Leading the processes that underpin financial planning, budgeting and forecasting, Financial Planning & Analysis (FP&A) today is a vital element within successful businesses. Despite its importance, many organizations still lack the speed and agility across FP&A to match the challenges and volatility of the current climate. Finance professionals continue to rely on outdated and unfit activities, leaving the Office of Finance unprepared.

To initiate change, finance teams need to understand how they can intelligently transform FP&A with a digital-first approach. Guiding this initiative is the FP&A Maturity Model – offering seven steps to take FP&A from inadequate to best-in-class.

What is the FP&A Maturity Model?

The FP&A Board Maturity Model is a process and guide to help businesses reach a “leading state level of maturity” and achieve best-in-class FP&A. Today’s business climate today is filled with uncertainty and subject to rapid change. It means that operating within it is far more challenging and businesses lacking robust FP&A (among other critical business functions) are at risk of falling behind. To cope with market uncertainty, businesses can follow the model (regardless of size, industry, and geography) to assess where they are in terms of planning and analysis and how they can improve.

The model assesses six categories to provide a maturity level for each – from Level 1 (the most basic) to Level 5 (where FP&A aspires to be). The categories are:

1. Leadership
2. Functional Skills
3. Business Partner and Collaboration
4. Process
5. Data & Analytics
6. Technology

In essence, the higher the level of maturity across each category, the closer the business is to best-in-class FP&A and the better armed it is to cope with an uncertain and hard to predict future.

Reaching the leading state level of maturity in seven steps

Applying the insight learned from FP&A Trends’ extensive research and the views collated from thousands of finance professionals, reaching a leading state of maturity (i.e. Level 5) can be best achieved in seven steps:

1. Set the vision

Following the example of businesses who have reached best-in-class FP&A maturity, the transformation project always starts with the vision of what planning could be. Backed by senior management (an extremely important element of the entire project), the optimal planning approach is one that incorporates a culture of collaboration and integration.

An integrated management process covers:

• Adopting planning agility that responds to events as they occur rather than reacting after they’ve impacted the business
• Creating a team of subject experts to lead the integration of strategic, financial, and operational planning processes
• Going beyond financial planning to link operational activities with strategic goals (also known as Extended Planning & Analytics, or XP&A)
• Ensuring senior-level support is in place to drive the correct culture across the enterprise

Having each of these planned into the overall vision of the planning project will deliver top benefits to the business.

2. Identify suitable business partners

A transformation project of this scale is all but impossible to achieve by one person or one department. It requires high levels of collaboration and alignment on the desired outcomes. Identify business partners to work on the project and move it forward.

3. Run the pilot project

Running a pilot project in an individual business unit or division is a good way of garnering its impact and gaining support. However, in order to do this successfully, it is important to have people with extensive operational knowledge or the certain skills, such as IT or specialist fields such as AI and Machine Learning.

4. Data management

Data management is a big issue for many organizations. High volumes of spreadsheets and silos make it incredibly complex to maintain control and increase the risk of errors. More time is spent just managing data rather than understanding it.

Put simply, data quality and management must be exemplary and agile to ensure that transformation can take place.

5. Automate

Automation is key to unlocking FP&A time. Too much time, as noted above, is spent on low-value tasks such as loading data, maintaining spreadsheets, writing reports, and much more. Automation can make these activities much simpler to undertake and far faster to complete. Automation is also a key ingredient in an agile planning process – encouraging activities to be led by data.

6. Transformation takes time

A complete transformative overhaul will take time. There is no escaping this reality, but it can be planned for. Each step is precisely that, a step towards the end outcome. Trying to do them all at once will result in failure but following the process step-by-step will deliver top results. Afterall, the overall project is to help bring the FP&A team together and align them and the wider business to a shared vision that links strategic, financial, and operational planning.

7. Try, fail, learn

The last point is that intelligent transformation is a learning process. Each business will uncover different challenges to achieving the perfect state and many will experience failures from time-to-time. They key here is to learn and adapt to perpetually move forward.

How to create an Intelligent Planning process with the FP&A Board Maturity Model

Building on the first FP&A Board Maturity Model research report, which explored what best-in-class FP&A looks like, the next paper takes a deep dive into how businesses can intelligently transform FP&A and build towards a leading state of maturity.

Download the latest report, FP&A Board Maturity Model: Achieving Intelligent Transformation, to learn more about how FP&A teams can best serve organizations.

Disclaimer: The model presented here was created by the International FP&A Board. It reflects extensive research, current realities, and the latest developments in FP&A best practices. As the result, this is a collective, balanced view of thousands of professionals from different organizations around the globe.