In October 2023, Gartner surveyed 273 FP&A leaders and 102 senior business decision-makers at organisations with more than $250 million and found that 85% feel unable to maintain a consistent level of decision and planning support across decision-makers while supporting complex, new decisions without burning out staff.

It is unsustainable because the FP&A function is over-extended. Constantly reacting and firefighting just to stay afloat, over-working staff barely meets the demands of the function. They have to sort out requests for value-adding decision support because it isn’t possible to meet the demand for it in volatile economic conditions.

Sound familiar? The good news is that 15% of FP&A leaders have found a sustainable delivery model where their teams can maintain a consistent level of decision and planning support across decision-makers while supporting new decisions without burning out FP&A staff.

How to Modernise FP&A?

FP&A modernisation is one of the main tracks on the agenda for the forthcoming Gartner CFO & Finance Executive Summits in North America and the UK because it is one of the top focus areas for those who are looking to turn the finance function into a valued Business Partner that helps shape strategic decisions and grow the organisation.

Most of those people see FP&A modernisation and digitalisation as a way to reduce the burden of routine work in order to free capacity for FP&A staff to partner with decision-makers across the business and arm them with value-adding insights. Gartner calls this the internal consulting model of FP&A delivery.

Yet, given that 85% of functions Gartner surveyed are reporting capacity constraints and staff burnout, the internal consulting approach clearly has shortcomings. While automating routine processes should continue, relying on it to create additional capacity to reduce the pressure on FP&A doesn’t work very well for several reasons.

Automation, like many digital projects, falls short of expectations. Gartner’s studies indicate that less than half of digital projects in finance improve workers’ productivity. Even when a function manages to automate a routine process, the capacity gains are often fractional, and only 15% of finance leaders have the insights on how to rearrange teams or the operating model to drive productivity breakthroughs at an organisation-wide level.

Moreover, capacity shifting is the desired ideal, but 60% of staff report they still have to do manual work on processes that are supposed to be fully automated.

If we look at the other side of the equation, which is the shift of capacity to Finance Business Partnering, we can see more problems. The combination of expertise in both finance and processes and business domain knowledge required for successful Business Partnering is tough to find externally and just as difficult to build internally. Therefore, Finance Business Partners tend to command significantly higher salaries than average FP&A analysts, making the internal consulting model a luxury from a budget perspective.

Fundamentally, the internal consulting model is not very scalable and limits the delivery of FP&A insights and decision support to the wider enterprise. The alternative this research reveals is a Capability Diffusion model, which offers a dramatic improvement to the sustainability of delivering FP&A decision support (Figure 1).

Figure 1: Maximum Impact on Sustainability of FP&A’s Delivery Model

Capability Diffusion Is a Better Delivery Model for FP&A

Capability Diffusion describes an alternative model for imparting FP&A’s expertise to business decision-makers. The major change is that instead of depending on technology to free up staff hours to use for in-person Business Partnering, technology itself becomes the default channel for transferring FP&A expertise to decision-makers.

The rapid evolution of technology and the prevalence of tools with embedded capabilities such as graph analytics, Machine Learning (ML) and Generative Artificial Intelligence mean that for the first time, it is now feasible to extend FP&A into the wider business.

The implication is that FP&A is transformed from a specialist finance function drowning in demand to an easily scalable on-demand enterprise capability that decision-makers can access when they need it in most scenarios.

In turn, by handling most decision support needs via technology as the default channel, Finance Business Partners have the capacity to support the most complex or strategic decisions and train decision-makers across the business in how to use this new enterprise capability.

Most FP&A functions would concede that they have been trying to pursue the automate-for-capacity approach to technology implementation for some time as they attempt to create bandwidth for the ever-growing demand for decision support in the current economic volatility. Most would also admit that capacity gains have been marginal or elusive and that the current way the function extends its expertise into the wider business is not sustainable.

Those in this position should at least consider the alternative of Capability Diffusion via technology, especially due to the fact that it didn’t matter how effective the internal consulting model was.

Whether starting from low or high internal consulting bandwidth, pursuing capability diffusion drove at least a 2.5x uptick in the sustainability of FP&A’s delivery model. That translates to less strain on staff, better, more consistent decision support across the business and more capacity for in-person support on the most important issues.

For example, with modern tools, FP&A could create a leading indicators dashboard based on forecast drivers. It can be used to trigger decisions on material operational performance categories such as pricing, marketing spending or a decision simulation tool built specifically for the C-suite and executive management to game out enterprise-level effects of strategic decisions prior to the Strategic Planning cycles.

Reorienting Teams for Capability Diffusion

Capability Diffusion implies a need for different skill sets, new team roles and upskilling for a technology-first operating environment:

• Hire and develop digitally literate talent

For FP&A talent, familiarity with new and emerging technologies will be key for programming FP&A’s analytics output into tools and automating advice. Prioritise talent with the skills for using low-code/no-code and GPT-style technology to create and program decision support tools. In fact, upskilling finance staff to the level of “citizen data scientists” can solve up to 90% of finance’s data science problems. Your next FP&A hire should not be an embedded Finance Business Partner but a digitally-savvy finance analyst instead.

• Create technology-focused FP&A roles

As FP&A expands its portfolio of tools, product managers will need to oversee the strategic roadmap for FP&A’s digital products and their creation and maintenance. Create finance product manager roles that have control over the final decisions and resourcing for their FP&A products. FP&A will likely need prompt-engineering roles to optimise large language models (Gen AI).

• Reorient Finance Business Partners to a teaching role rather than an advice-giving posture

Task retained Finance Business Partners to teach decision-makers to better understand business problems and the use of FP&A tools. They must also simplify finance insights and base them on decision-maker intuition, not finance jargon. Finally, Finance Business Partners must listen to decision-makers’ unarticulated needs that will become opportunities for new or improved decision support tools.

Additional information is available via the following link: The New Vision to Guide FP&A Transformation