This is the final installment of a 12-part blog series appropriately called "The 12 Principles…
In the past few months this blog series has examined the 12 Principles of Best Practice FP&A. Just to remind people, these best practices were revealed with research conducted in conjunction with the Institute of Management Accountants (IMA) and based on a global survey that more than 700 organizations participated in. The researchers first identified those companies that consistently meet or beat their own targets AND consistently beat the competition. What CFO (or CEO for that matter) doesn’t have that as their #1 goal? The researchers then went to work reveal “what’s in their drinking water.”
If I had to summarize (I guess that’s the point in a wrap-up post like this) here’s what we found.
There’s a lot to unpack there. The best run companies have a clear understanding of how operational improvements will drive financial results, and they focus just as much attention (if not more) on operational planning as they do financial planning. In the best run companies people are held accountable for delivering specific operational and financial results. They know the resources they need to get those results, and after making their case, those resources are baked right into the budget and clearly identified. Is there more to it than that? Yes, a lot more, but like a compass, those fundamentals point to true north.
So, what’s the first step to take in your journey to move toward best practice FP&A? Our suggestion is you first get a baseline by benchmarking your company or institution against the 700-plus organizations in the database. (Take the Global FP&A Survey here). You’ll be able to identify key gaps in your company’s practices, which of course is the first step to closing them. Then look at the IMA Management Accounting Competency Framework, paying particular attention to the sections on Planning & Reporting and Decision Making. Last, conduct an IT assessment to evaluate how well your systems are serving as a decision-making platform rather than just a patchwork of tools. You can visit the original cover story in Strategic Finance Magazine and review Table 2: Key Technology Enablers.
After reading this blog series, you may feel that your organization is far from best practice FP&A. You aren’t alone. The good news is that even small steps can make a big difference. Good luck on your personal journey to bring best practice FP&A to your organization. We’re here as a resource, so don’t hesitate to reach out!
Take a look at the 12 Best Practice Principles in turn, starting with: FP&A Best Practice Principle #1: Translate Strategy into Actionable Plans