Jeff Glenzer CTP, Vice President and Chief Operating Officer, AFP
There are a bunch of financial planning and analysis (FP&A) maturity models out there. But there’s not one like the Maturity Model AFP launched at the end of October.
It’s comprehensive. It’s doesn’t focus on one feature of the function but on the entire FP&A organization, across four domains, each broken into five performance areas:
- Business process.
It’s practitioner-based. It was developed by a team of primarily practitioners for practitioners.
It’s practical. It includes a per-domain, self-assessment tool that allows professionals to rank themselves on a scale of 1-10 and figure out where they stand.
It’s actionable. It comes complete with a list of key steps and a comprehensive addendum of how-to steps on how to move up the maturity curve and improve performance.
The model acknowledges that FP&A is evolving from an offshoot of the accounting organization into a forward-looking and strategic function that performs not only the core activities of budgeting, forecasting and planning, but also relies on increased use of data and analytics, an expanded skillset and advanced processes to partner with the business to improve enterprise performance. As its mandate expands, so are its uses of data and technology, the scope of its business processes and its talent requirements.
How to use the model
“The model is a valuable tool to help FP&A organizations assess where they are today and where there are opportunities to grow and improve,” said Gaileon Thompson, senior vice president, global consumer operations and technology finance at Citibank, and the chairwoman of AFP’s FP&A Advisory Council. “And for those teams that are further along the maturity spectrum, the tool also serves as a validation for just how far they've come.”
Here’s how the Advisory Council model workgroup suggests FP&A teams put the new model to work:
- Create an action plan. “I hope that the model is seen as a useful resource and tool to help FP&A professionals benchmark where their organization is, develop ideas and formulate a plan to help them move themselves move further forward along the maturity continuum,” said Jon Kanter, CFO of Goodwin Procter LLP.
- Move up the growth curve. The FP&A profession is still in its infancy and will only get better over time, continuing to be seen as the key driver of value added business insights. “FP&A professionals will be able to apply this model to move their own organizations up the growth curve,” said Tom Russell, vice president of corporate FP&A at Welltower.
- Identify unique areas of improvement. FP&A professionals should be able to apply the model by using it to objectively assess each area, both in terms of importance/relevance and performance. “Not every best practice is relevant in each situation—given differences in business, industry, organization, technologies and culture. While high-level summaries are helpful, I believe that the detailed elements provide important depth to guide improvement,” said Mitch Max, partner with BetterVu, who served on the model workgroup.
- Get a head start. According to Thompson, one great aspect of this model is that some FP&A teams may realize they have room to grow, but may not necessarily know where to start or what to do first. “The model can help teams identify where to start and how to get started. This model can also help from a benchmarking perspective, and in instances where an investment in people or systems is needed, this model can help build the business case for making those investments and establish a methodological framework for evaluating your FP&A team’s performance and provides guidance on what can be done to improve.”
Philip Peck, VP of Finance Transformation at Peloton, and also a member of the FP&A Advisory Council model workgroup summed up the model as follows: “The Maturity Model framework will allow organizations to establish a baseline score that highlights their relative capabilities across a series of key attributes covering business process, technology, data and information, and people. By understanding how one’s own organization compares to domain area and industry best practices, companies can quickly assess the areas where they have the greatest opportunities for improvement, identify ideas for initiatives that can move the dial and help transform their FP&A function, and then determine a game plan for improving their FP&A capabilities in the target areas.”