Evolution is the critical theme of FP&A in 2022. As businesses still learn how to best adapt to the aftermath of the pandemic, patterns for where FP&A (Financial Planning & Analysis) is heading are becoming far more defined. Some enterprises appear better placed to make the most of the FP&A evolution, having already adopted (or are currently adopting) important digital initiatives across their Office of Finance. Others remain at risk of being left behind, lacking the agility and speed to make changes at the same rate of change seen across business markets. 

In our predictions last year, we championed the idea of digital transformation as the key to overcoming the significant challenges of 2021, the pandemic, and other factors impacting the Office of Finance. While this sentiment remains important, FP&A itself needs to have a fundamental restructuring for businesses to move forward. Technology certainly works to enable this, but only to make the evolution manageable.  

Read on to discover the five trends shaping FP&A and actively evolving the Office of Finance to new heights. 

#1 Automating the Office of Finance 

Automation is an interesting concept. Automation replaces manual and time-consuming tasks to enable the Office of Finance to spend its time on tasks with greater value.  

There is no more significant asset to businesses than the workforce and the creative and strategic input it brings. In providing more time for the finance team (and this is not limited to the Office of Finance, but the entire organization) to work on analysis and reporting, rather than managing data and maintaining things like spreadsheets, the enterprise benefits from far more value and insight. 

#2 Agile scenario planning  

Scenario planning is the concept of creating a number of different scenarios so organizations have a foundational set of data to base decisions on. From the Office of Finance, these typically focus on budgeting factors that will impact the bottom line. Following the pandemic, businesses have realized that scenario planning must be fast. The rate of change in the market has proven to be quick (and largely unpredictable), so scenario planning must give organizations the agility to cope. 

The key to dealing with complexity and uncertainty is for companies to adopt planning tools to quickly model different scenarios and alternative courses of action. Legacy scenario planning models are often very lengthy and inadequate in giving the rich data set required to plan and replan should something suddenly change.  

#3 Predictive planning 

An essential aspect of modern FP&A, as the Office of Finance becomes more forward-looking, is forecasting. In the past, FP&A focused on recording and reporting financial results and leveraging historical financial data to predict the bottom line. Today, with far more data available and the tools to analyze it, FP&A aims to be less reactive and more proactive.  

Predictive planning is key to forecasting, where historical data is incorporated into advanced analytics models to provide accurate predictions on future events, behaviors, and outcomes. Throughout the FP&A process, predictive planning models can provide accurate end-to-end forecasting. As a result, enterprises gain invaluable insight across their planning cycles to guide decision-making. 

#4 Collaboration 

Two notable outcomes have come out of the COVID pandemic. One is the immediate need for remote work. The other is the quick realization that older FP&A models were ill-prepared to meet the demands of sudden and drastic changes in the market. With the fundamentals of FP&A requiring an evolution, one typically launched by and enhanced by digital intervention, the Office of Finance needs to be more connected than ever. Not just to each other in the finance function, but to all enterprise levels. With entire teams working from home in isolation, the ability to work collaboratively remains challenging. 

Technology sits at the fore of overcoming this obstacle. When discussing FP&A, technological platforms provide greater transparency across data and responsibilities to foster collaborative working. With real-time data and clear workflows across FP&A activities, the Office of Finance can operate with standardized data that provides a single version of the truth. There is no longer a reason to fear inaccurate data entry and other common pitfalls associated with spreadsheet-based planning.  

#5 Adopting xP&A 

Traditional FP&A focuses on only the financial aspects of the enterprise – budgeting, planning, forecasting, and analysis. While it is an essential function for any organization, working in this way only creates a disconnect across the other areas of the business (such as operations, human resources, and marketing). What happens if the principles applied to FP&A exist outside the Office of Finance? 

Enter xP&A (Extended Planning & Analysis), the idea that FP&A processes – including continuous planning, forecasting, advanced analytics, and performance monitoring – can, and should, exist across the entire enterprise. In doing so, businesses gain unity across all their functions and have access to standardized and transparent data to operate with more efficiency and effectiveness. 

Learn more  

To expand on the FP&A trends specified above and discover the key evolutionary drivers changing the face of FP&A in 2022, you can download the full eBook here.