Leadership, process, and technology are the key criteria for measuring the health of a company's FPA maturity.
FREMONT, CA: Assessing financial planning and analysis (FPA) maturity can help businesses learn what the best FPA looks like and how they can achieve more intelligent ways of working to move towards a leading state. Investing significant time and resources in this process can be time-consuming and costly. An organization can move to the next maturity level once it has assessed its maturity in each category.
A recent poll conducted by the FPA Trends Group surveyed senior business leaders and key Office of Finance members about which categories present the greatest challenge to achieving leading maturity. Among the key challenges identified by respondents were leadership, process, and technology.
Leadership: A strong leadership team enhances FPA within an organization. A fully aligned strategic and operational plan is imperative to driving vital change at the Office of Finance, not just finance.
It is common for senior business leaders to bring competing priorities relevant to their remits to the table. Business leaders have difficulty carving out the time to transform because they prioritize non-value-added activities.
Strategic change requires a transformational shift, which requires support and sponsorship. There is a need for the finance industry to evolve from inception through implementation and performance evaluations and create closed-loop value-creation capabilities.
Process: FPA processes that are efficient and automated free up the team's valuable time to focus on more productive activities like analysis, interpretation, and communication. Key business drivers are analyzed to achieve a good FPA process and reliable simulations of the likely outcomes of decisions are used.
A lack of input and speed often stalls the development of a best-in-class process. It is possible to improve business solutions by involving more people, but the timelines constrain this from traditional working methods. Modern markets require adaptability and agility, and simulations are too slow and stop frequently. Inefficiency prevents companies from taking advantage of important opportunities. In a competitive marketplace, siloed approach and a lack of input from a diverse workforce led to inadequate business decisions.
Technology: The role of technology in FPA can serve as the digital glue that holds modern accounting operations together. By utilizing (the right) technology, FPA can be simplified, integrated, and flexible while enhancing intelligent planning with real-time capabilities with an integrated, flexible, and self-serving platform.
A key issue in organizations that rely on traditional technology is their unwillingness to move beyond legacy work forms. FPA operations run using Excel. While spreadsheet-based planning is popular, it is heavily constrained and unable to cater to modern businesses' needs and operate promptly. There is a risk of error, it restricts collaboration, and it can be time-consuming to integrate even when it does not function well in a silo.
A report by FPA Trends suggests that the key is to apply Excel's experience to modern FPA tools like integrated planning systems and AI/ML, as well as predictive and prescriptive analytics, to become best-in-class in technology. It is not sufficient to lift and shift existing processes without using technology-enabled automation, to augment and re-engineer.
