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COVID-19 Survey: FP&A Recognizes the Need for BCP

  • By Bryan Lapidus, FP&A
  • Published: 5/28/2020

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AFP’s recent FP&A COVID-19 Survey highlighted the importance of having a strong business continuity plan (BCP) in place. While the first three articles in this series focused on how FP&A was supporting and interacting with their respective enterprises. In this article we look at how FP&A as a function is responding to the COVID-19 crisis.

The first few weeks were marked by a crisis response, followed by a repositioning of staff and resources as most of the country went on lockdown. Approximately half the organizations had a formal BCP in place. This response showed the greatest differential based on company size; two thirds of large companies (revenue more than $1 billion) have BCPs, while less than half the others do. Of those respondents, 80% said their BCP was either effective or highly effective (a four or five on a five-point scale). A survey respondent summarized this outcome by saying, “Our entire organization was remote and ‘business as usual’ within 48 hours.”

Describing the impact on the companies without a formal BCP prior to coronavirus, 65% self-assessed their organization’s response as being either effective or highly effective. While this seems fairly high, the detailed comments indicate they were slower and worked harder to get to back to base level of operations relative to companies with BCP. Here are some representative quotes:

  • “Took all of a week and a half to get 98% of the company to work offsite with little BCP planning in the first place, so the execution was swift.”
  • “This crisis was not a scenario that we had a plan for, so we have been handling it on the fly. So far that has gone well for FP&A, less well in other parts of the organization.”
  • “We didn't have a plan. We are in a reactionary mode. Right now... the only focus is cost reduction without evaluation of long-term repercussions.”



Overall, FP&A experienced a smooth transition from office to remote work.
It is common for people to work from home occasionally, aided by cloud systems or on-premise systems that can be accessed securely through VPNs. Nearly all companies greater than $1 billion in revenue managed this well, perhaps due to the BCP in place. FP&A also self-assessed that their teams had the right financial skills in place to handle the questions and uncertainty, and here again larger companies outperformed smaller ones. We believe this is due to the higher specialization at larger companies where discrete subunits have handled challenging questions. In contrast, smaller companies might have asked FP&A to research areas outside their typical areas while scouring for cost savings and cash flow opportunities.

The next three areas—FP&A’s application of tools and processes—represent an area of opportunity even though they self-assessed as effective at 66%, 66% and 58%. This is a significant drop from the first two areas, and smaller and medium-sized companies have more risk here. This could be weighted by practitioners who are using spreadsheets and non-integrated data that was hard to manipulate, and manual processes that are slow to execute. Where tools are present, some practitioners were not well-versed in using all the functionality of their software that was now being required. For example, one respondent identified an opportunity to more “fully embrace newly implemented FP&A planning tools.” Anecdotally, one system consultant said she was receiving requests to add or explain how to use scenario modules. Often planning systems become consolidation tools for fragmented or offline forecasts instead of a truly integrated business plan.

We see that the crisis has accelerated trends from years into weeks, and some members are saying that ideas and initiatives they thought were impossible have now been accomplished with urgency. The trends of digitization, automation, and infrastructure improvement are now seen as essential operational agility, in addition to providing improved quality, insight, and time savings. “Business continuity” is becoming “business as usual,” and those who plan for it are best prepared.

To access other articles and information relating the survey, please visit www.afponline.org/covid19FPA.

Register for the webinar: “What COVID-19 Means for FP&A” on June 11th.

 

 

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