Making the journey to FP&A excellence

Unit4 Financial Planning and Analysis (FP&A), Global

from Unit4 Communications January 19, 2023 | 4 min read

As our 2022 Business Future Index survey revealed, 69% of finance functions still rely heavily on spreadsheets, or on data imported or exported to or from Excel for their FP&A processes.

This doesn’t just represent a startling reticence towards modernization: it creates major deficiencies in planning and analysis that can expose organizations to unnecessary risk. This has especially been highlighted in recent years: businesses willing to modernize – or who had already undergone finance transformation – found they could respond flexibly and with agility to the disruption. Those who had dragged their feet have had a far tougher time of it over the past 3 years.

With business in 2023 set to move faster than ever, more disruption on the horizon in the form of a looming recession, and internal pressure from within the organization pushing for modernization, there’s more reason than ever for finance departments to equip themselves with the software tools they need to automate workflows, integrate data, and weather whatever shocks the future can throw at them.

Let’s take a look at the steps you can take to set your organization on the journey towards fully transformed, modern FP&A capabilities.

1. Define success for your finance transformation

Success for an FP&A transformation initiative will ideally have multiple advantages in the short and long term. Immediate improvements can come from the ability to streamline processes in a way that reduces errors and time spent, removing data silos, and addressing other urgent pain points like reporting reliability.

In the longer term, FP&A transformation can enable the design of stronger workflows, more robust analysis, and establish and grow a closer and more trusted working partnership with multiple parts of your organization.

Click to read FP&A product brochure - blog - FG

Key outcomes can include, but are not limited to:

Streamlined processes
Reduced planning cycle times and faster closing
Unified systems across the entire finance ecosystem
Better management reporting and insights
Company-wide planning capacity that unites everything from your balance sheets and budgeting to workforce planning and revenue performance management.

2. Develop your business case

A strong business case and ROI forecast will help you immensely in attracting leadership buy-in and selling your entire organization on the benefit of a modernized finance function.

When it comes to FP&A, you’ll find there are several areas where calculating returns on investment and value generation is an easy process, as your salary costs and time spent on different processes are already well defined. These include things like developing forecasts, manual import and export of data, and creating, customizing, modifying, and distributing your reports.

For example, according to BPM Partners, a unified FP&A software platform conservatively saves 2.5 hours every month in employee time on average.

Based on an assumed hourly rate of $90 ph (including 30% non-salary costs) – that equates to $2,700 every year saved per employee, assuming forecasting is done monthly.

But the most significant part of FP&A’s potential value add might not be so obvious – tied up in events and processes whose inputs and outputs are harder to quantify, and thus often left out of traditional business cases. For instance, the ability to quickly reforecast – made possible by modern systems – presents the probability that you’ll be able to detect problems or opportunities will in advance and respond more quickly and confidently. A tricky thing to quantify – but one which can create huge potential value and which should definitely be represented in your business case.

In their recent white paper on FP&A transformation, BPM Partners suggest that ROI models account for these events by including the expected value of benefits that are unlikely to be realized in year 1, but likely to occur in the next 5 years. And that special attention be paid to calculating the potential savings that can be made by investing a little now to prevent or forestall events that your organization must avoid at almost any cost. You can think of it almost as a kind of insurance premium.

3. Pick your scope and speed

Like any other digital transformation initiative, an FP&A transformation can proceed at varying degrees of both speed and comprehensiveness. BPM suggest thinking in terms of 3 distinct distance and speed settings for the journey:

Transform: a sweeping and comprehensive change that involves the streamlining, optimization, and automation of almost all your processes and structures. Transitioning from static, finance-focused planning and reporting to a wide ranging planning, consolidation, reporting, and analysis model for the entire organization.

Extend: A widespread change program that takes planning and analysis company wide, implements sales performance management, revenue performance management, workforce planning, and supply chain planning and analysis.

Evolve: An incremental, step-by-step approach that helps you take the next steps in your journey with controlled and discrete changes – for example increasing your forecasting frequency with a view to implementing rolling forecasts, before then making the jump to scenario modeling and predictive forecasting.

4. Prepare for continuous improvement

Although the initial phase of your implementation project might only take 1 to 3 months, you should plan for ongoing improvement and extension of your new systems’ capabilities over a period of several years as you consider new use cases and needs.

Once your initial goals are realized, you’ll have to prepare your finance teams for a program of continuous adaptation and change to their processes and technology. What exactly this means will depend on the precise nature, size, and scope of your organization and the needs of the customers you serve.

Ready to learn more?

To learn more about the FP&A transformation process – along with a detailed look at the extent of transformation across industries and the trends driving it – check out this new white paper from BPM Partners: The Road to FP&A Excellence, which also includes full checklists for organizations considering modernization of their FP&A capabilities, a breakdown of potential transformation roadmaps, and some provocative questions for the future.