FP&A teams have come a long way, but what changes can we expect to see in the future? There are at least five additional changes we’ll see in near future.
Increased adoption of cloud platforms: It has already started, but the transition to the cloud will speed up more as the costs keep coming down and reliability keeps increasing. Switching to cloud platforms will facilitate easy accessibility and will reduce monitoring of IT infrastructure, databases and servers. This will also help FP&A analysts spend more time in analysis and less on gathering data.
Higher flexibility and customization: With continuous technological advancement, ever-changing regulations, unremitting social, geopolitical and environmental pressures, business and industries are changing at much rapid pace today than ever before. We’ll likely see companies with more integrated businesses, diversified portfolios and a larger geographical presence. Continuous and increased consolidation and divestitures of businesses would ask for faster and easier reporting, analysis and valuations of entities as whole and as parts. This will result in the need for more flexible, customized and thorough design of planning systems to quickly incorporate new businesses or spin-off existing assets.
Boosted acceptance of artificial intelligence (AI): Data analytics is the core of the FP&A function and usage of AI will find more acceptance in future. Few planning applications already offer smart tools for data analytics and we’ll likely continue to see good enhancements on what these tools can do in future. Measurable and repeatable tasks will be performed using AI and it will deliver results much faster than humans. Together with automation, more work will be done with less resources and faster.
Superior performance and quicker turnaround times: We’ll see accounting close cycles getting shorter, and analyses and reporting being done faster. We’ll also see more intra-month updates giving executives an opportunity to track numbers more closely and make quick business decisions as necessary. This particularly helps companies dealing with more volatility to either mitigate risks or grab opportunities.
FP&A as critical role: FP&A will no longer merely be a support function, but it will be a critical role. FP&A enables individuals to see the full picture of a company’s businesses, past performance and future projections. This tremendously helps analysts to understand what has been working and where things need redirection. Such exposure will continue to attract better talent and skillset, which is essential for the role. Organizations will also invest more in keeping the skillset of FP&A professionals up-to-date.
I’m sure we’ll see more changes than the ones listed above, and likely FP&A roles will get bigger and grow even more critical to what they are today. The increased demand for this function, as well as the emergence of new technologies, will surely attract more highly-skilled talent. FP&A is an exciting space to watch, as these changes start occurring and help shape the future of their respective organizations.
Disclaimer: Opinions expressed are my own and not the views of my employer.Harshit Chatur, CTP, FP&A, is director of finance at NRG Energy, Inc.