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Aspiring Business Partner: FP&A is Falling Short of CFO Expectations

  • By Michael Heric, Senior Partner; Steve Beam, Expert Partner; and Anup Juneja, Principal
  • Published: 4/7/2021

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Many companies are calling on their financial planning and analysis (FP&A) teams to help navigate present uncertainties. As one finance executive told us, “I need an operating thought partner and not someone that is just keeping score.”

CFOs and finance teams have recognized the need to transform FP&A for some time. Yet despite years of redesigning processes and investing in new technologies, many have not achieved their expected results. 

Our experience working with CFOs and finance groups reveals five challenges companies encounter when trying to transform their FP&A:

  1. Lack of alignment among business leaders.
  2. Sticking with the traditional approach to FP&A.
  3. Inability to address critical skills gaps.
  4. Inability to adopt or scale up new ways of working.
  5. Inadequate technology and data.

Lack of alignment

When business leaders fail to align on business strategy and future value creation, FP&A is forced to react to events and requests rather than anticipate them. It is important to align not only on the end goals for the business but also the path and timing to get there.

Sticking with the traditional approach to FP&A

Traditional FP&A tends to rely on a group of generalists to carry out a broad scope of responsibilities, but the bar for FP&A expertise continues to rise. With deeper specialization now at a premium, CFOs increasingly turn to new organizational models, most notably hub-and-spoke configurations and centers of excellence.

Persistent critical skills gaps

FP&A teams with traditional finance or accounting backgrounds often lack a deep understanding of the business domain, but partial allocation of staff time between FP&A and other areas also limits the ability to build competence. To develop the required skills, dedicate a group of finance professionals to FP&A; do not split them between FP&A and accounting or other transactional work.

Inability to adopt or scale up new ways of working

This pitfall manifests itself through a failure to adopt innovative practices or a tendency to make a large number of small bets with scant results. Double down on investments in which innovation will have the largest positive effect.

Inadequate technology and data

As volatility grows, businesses request more frequent forecasts from finance, requiring access to clean data and the right tools. Upgrading technology requires expensive, substantial change. Take a phased approach, using a portfolio of existing and new technology solutions.

Choose your spots

As companies commit to transforming their FP&A, choosing the right focus and pace is essential.

  • Set the appropriate ambition at the starting point.
  • Enroll business leaders to copilot the effort.
  • Align with business leaders on sources of future value creation, then work backward to redesign FP&A around them.
  • Have finance staff dedicated to FP&A, ensuring that FP&A is separate from accounting and transactional activities.
  • Select the organizational model that best fits the company and culture.
  • Invest to develop great FP&A leaders and practitioners.
  • Pick and choose your battles on technology and data.

Improvement in these areas will raise the odds of FP&A shifting its role from scorekeeper to true business partner.

Want to learn more? Register for AFP’s April 21st webinar, FP&A Is Falling Short of CFO Expectations, to hear Bain & Company experts, Michael Heric, Steve Beam, and Anup Juneja, discuss their experience of working with CFOs across industries and geographies.

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