Integrated FP&A is not a new term. Most experienced FP&A professionals are probably already subconsciously doing it. Integrated FP&A promotes the idea of collaborative planning where finance professionals work with different parts of the organisation to create a holistic view and plan. This means the strategic plans created are fully coordinated and the company has a greater chance of effectively achieving the organisational goals.
The winning formula
For integrated FP&A to be successful, the foundation needs to be strong across four areas:
To create a holistic plan that encompasses the whole organisation, the business requires good quality data. The data needs to be fit for purpose and accessible in a timely fashion so that any analysis and planning can be predictive rather than reactive. However, to decide what data is required, the business needs to understand its processes and its goals. It is also important to have data trust in order for integrated FP&A to be credible. Apart from timeliness, data consistency is important to establish data trust. Organisations need to avoid being drowned in too much data since this leads to teams being unable to extract useful information from the data. Information is the insight that integrated FP&A can use to promote forward-looking recommendations. This is where opportunities can be identified and acted upon.
With the advances in technology such as artificial intelligence (AI) and robotic process automation (RPA), finance teams can take on more value-added analysis by embarking on a digital analytical transformation. The appropriate data capture technology and analytical application can vastly enhance the capability of integrated FP&A. The fit for purpose applications can perform more real time on demand planning and analysis. The FP&A function can be truly integrated since data from to different business operations can be accessed to produce cohesive scenario analysis.
For organisations to achieve integrated FP&A, the corporate culture needs to support this. There should be stakeholder and management buy-in. Integrated FP&A is not just a practice but a way of working and a state of mind. This culture can develop collaboration between finance and operations and help FP&A move from being the gatekeeper, of financial information, to the trusted partner, who advises business on finance-related matters. With integrated FP&A, the stakeholders are given more ownership and autonomy in their planning and strategy since it is no longer solely the finance team that does the planning. Everyone is involved.
It is insufficient to only have the will to establish integrated FP&A. The finance team also needs to have the right talent. Often, one of the biggest barriers to a successful integrated FP&A is a skills gap. Traditional finance professionals analyse what happened and why it happened but does not look into opportunities for growth. Data literacy and soft skills, such as networking and communication, are only a few areas that traditional finance professionals need to develop in order to evolve towards integrated FP&A.
What can we do to alleviate the challenges?
A gap in finance skills is one of the challenges that hinder the development of integrated FP&A. In addition to the technical acumen, FP&A also need analytical skills and a collaborative mindset to become integrated FP&A. Ongoing learning and peer networking are some of the ways to develop new techniques and bridge the skills gap. Soft skills such as communication and influencing can be more difficult to rectify as these require experience. Mentoring is one potential method to develop such soft skills. Another challenge is changing the corporate mindset. This requires FP&A to be engaged with management so that the business can understand the benefits of integrated FP&A. This can be done via ongoing dialogues, not simply during planning periods and proactive partnerships.
The gains - why Integrated FP&A?
Integrated FP&A requires collaboration from all parts of the business. The result is an objective, aligned and cohesive strategy. Stakeholders have a vested interest in being successful, they can see how their vision can be translated into strategy, operations and ultimately the bottom line.
Integrated FP&A is not a one-time activity. It is an ongoing journey. Just like, Rome which was not built in a day, Integrated FP&A is a partnership that needs time and effort to grow and bear fruit.
Any views or opinions expressed are solely those of the author and do not necessarily represent those of any companies that the author has been and is working for.
The article was first published in Unit 4 Prevero Blog