Seven FP&A trends

Here are the top seven FP&A trends to be aware of:

1. Agility is the new normal

Historically, the kind of analysis FP&A teams provided was financial data. But the world has moved on. By gaining access to previously inaccessible numbers, teams across the business are able to make better and more accurate decisions.

Agile organisations tend to have people plan more frequently, put more of their plans into action and leverage planning technology more effectively. These organisations are more prepared for threats and opportunities, from a position of strength.

Rather than defending against the unpredictable, truly agile organisations need to move towards leveraging opportunities for growth. By anticipating disruption, rather than just reacting, organisations are continuously learning and amending their strategies based on experience.

To navigate uncertainty, it is critical that all leaders and decision makers have the most robust data and dashboards possible, with embedded external industry data. According to Forbes, 1“Data-focused executives make better decisions in times of volatility and crisis, and data transparency aids challenging conversations across the executive team regarding resourcing, growth and service.”

2. Collaboration underpins business planning

Connected planning that brings different parts of the business together, to have conversations about each other’s parts of the business together and about how they work together, creates a better outcome for the business as a whole. Best practice processes work hard to ensure that all plans have the resources needed to execute plans properly.

Constructive collaboration does not happen in spreadsheets. By using collaborative analytical functionality embedded within FP&A tools, teams can quickly find, discuss, and analyse options together. Freeing up time to improve forecast quality, exploring the reasons behind issues, testing scenarios and ideas as well as delivering work that eliminates issues and creates opportunities.

Finance is ideally placed to drive quality collaboration, communication and roll out plans across multiple teams including HR, supply chain, sales, marketing, and operations. All, while keeping everyone up to date and aligned on results and next steps.

3. The role of the finance leader has changed

Recent innovations have transformed internal finance operations, to the finance function of the future, as a “custodian of performance”. They play a strategic and valuable role in supporting planning and creating strategies to deliver growth.

The 2role of the finance leader is no longer only about compliance tasks and retrospective reporting. The finance team must now “wear multiple hats” in the organisation. They have taken on the role of business partner, understanding the market, and supporting the leadership team in an advisory capacity. They are transformation agents, driving the organisation forward and holding those in charge to account. They are data-modelling analysists, enabling data-driven, fast decision-making to drive business opportunity and impact. Storytellers, helping the leadership team identify problems with a clear narrative, and proposing ideas for improvement. And finally, data scientists, able to extract and understand the information generated by the underlying data and support scenario planning using predictive analysis.

4. Scenario planning is no longer a nice-to-have

In an uncertain world, plans with a single focus are no longer sufficient. Business leaders need to constantly scan the business environment, assess what lies beyond the ‘span of predictability’, and be prepared for a multitude of options.

For scenario planning to be useful, it needs to be as complete and detailed as possible, continuously updated with the latest data, and most importantly, refreshed throughout with the impact of the strategies being considered.

Additionally, data analytics such as predictive modelling allows organisations to understand the root causes behind problems and predict future outcomes. Organisations should fully embrace analytics and machine learning to detect both abnormalities and opportunities.

Scenario planning should now form part of any business as usual and should not just be done at the start of the year, it needs to be done throughout the year.

5. Organisations have moved on from annual planning

The traditional way of doing annual planning is not sufficient to support businesses for the future. Businesses need to be continuously planning and budgeting, proactively responding to market conditions such as how customers are behaving, hyperinflation or suppliers being impacted by supply disruptions.

Businesses now need the ability to analyse data and make decisions with a moment’s notice. In fact, many companies are now using “microplanning”, which leverages real-time, granular data to make accurate decisions and forecasts.

These organisations are more prepared for threats and opportunities, from a position of strength. Naturally, it is important to ensure that the underlying data is relevant and accurate when using it to make decisions.

Plans and financial forecasts should be revisited frequently and shared with key stakeholders throughout the company to promote collaboration and alignment. By actively participating in the planning and forecasting process, department managers own a greater stake in both the operational performance under their span of control and the financial performance of the overall business.

6. Planning is not just for finance

Budgeting, forecasting, and planning by their very nature are collaborative processes, and when supported by the appropriate software can drive real organisational value. Every aspect of process can be discussed and assessed, supported by facts and figures.

Accountability is shared across the functions, as functional objectives are aligned, which is underpinned by strong processes, a collaboration planning tool, and the quality of underlying data.

By creating a shared vision to solve a business challenge, teams are able to leverage shared information to develop various scenarios and make informed decisions on the way forward. Preconceived ideas and alternative views of the problem can be challenges and debated as well as potential solutions.

7. Machine learning and AI will play an increasing role in FP&A

With so much data being generated, it can be difficult to aggregate, categorise and summarise the data, never mind spot trends or opportunities. FP&A or planning teams typically work with huge datasets pulled across the entire organisation, so technology, powered by machine learning and AI is a must-have.

The benefits of AI and machine learning (ML) are many-fold. They can help develop better real-time and accurate reporting, identify errors or potential issues or trends, help automate trigger-based processes, minimise manual interventions, improve forecast accuracy and increase productivity.

AI and ML support predictive and prescriptive analysis, helping with root cause analysis, from both structured and unstructured data to deliver real-time business insights.

There are already so many areas where AI and ML are helping streamline processes, and it is only the start. There is so much more to come.

Organisations should foster a dynamic environment that moves with a clear focus on mission and heightened team focus, that connects the contributions and wellbeing of workers with the organisation’s higher purpose, regularly review progress and instil it at all levels.

Accurate, frequent, and integrated business planning has become mission critical as geopolitical tensions, worldwide inflation, and supply chain disruption reshape the global economy. Organisations that embrace and deploy digital planning capabilities will be able to adapt quickly and simplify planning processes.

By investing in the digital infrastructure, organisations will have increased accessibility and flexibility to be able to build out alternative scenarios. As well as use insights to set thresholds and alerts if forecasts are outside of ranges and adapt business plans accordingly.

CFOs and planning leaders have a role to play in reinventing the workforce, creating a knowledgeable, agile, collaborative, and empowered team to lead the organisation. Additionally, re-evaluating systems and processes enables CFOs to set the vision of moving to a business partnering finance function with a strategically driven approach to planning.

What to read and do next

Think your planning is solid? Explore our latest finance blogs to uncover the hidden risks that could be holding your organisation back:

• The Excel ceiling: when your most important planning tool becomes your biggest liability
• Why your forecast was wrong again – and why it’s not your team’s fault
• The planning gap no one talks about: why mid-market businesses are more exposed than they think

Plus, make sure you use our Confidence Grader. It scores your planning function across five dimensions in under three minutes — and shows you exactly where speed, visibility, and confidence can be built. Because the businesses that navigate the next two years most successfully won’t be the ones with the best forecasts. They’ll be the ones who can see what others can’t. Take the Confidence Grader