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Driving the processes that underpin financial planning, budgeting and forecasting, financial planning and analysis (FP&A) today is a vital element within successful businesses. Despite its importance, many organizations still lack the speed and agility in FP&A to cope with the challenges and volatility of the current climate. Financial professionals continue to rely on outdated and unsuitable assets, leaving the Finance Office unprepared.

To initiate change, finance teams need to understand how to intelligently transform FP&A with a digital-first approach. Leading this initiative is the FP&A maturity model, which offers seven steps to transform FP&A from inadequate to best-in-class. In support of this article, we have also provided you with a link to a webinar session explaining the origin and intent of creating this model, feedback and lessons learned from survey participants, and how to start the process using the information.

What is the FP&A maturity model?

The FP&A Board Maturity Model is a process and guide to help companies achieve a “leading level of maturity” and achieve best-in-class FP&A. To cope with market uncertainty stemming from all the recent changes taking place, companies 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 evaluates six categories to provide a maturity level for each: from Level 1 (the most basic) to Level 5 (where it aspires to be FP&A). The categories are:

  1. Command
  2. Functional Skills
  3. Business partner and collaboration
  4. Processes
  5. Data and analysis
  6. Technology

In essence, the higher the level of maturity in each category, the closer the company is to the best FP&A in the category and the better it is armed to face an uncertain and difficult to predict future.

By applying the information learned from FP&A Trends’ extensive research and the insights gleaned from thousands of financial professionals, reaching an important state of maturity (e.g. Level 6) can best be achieved in seven steps:

  1. Set the vision (this is the main and most important step of the process)

Following the example of companies that have achieved best-in-class status, the transformation project always starts from 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:

  • Adopt planning agility that responds to events as they occur rather than reacting
  • Creation of a team of subject matter experts to guide the integration of strategic, financial and operational planning processes
  • Go beyond financial planning to link operational activities with strategic goals (also known as Extended Planning & Analytics or XP&A)
  • Ensure senior level support is available to promote the right culture throughout the company

  1. Identify suitable business partners

A transformation project of this magnitude is nearly impossible to accomplish by a single person or department. Identify business partners to work on the project and carry it out.

  1. Run the pilot project

Running a pilot project in a single business unit or division is a good way to make its impact and get support. However, it is important to have people with extensive operational knowledge or certain skills, such as IT or specialist fields such as AI and machine learning.

  1. Data management

Data management is a big deal for many organizations. The high volumes of spreadsheets and silos make it incredibly difficult to maintain control and increase the risk of errors. Put simply, data quality and management must be exemplary and agile to ensure that transformation can take place.

  1. Automate

Automation is the key to unlocking FP&A time. Too much time, as noted above, is spent on low-value tasks such as loading data, managing spreadsheets, writing reports, and more. Automation can make these tasks much easier to undertake and much faster to complete.

  1. Transformation takes time

A full transformative overhaul will take time. There is no escape from this reality, but it can be planned. Each step is a step towards the desired final result. Trying to do them all at once will result in failure, but following the process step by step will provide the best results.

  1. Try, fail, learn

The last point is that intelligent transformation is a learning process. Each business will discover different challenges to achieve perfect status, and many will experience failures from time to time. The key here is to learn and adapt to go on forever.

To learn more about smart planning using the maturity model, Board will host a webinar on November 10, 2022. To learn more about the organization’s hierarchy in the maturity process and the steps in detail, you can download the research study published by FP&A Trends Group and complete an online assessment on the Board website to start the FP&A transformation process from textbook to smart state.

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