Opportunity shapes adaptation in finance
Evolutionary twists and turns can unfold at any time as companies adapt to innovations in technology. Take Nintendo, for example, which was established in 1889 as a distributor of playing cards. It wasn’t until decades later—1985, to be exact—that the company released its iconic gaming console and became a household name.
The function of financial planning and analysis (FP&A) has seen a similar, albeit longer, evolutionary road. Dating back to ancient civilizations, the earliest application of accounting survived thousands of years to eventually evolve into the acute, forward-looking process that organizations depend on today.
In the paper, “The rise and rise of FP&A” Gary Simon, leader of the FSN Modern Finance Forum on LinkedIn, explores the impact that technology and data has had on the evolution of finance and the competitive advantages that a robust FP&A function can provide to an organization.
Started from the budget, now we’re here
FP&A began primarily as a function for budget- and forecast-generation, the paper explains, using historical financial data to anticipate future sales and earnings. Since then, technology, data, and competition have significantly helped the finance professional evolve from a back-office budgeter into a forward-looking collaborator.
The journey from “there” to “here” hasn’t historically been easy, especially as organizations of varying sizes sought out effective FP&A processes and technologies. As Gary points out in the paper, the FP&A function was primarily leveraged through traditional software by larger organizations with access to extensive resources. However, as business conditions became more complex, legacy software began to struggle to cope effectively with large amounts of data.
For smaller businesses, the limitation of resources or capabilities to go beyond standard reports, budgets, or, in some cases, tools such as calculators prohibited the exploration of more insightful FP&A horizons.
This gap in organizational resources and technical capacities is where the advent of cloud-based financial planning software revolutionized the future of financial planning for all organizations, regardless of size and means. It provided the ability to better implement increased data visibility, agility, and flexibility into the FP&A process and it did all that more quickly and affordably than traditional software.
For finance, opportunities are abundant
Looking ahead, Gary proposes, the role of FP&A continues to be paramount in executing more strategic, agile, and forward-looking business planning. He shares that accurate and timely visibility into financial data and insights is key to achieving success amid today’s uncertain and volatile business environments.
Developing a robust FP&A function means that finance must collaborate across all departments—well beyond standard financial reporting—to connect planning throughout the entire enterprise. Information gleaned from operations, marketing, logistics, human resources, and the supply chain (among others) is necessary in helping finance provide insight that can inform future decision-making.
Through a more collaborative and adaptable planning process, finance can continue to spend less time sorting through and organizing numbers, and more time analyzing the trends and results that can inform data-driven, effective strategies for leadership.
To read more about the past, present, and future of finance, download “The rise and rise of FP&A.”
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