drive more intelligent strategy and providing a pipeline of strategic talent for the leadership of the future.

2. The impact of technology on FP&A teams

Technology is coming to dominate FP&A as a function, and this report sees its effects as groupable into three major themes:

• Collaboration – technology is being used increasingly to make FP&A teams more cohesive and more integrated with other business functions.
• Analysis – predictive and prescriptive analytics, backed up by AI and ML, are being deployed to enhance the quality of insight available to decision makers.
• Automation – tools and techniques that reduce the time spent on lower-value tasks and processes are leading to increases in efficiency and productivity.

This means that tech skills are now a prerequisite for everyone in an FP&A team to help you leverage the tools you have available to their fullest to support more agile decision making. Just as it’s now impossible to carry out normal business processes without relying on technology (whether it’s something as simple as Microsoft Office or something more technical), it will be impossible to perform many of the functions of an FP&A team moving forward without incorporating tech platforms into day to day workflows.

3. FP&A teams and business partnering

In order to actually have an increased impact on business decision making, FP&A teams need to be closer to the rest of the business than ever before. “Business partnering” – working closely with leaders to enhance corporate performance – will therefore be a critical part of the future FP&A department’s goals. 

Business partnering is a role that requires a careful balance of analytical and insight-development skills with softer relationship skills and “emotional intelligence,” allowing your business partner to influence decisions without making them, and to communicate vital information and justify the recommendations your team makes with the hard facts of the data.

How does one measure the emotional intelligence of their FP&A team? By paying attention to the reactions of the rest of the business to the way your people work and the advice which they offer. If people trust you, it’s a great sign you’re operating with the level of emotional intelligence necessary to succeed. The increasing confidence felt by the foremost FP&A teams is infusing the rest of the organization, leading to a finance-first culture and an overall improvement in performance and capability.

This will mean evaluating potential hires and promotions on their soft skills as much as on their analytical abilities - focusing just as much on the ability to play a supporting role as the ability to play the hero role with clever analysis.

4. Team building and management must be future-focused

There’s a global shortage of the skills required for the modern FP&A team – so hiring the talent you need externally is likely to be difficult (not to mention expensive.) It’s also difficult to assess the growing number of soft skills your new hires will need through a traditional interview process.

Moreover, since the skills you’ll need to build an effective team will only continue to evolve, it may be more advisable to cultivate new skill sets within your existing team. FP&A Trends’ survey, interestingly, does not cite formal training as a key element in skills development, with respondents instead focusing more on on-the-job training and mentoring. 

However, these approaches don’t just mean throwing people in the deep end – they require a strong culture of camaraderie, support, continuous improvement, and open and honest feedback. Prominent leaders are applying a variety of techniques to build their team’s motivation and capability. Techniques can be combined and melded as appropriate to the leader’s style and the organization’s culture, and include linking initiatives, metrics, and incentives to create desired behaviors and ways of working, and the use of technology to bring people together in collaborative structures that make optimal use of every team member’s skill sets.

More than anything else, hiring and upskilling your team must be done with the future in mind – based on a career path that can attract good people, keep them around, and which emphasizes the strategic importance of the roles and skills learned on the job – which will likely groom people for the senior leadership positions of tomorrow.

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