Why Companies Need To Take A More Holistic Approach To FP&A

This article is sponsored by Jedox. Jedox is a great example of software that is enabling true cross-functional collaboration, helping to join up disconnected planning processes, and expand FP&A beyond the Finance function for true Extended Planning and Analysis (xP&A). Learn more about how Jedox can help you go beyond FP&A here.

The continuing disruption, triggered by the pandemic only serves to reinforce the golden rule that, no matter how much we plan, things rarely turn out exactly as expected. That’s certainly the case in the office of Finance, where agility and resiliency continue to prove a key requirement during this time of uncertainty. Inevitably, the current disruption has placed an increased emphasis on the corporate planning function, particularly as it evolves towards a more continuous, rolling planning focus.

However, as planning becomes more and more important, organizations should also recognize that their FP&A activities need to broaden and adopt a more holistic focus. A company is much more than just its financials. The result of planning activities may eventually end up as a debit credit posting, but they also need to be looked at from a wider perspective. Yet, all too often, the planning process ends up being reduced to a set of financials that gets approved by the board and provides the framework for future activity.

While departments are often consulted in the planning process, they’re often not fully engaged – and consequently, run the risk of being disconnected from key planning decisions.?Simply put, they have “no skin in the game”. Additionally, there’s often little coordination between departments to ensure that sales planning is connected to operational planning and procurement planning. This siloed activity planning can quickly lead to inefficiencies, leaving lots of value on the table.

What’s needed to resolve this is a more integrated planning, analysis, and reporting approach – one that takes advantage of a single, unified software suite to help empower decision-makers and business users across all departments.

Building the case for a single set of planning principles

A key stage in the journey towards a more holistic approach to xP&A is the creation of a more connected planning process based around a single set of planning principles.

Organizations with a disconnected process often feature departments that use different planning principles, whether it’s daily, weekly, or monthly – or fully-loaded salaries against simple salary costs for example. Having a connected planning process makes it easier to link planning directly to strategic goals, macroeconomic indicators, and other industry trends.

To ensure success here, it’s important to govern the planning process with a few high-level principles:?

• Planning needs to be driven by the business strategy and its underlying assumptions. These should be tracked continuously, with any deviations triggering conversations across the business?
• The end-to-end process should be governed and facilitated by one department - typically FP&A. This will ensure that just one set of planning principles is used and that reviews are data-driven.?
• Each review will lead to a set of actions that aim to bring the company on the right strategic track or exploit new opportunities as they arise to perform even better?

This may seem simplistic, however, having a clear planning process supported by strong FP&A leadership can deliver strong results, bringing everyone through the process together and securing outcomes that succeed across the business.

With FP&A typically taking on the facilitator role, there’s clearly a requirement for a strong platform to support the planning process across the business. Finance teams now need to be supporting the rest of the business with a wide range of scenarios. Handling multiple scenarios will of course make the planning process more complex, but it will provide both corporate teams and business management with a far greater range of options. Jedox, with its ability to support rolling planning forecasts and powerful What-If scenarios, directly addresses this requirement.

You can read a lot more articles about FP&A, Business Partnering, and Finance Transformation below. It all start's with “Introducing The Finance Transformation Nine Box”?where you set the ambition for your transformation. You should join the?Finance Business Partner Forum?which is part of Business Partnering Institute's online community where we will continue to discuss this topic and you can click here to follow me on?Twitter.

8 Changes For FP&A To Make To Transform Strategy?(part of a ten-article series about FP&As involvement in the strategy process)

An Open Letter To The CFO: Are You Ready To Transform FP&A?

The Future of FP&A – Two Ways To Take the Reins

All Successful Business Partners Are "Leaders"?(part of a five-article series where we unfold our business partnering capability model)

Should We Keep Talking About Business Partnering??(part of a 17-article series where we deep-dive on our business partnering framework "BP on a Formula")

How To Create Value Through Business Partnering

Everyone Can Adopt A Business Partnering Mindset?(part of a six-article series about FP&A Business Partnering)

From Business Partner To Working Within The Business?(part of an article series where I interview finance professionals about their careers in FP&A and Business Partnering)

Is Your Product Optimized For Value Creation??(part of a toolbox series where we look at what tools FP&A professionals should leverage to drive value creation)

How Business Partners Turn Analysis To Insight?(part of case study series where I interview business partners about how they drive value creation using real cases)

What Defines A Finance Master?

The New Career Path For Finance Professionals

How Finance People Can Be More Successful

The CFOs Roadmap To Transforming Finance

How To Become A Finance Business Partner

Financial Analyst vs. Finance Business Partner

You’re A Finance Business Partner, Now What?

Building A Team Of Finance Business Partners

Anders Liu-Lindberg?is the co-founder, COO (Chief Operating Officer), and CMO (Chief Marketing Officer) at?Business Partnering Institute?and owner of the largest?group dedicated to Finance Business Partnering?on LinkedIn with more than 9,500 members. I have ten years of experience as a business partner at the global transport and logistics company?Maersk. I am the co-author of the book “Create Value as a Finance Business Partner” and a?long-time Finance Blogger?on LinkedIn with 60.000+ followers.