Anyone who has worked on a budget at some point has experienced that late night moment when they throw up their hands in frustration because they cannot find why numbers do not tie, plug the number so it matches management's expectations and call it a night. The above example is all too common in FP&A and the last few years make it abundantly clear that the traditional ways of working, coupled with the systems and processes of the average FP&A department, is insufficient to keep up with the businesses needs. In today’s world of ever-increasing demand for more analysis, forecasts, understanding of cash positions, and scenario management the need for better processes, ways of working, and technology has never been more clear. The last few years have increased the visibility of the FP&A department, allowing many FP&A departments to claim the seat at the table they felt was long overdue. FP&A has been looked to again and again to help companies navigate the uncertain economic waters of the last few years. However, if FP&A hopes to keep its seat at the table and navigate a world with ever-increasing uncertainty, FP&A departments must continue improving processes, upgrading skills, and embracing technology.
Improving technology is top of mind for many finance leaders; one recent study found FP&A tools to be the #1 technology priority for 2023. Surveys conducted by FP&A Trends and Charles Tenot further highlight the need for better tools if FP&A is to keep up with the ever-increasing demand being placed upon them. The FP&A trends survey found that overall forecast satisfaction declined from 54% to 39% over the last year and that 45% of FP&A’s time is still being spent on “low-value activities such as managing multiple spreadsheets and data validation”. If FP&A hopes to attract and keep top talent the time spent on low value activities must change. FP&A professionals want to be strategic partners not data jockeys who spent all night working “Black Magic”/”Excel Wizardy” in an effort to find valuable insights from the messy data.
What is clear is that spreadsheets alone are not enough for most FP&A departments to manage the budgeting and forecasting process. The need for scenario planning/management, use of external factors, and driver-based planning is higher than it has ever been. Anyone who has managed a forecast/budget in Excel with multiple stakeholders is intimately familiar with the difficulty of managing multiple versions, collaborating with stakeholders, and creating multiple budget scenarios. These headaches often lead to mistakes and many late nights scrambling to finalize the budget or complete the latest forecast.
Companies need to embrace technology as an enabler to keep up with the demands of the modern finance organization. As companies look to upgrade technology they must remember that technology is an enabler, not a solution. In addition to implementing better tools, FP&A departments must focus on ensuring they have robust processes and people with the right skill sets to meet the ever-increasing demands of the modern FP&A department.
The 2022 FP&A trends survey found that companies that have embraced technology are seeing much better results than those that have not embraced technology. The survey found the following:
The bottom line is that for FP&A to keep their seat at the table and drive value they must find ways to embrace technology to inform decisions and to streamline and automate the budgeting/forecasting process.
The right technology to include the use of AI/ML coupled with a strong understanding of the business and its key drivers will not only increase the satisfaction level of the forecast but will make the process easier to manage and support. Moving forward, the modern FP&A department would be wise to evaluate its current processes, team skill set, and technology adoption and develop a plan to ensure it can meet the ever-increasing demands of the business and keep the seat at the table it has earned over the last few years.
Fintastic is a new platform that aims to address the complaints by many finance executives that FP&A software is outdated and fails to meet the needs of the business. Fintastic is the first complete FP&A solution that uses probability science and risk-derived planning to give actionable insights and recommendations. Fintastic combines all the benefits of traditional planning tools such as data integration, collaboration, and modeling capabilities with Machine Learning Driven Smart Features, so you can understand your company’s performance at a glance and close the gap between planning and analysis, enabling fast and continuous cycles.
Formulas and automation will not get it done in today’s ever-changing world. Companies need to expect more from finance tools and the finance department. Enter Fintastic, the only solution that turns your data and financial model into real business value.