The filmmaker Frank Capra once said “Don’t follow trends, start trends” which holds true for best in class organizations as per the latest results of the FP&A Trends Survey 2022. Best in class organizations clearly bucked “trends” by delivering value internally to business constituents and ultimately to shareholders. The survey which included responses from over 375 FP&A professionals from across the globe highlighted some key insights in challenges, satisfaction, adoption of technology and next steps for the FP&A field.
The key findings for me included the technology findings and how adoption of modern technology in the FP&A space was providing incredible value. One of the key trends was that in the space of Artificial Intelligence and Machine Learning. 63% of those organizations adopting AI/ML felt that the quality of their decisions was more accurate, versus only 39% who reacted favorably using traditional planning technology. Clearly this highlights the benefits of using AI/ML as part of the not just the overall planning process, but also in that modeling scenarios and evaluating outcomes.
For a long while I’ve been highlighting that for modern FP&A to evolve and become an extended planning and analysis (xP&A) organization its not just about adopting the technology that will link their plans seamlessly but changing their processes. The survey highlighted quite a bit of the status quo that needs to change in that:
- 45% spend too much time on low value-added activities (e.g. managing spreadsheets and data validation)
- Only 16% of organizations consider themselves to be “high performing” FP&A teams
- 21% of organizations can deliver a forecast in less than 2 days
Organizations taking an xP&A approach to their planning are evolving the way they do planning. These organizations are embracing the technology available to them to use the data (57%) to make data driven decisions. The trend towards data driven decisions will continue to evolve as organizations integrate their planning solutions with their ERP, HRIS, CRM and other applications. However, this adoption won’t be limited by the underlying technology but also the ability to understand the data.
According to the survey: Analytical skills continue to be the most sought-after FP&A skill in 2022. 59% of respondents marking it as number 1 (2021: 50%), followed by 24% stating business skills (2021: 14%). In order to make sense of the data, interpret the data and direct the use of the data, CFOs and FP&A leaders are changing the way they hire and looking for skills beyond interpreting financial statements. Analytical Expertise is the key foundation amongst the skills finance professionals will need to survive and provide the value their organizations require in this modern age of planning and analysis.
As xP&A continues to grow and evolve, its clear best in class organizations are adopting it. 16% of organizations indicated they have embraced the process and technology behind xP&A and 49% of organizations have started to or are considering this move. Troublesome is that 35% of organizations are not considering this move, or never plan to. For these organizations in the 35% space, it brings a terrible light to the fact that as an organization they don’t plan to integrate their plans across their enterprise and continue to see their planning efforts through without real time inputs from operational areas and limited or zero adherence to how operational and financial plans are aligned with the corporate strategy which is a key tenet of xP&A.
The survey highlights are a key read and provide amazing metrics into the evolution of the FP&A space and how the leaders in this field view the value of their day-to-day efforts. To learn more about the survey watch the global webinar where an experienced panel of experts discuss the trends and challenges facing FP&A departments around the world and download latest results of the FP&A Trends Survey 2022.