The Strategic Value of Financial Planning & Analysis (FP&A)

Promising a flood of revolutionary changes for the corporate world, digitised Financial Planning& Analysis (FP&A) offers CFOs and other financial leaders the opportunity to drive their organizations’ financial futures forward. How? By offering greater cross-functional collaboration and efficiencies, richer actionable insights, faster reporting times, and reduced costs.

But what separates baseline financial performance with growth-driven financial success? Financial Planning & Analysis (FP&A) solutions that align with your organization’s strategic vision

Organizations that marry their Financial Planning & Analysis processes with other functions like HR, Marketing, Sales, Supply Chain, Inventory and Operations are able to steer their financial performance towards a future that aligns with their organization’s overall strategic vision, leading to lasting enterprise-wide financial change that props financial leaders up to generate greater year-on-year growth.

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What is Financial Planning & Analysis (FP&A)?

According to the Corporate Finance Institute, Financial Planning and Analysis (FP&A) involves budgeting, forecasting, and analysis of a company’s financial performance with the ultimate objective of supporting major corporate decisions of the CFO, CEO, and Board of Directors.

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The Financial Planning & Analysis Framework

Financial Planning & Analysis is more than just accounting and reporting of your organization’s day-to-day transactional activity. FP&A software enables your finance teams to examine historical and accurate forecast data to uncover data-driven insights that inform your organization’s future financial decisions. The FP&A framework includes:

• Data Collection and Consolidation: Create your organization’s master data management strategy. A data governance and security strategy designed to facilitate superior and streamlined data collection, storage, and analysis processes which empower your organization’s decision makers with a fast and secure ease of access to all your organization’s data and analytics.
• Scenario Modelling: Unlock financial and operation scenario modelling software to find out how your organization’s financial decisions would play out in the context of real world economic, industry and organizational trends. By modelling complex what-if-scenarios, your organization can reduce risk and uncertainty in your decision making processes.
• Reporting and Analysis: Leverage seamless predictive planning and budgeting through interactive dashboards, data visualisation tools, and self-service reporting. Compile accurate and up-to-date financial reports, created using resource rich real-time financial data reporting and analysis capabilities. By investing in Connected Planning solutions, your organization can eliminate the need for multiple reporting systems, consolidating all your organizational data in a singular planning platform and enabling enterprise-wide collaboration for all financial planning activities.
• Planning and Budgeting: Implement a cross-functional approach to your organization’s planning and budgeting activities to align financial performance efforts with your organization’s strategic vision. Unlock FP&A solutions to navigate your organization’s HR, Marketing, Sales, Supply Chain, Inventory, Operations and other functions towards holistic financial growth.

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The value of Financial Planning & Analysis

McKinsey, in its ‘Finance 2030: Four imperatives for the next decade’ report, breaks down the four moves that organizations should adopt to optimise their finance function efficiency. It goes onto advise CFOs and other financial leaders to focus on ‘spending a greater portion of their time on value-added activities, such as Financial Planning and Analysis (FP&A)’ and strategic planning.

With the advances in computing power and the emergence of Artificial Intelligence (AI) and Machine Learning signalling a technology driven change of pace in FP&A software, McKinsey suggests transitioning from first-wave automations like Robotic Process Automations (RPA) to second-wave automations powered by machine learning algorithms to conduct all capital allocation, financial planning, and auditing tasks.

Also recognising the value of aligning your AI powered Financial Planning & Analysis efforts with your organization’s strategic vision, McKinsey states, ‘Having an enterprise-wide strategy on which of the myriad technologies to employ not only allows more focused investments, it also encourages further collaboration between finance and other functions.’

McKinsey also reveals how Financial Planning and Analysis (FP&A) solutions can shape the future financial performance of key industries:

• FP&A in the Manufacturing industry: Illustrating the benefits of investing in high-end automation, McKinsey goes on to share that a high-tech manufacturer leveraged ‘machine learning algorithms and analytics to monitor financial and business continuity risks’ and conducted more efficient audits, resulting in a reduction of its total internal audit cost by 15 to 20 percent.
• FP&A in the Consumer Packaged Goods (CPG) industry: McKinsey also revealed that a global consumer packaged goods company invested in natural language generation (NLG) – an AI powered software that generates written or spoken narratives from various datasets. The CPG company used the NLG software to create an initial draft management discussion and analysis of its monthly operational review. By automating portions of the report using NLG, the company was able to unlock synthesised financial insights while freeing up time of highly skilled finance staff which allowed them to focus more on resolving financial risks and pursuing opportunities.

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Key Takeaway

Financial Planning & Analysis (FP&A) is evolving with the speed of AI and Machine Learning adoption. By leveraging enterprise-wide Financial Planning & Analysis (FP&A) solutions that align with your organization’s strategic vision, you can eliminate organizational siloes that present a roadblock to achieving greater financial growth over the short, medium and long term.

Invest in a top-down Financial Planning & Analysis (FP&A) framework - which includes secure data collection and data governance protocols, quick and accurate scenario modelling, robust real-time reporting and analysis, and superior planning and budgeting capabilities.

This framework is designed to empower your organizational leaders with data-driven decision making capabilities that lead to reduced costs and greater cross-functional collaboration to secure your future financial success while achieving your strategic vision. Get in touch to learn how Financial Planning & Analysis can transform your organization and help you achieve strategy led financial growth.