As organizations look ahead, they’re working to determine what FP&A issues will dominate the industry for the foreseeable future. In this post we present five trends that likely will be relevant for this year—and far beyond.
Shift #1: CFOs will sit in the driver’s seat
Forget the days when CFOs were viewed as nothing more than scorekeepers or corporate cops. While reporting chops may still be the price of entry to the CFO job, wide-ranging strategic vision and an ability to interpret data are what make a finance chief truly indispensable. As organizations increasingly rely on recurring revenue models and acquisitions to drive growth, corporate finance gurus are expected to stay on top of their reporting duties while also managing corporate portfolios and overseeing capital allocation. And in this era of chronic uncertainty and anxiety, CEOs want true partners who handle financial reporting but also serve as strategic deputies and growth champions, helping to make data-driven decisions. This increased influence, while exciting, can easily become overwhelming when you consider that nearly half of CFOs surveyed in the Adaptive Insights CFO Indicator Report Q2 2016 say their teams are already working up to 50 hours per week.
Shift #2: Finance teams will do a lot more with less
Already-busy finance teams are being tasked with more data analysis and strategic insight work—so it’s only fair that they staff up to handle the increased load, right? Not quite. Three of four CFOs will not expand their FP&A team in the next 12 months, according to the CFO Indicator Report Q2 2016, even as they expect to double the amount of time they spend on strategic tasks by 2020. Tech tools, then, are absolutely critical to bridging the resource gap while retaining your team’s sanity. If your accounting and finance team are buried in manual reporting processes, there’s no chance they’ll analyze the data or offer strategic insights. Smart FP&A teams are leveraging technology in order to automate those processes so they can focus more on value-adding, high-level analysis.
Shift #3: Organizations will speak a common finance language
Now that finance teams have shouldered heavier-than-ever responsibilities, they must effectively communicate these strategic goals across the organization, explaining precisely how the goals are defined. Since finance is increasingly viewed as the source of data and decisions, it’s the CFO’s job to make sure all stakeholders across departments are on the same page when it comes to metrics and reports. This ensures that the sales department and the production team are making decisions based on the same data that is driving FP&A decisions. A common language creates alignment—and if you lack alignment, you’re going to waste time you don’t have trying to communicate your strategic vision in a dozen languages to a dozen department heads.
Shift #4: Real-time data integrity will be critical
CFOs digest huge swaths of data but often find themselves starved for reliable information. As business complexity and the ubiquity of big data increase, the problem only stands to get worse. According to Adaptive Insights’ CFO Indicator Report Q1 2016, one-third of finance leaders expect the amount of data their teams manage to increase by 50% over the next five years. They’re increasingly responding to this data deluge by ditching spreadsheets, which keep information siloed by department and are notoriously mistake-riddled, to boot. (According to the Association of Chartered Certified Accountants, more than 90% of spreadsheets contain serious errors—even though more than 90% of users are convinced that their models are perfect.) Strategic CEOs know that a central data store creates a single source of truth that is always fresh, always correct—and always trusted by other company leaders. That means they spend less time defending the data and more time considering the issues and making better decisions.
Shift #5: Agility in the face of business complexity will be required
If CFOs are going to take over—and remain in—the driver’s seat, they need to create an active planning process that is collaborative, comprehensive, and continuous. Think about it: If the FP&A team takes three months to complete the planning process, then the company doesn’t have much more than an annual guidepost at best. The plan is almost immediately outdated. Agility is just a pipe dream. But with continuous planning, finance leaders have more accurate, more up-to-date plans and forecasts that let them react to the business landscape swiftly and decisively. That’s agility at its best.