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The Resource for the Global Finance Profession

Why FP&A Groups Must Measure Their Own ROI

  • By Bill Sayer, Amber Bowden, CTP, and Gavin Block
  • Published: 2014-04-23

Chances are your financial planning and analysis team spent a good chunk of 2013 measuring the value of departments, projects and initiatives throughout your company. However, there’s one group in your company that most likely has never received such attention—yourselves.

FP&A teams rarely turn the table and evaluate themselves, but you should consider it a new challenge. Knowing your worth—the quantifiable impact your FP&A team has on the company—could unlock new opportunities.

There are a number of benefits to measuring your ROI, both direct and indirect. First and foremost, the results could help you justify growing your FP&A team.

Kforce, a professional staffing firm that specializes in finance and accounting workforce solutions, recently conducted a survey of FP&A leaders at companies across the nation. Among the survey’s findings:

  • 56 percent added headcount to their FP&A staff in 2013
  • 51 percent made significant investments in technology and continuing education for their FP&A teams in the past two years.

Clearly, demand for FP&A professionals is on the rise. Adding to that, unemployment among college educated professionals is roughly half the overall national unemployment rate. This means that qualified professionals are becoming harder to find and are commanding higher salaries. However, when you know your FP&A team’s ROI, you can make the case that expanding headcount is a strategic investment rather than just another expense.

Another benefit to consider: Changing the view of FP&A within your organization. Not every company is committed to having a dedicated FP&A team. Unlike accounting or compliance, an FP&A group is sometimes considered “nice to have” rather than a “must-have.”

However, a measurable ROI on your FP&A services can help you change this perspective—in effect, giving you a better seat at the table. It is one of several indirect benefits that include:

  • Increased engagement within your FP&A team
  • Improved “customer service” with company stakeholders
  • Improved understanding of FP&A function.

Overcoming challenges

There are several key challenges your team will face when measuring ROI.

The first is determining the value of “soft” data, secondary items like employee satisfaction, employee engagement and customer satisfication. One possible solution: Don’t include this kind of data in your ROI study.

A second challenge is defining the value of your team’s primary responsibilities. It can be hard to put a specific dollar amount on the type of work that we do in FP&A. But your team can ask questions about the value of its priority tasks and responsibilities. “Is it more than X?” and “Is it less than Y?” These types of questions can create multiple, nonbiased factors, the application of which will be more accurate than an outright guess.

Another tactic for removing bias: Exclude tasks performed by other divisions from your ROI study. For example, other departments might handle some of the same secondary functions performed by your FP&A team. By removing those duplicative efforts, your ROI results can gain more legitimacy.

Using Your ROI

There are numerous benefits to a ROI study, no matter its results. Even a negative evaluation (unlikely for most FP&A teams) can provide the kind of insight that leads to true strategic development of your FP&A team. Your analysis should highlight the areas that have the most and least impact financially and help you address questions such as:

  • What can you do to sharpen your team’s focus?
  • What steps can lead your team to be more proactive?
  • Is your team involved enough in decision-making?

Other points to consider:

Get as much buy-in as possible from the start. You obviously want executives from both inside and outside of the finance team to support your study. Remember, you’re doing this on company time.

Foster credibility. If you do this ROI study entirely by yourself, no one is likely to believe the results. Even the most thorough study will be perceived by some as biased. You want people throughout the company to care about the conclusion that you have reached.

Focus more on expense than revenue impact. In a sales organization, the finance side of the business isn’t traditionally recognized as a revenue generator. After all, we aren’t pounding the pavement, meeting with clients and making sales. Data about your FP&A team’s impact on expense, rather than direct revenue impact, might get a better reception in other parts of the company.

Re-evaluate your first pass. Is your ROI unrealistically high? Take a second look with more conservative value estimations.

Benchmark for the future. Performing an annual ROI gives you a useful measuring stick of your FP&A team’s impact on the organization.

Bill Sayer is FP&A manager for Crump Life Insurance Services. Amber Bowden, CPA, CTP, is owner of Amber Bowden Consulting. Gavin Block is market vice president for Kforce Inc.

Copyright © 2015 Association for Financial Professionals, Inc.
All rights reserved.

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