This was the focus of a recent Argyle virtual event sponsored by Host Analytics at which the panelists discussed the role of CFOs in today’s business world, and the increased focus on financial planning and analysis (FP&A).
It started off with the results of a survey highlighting the relationship between CFOs and CEOs, and how that relationship has evolved over the years. About 44 percent responded saying the role of CEOs has evolved to be more collaborative, while 28 percent said CEOs were less focused on financial details and more focused on strategic processes.
Looking Toward the Future of FP&A
The event focused on the shifting roles of business executives and how those roles will most likely change in the future. About 37 percent of respondents said CFOs will be most focused on driving and adapting to change, 25 percent said CFOs will focus on efficiency, and 20 percent said CFOs will focus on growth. When asked what factors would be most critical for CFOs’ relationship with finance, 39 percent said supporting growth initiatives, 25 percent said aligning finance and operating plans, and 24 percent said leveraging data and analytics. As companies move forward, they are placing more emphasis than ever on integrating finance with operations and leveraging their data to its fullest potential.
Restructuring FP&A Models
As CFOs start assessing and restructuring their FP&A strategy, finance executives have different opinions about what’s the most important. Jeff MacKinnon, Chief Financial Officer of Jonas Software, said his business has grown considerably over the years and as a result, FP&A funding has grown a lot. However, his company has also shifted its finance framework toward being more streamlined, making it possible to free up some of the investments for finance to reallocate toward FP&A functions. The hope is that as the company becomes more focused on analytics, more can be invested into the analysis aspect of finance, rather than managing financial processes.
Ryan Neary, Head of Financial Planning and Analysis of Nicor Gas, said there is a lot of change happening around the ways his company approaches FP&A. They’ve been implementing new tools and software applications to support the process, which has led to a shift in roles for team members and a need for new skill sets. Team members need to have strong analytical skills and a deep understanding of accounting, while also being able to understand the data and key drivers of business. The company is also focused on efficiency, with the intention of conquering period-end reporting in a single day, so team members can devote more time to analytics.
The State of the Annual Budget
Many companies are still relying on annual budgets. However, rolling forecasts can provide growing companies with greater agility and flexibility. MacKinnon said his company has moved toward rolling forecasts permanently. While it hasn’t actually proven to be more efficient in his case, it has provided much greater agility. His team uses a quarterly rolling forecast that spans five years, and they constantly tack new quarters onto the end. It allows his team to be more reactionary when it comes to responding to changes in business and relevant trends.
Streamlining the Budget and Forecasting Process
Ryan Hamlin, Head of Finance at Emerson Process Management, said his team is using mobile apps to help distribute financial information for management reporting, which is just one of the ways his company is streamlining the budget and forecasting process. For him, the cloud has been vital, because it’s provided key executives with access to the reports from their phones and tablets. The cloud has the ability to greatly improve the efficiency of the budget cycle, while also making it easier to connect finance and operations.
How Enterprise Performance Management Can Improve FP&A
The virtual event revealed some key trends among CFOs. CFOs want employees to adopt more diverse roles, they want to improve efficiency, reduce spending on reporting and forecasting, and increase their emphasis on analytics. With a cloud-based enterprise performance management (EPM) solution, financial teams can access a platform that makes reporting and financial data much more accessible. It offers a number of integrated tools to improve efficiency, while also helping to guide rolling forecasts to improve the agility of forecasting. In turn, businesses can increase the efficiency of their financial planning while improving analysis as well.
To learn more about the future of FP&A, watch the Argyle CFO Leadership Virtual Event: Spotlight on FP&A.