Operational Challenges to FP&A

The landscape in which FP&A operates is evolving rapidly, with a combination of economic pressures, rapid advances in technology ('traditional' plus cloud), and resource constraints putting the FP&A practitioner under increased pressure to manage the change whilst continuing to deliver high value insight and business support to their operational and leadership teams.

 

The services of FP&A are as relevant as ever, but as the business landscape changes and resources become ever more stretched, the role of the FP&A has entered a critical juncture.  Traditional models that outlined the core competencies of an FP&A practitioner as little as 5 years ago are being re-written.

 

The increasing demands placed upon FP&A spans from being technical, systems and controls specialists to operationally astute business partners, whilst Finance Directors and CEO's are left pondering why they're not getting deeper insightful analysis into their businesses that they require in order to serve the needs of their executive committees and business owners.

  • Technology continues to move forward at a relentless pace, leaving behind outdated accounting systems and baffling users with an increasingly complex offering of 'best practice' applications.
  • Skilled employees with the requisite breadth of FP&A experience and/or industry-specific knowledge are becoming harder to find.
  • Businesses are having to 'do the same with less', or achieve more within a capital-constrained environment.

 

FP&A too can get caught in culture of "this is how it's been done before". With no clear executive sponsorship of their work it's even more challenging for people to reach beyond their immediate daily deliverables and engage meaningfully with their operational counterparts.

 

Day to day challenges to the efficiency and ability to add value to their organisation can be magnified by the following:

 

  • Culture: Lack of direct Executive Committee cultural leadership to drive Strategic Planning, leaving it Finance to manage in isolation.
  • Bottom-up only approach to budgeting with inadequate top-down feedback: 'Sandbagging' approach, inefficient use of resources, lack of buy-in.
  • Complexity: Increased pressure to deliver insight in an increasingly complex and volatile business environment.
  • Resource strain: "do more with less" due to recruitment freezes, reduced investment in higher level skilled staff.
  • Breadth vs specialism? Due to its typically high profile and broad remit, FP&A can fall into the trap of becoming 'everything to everyone', limiting its ability to remain Strategically Focused.
  • Organisational growth can push FP&A further away from the business front line , with resulting resultant reduction in business understanding and ability to influence operational decisions.  Tragically, it can mutate into a centre of data "aggregation excellence".
  • Technology: An explosion of applications promising greater automation and more insightful analysis, with varied success.
  • Lack of formalised training: Skills are often learn't through "experience by doing", with a limited network upon which to seek FP&A-specific advice.
  • Change management: Skills required in a steady-state environment are are very different to the skills required during periods of significant change.
  • Catch 22 problem solving: Tight deadlines can result in manual 'patching', with continued workload pressure reducing the time and resources needed to address deeper underlying issues.