FP&A transformation: Outdated systems do not support organisational agility

The pressure of responding to today’s challenges has exposed the limitations of outdated, ineffective planning and forecasting systems.

Organisations can no longer afford to work from data they mistrust, or that takes weeks validating in order to make a business-critical decision. During a recent webinar, called ‘The importance of digital FP&A transformation and key successful FP&A transformation elements’, recent FP&A survey findings were shared that stated that ‘40% of organisations report the data they use as being low and poor quality’ but recognised the importance of having great data ‘48% of companies still adopt a ‘last year plus X%’ when setting budgets’, while ‘26% had received no technology investments in five years.’

Even before the COVID-19 pandemic, FP&A transformation was on the top of the CFOs agenda:

• 54% of CFOs thought their finance function spent too much time reporting financial data, and 73% thought too little time was spent providing financial analysis and insights.
• CFOs agreed that enhancing business analysis will remain their top priority, alongside balance sheet optimisation and responding to new regulations.

As a result, sophisticated planning and forecasting, alongside an agile and responsive finance function are the most critical capabilities for CFOs over the next five years. 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, ensuring the migration of a CFO to Chief Value Officer.

Collaboration drives innovation

According to McKinsey, top performing organisations are focused on customer engagement and innovation strategies, creating strategic differentiators in the market. High-quality, focused collaboration sessions can improve productivity, speed and innovation within the organisation, driving better business performance.

There are three broad reasons to collaborate:

• Decision making – that includes decisions for complex or uncertain issues and actions, or decisions that include cross functional input.
• Creative solutions or driving innovation – such as new products/ markets or crowdsourcing ideas.
• Information sharing, including question and answer sessions – where team members can raise and discuss concerns as well as cross-functional check ins.

Collaboration is an essential aspect of innovation as it enables everyone to bring their unique set of knowledge and skills to the table, encouraging them to explore a wider range of opportunities. It can only be achieved when organisations are able to combine insight, valuable data and leverage information from their respective areas. Underpinning these efforts with good quality data is critical to have productive, value-creating collaboration.

To ensure that everyone is on the same page and errors of interpretation do not occur, leaders should embrace technology and data, reinvent core processes, and adopt new collaboration tools as the cornerstone of the digital transformation. Leveraging technology to make faster, more informed business decisions, with remote working employees all collaborating from a single data source is an investment well made.

For further information, including the differing transformation options, download our guide