Paving the way to FP&A progress: despite widespread talk of frozen development budgets, many CFOs and controllers have been beefing up their financial planning and analysis capabilities. But obstacles still block their path.

• Author: Driscoll, Mary
• Position: Finance Function - Company overview

Despite freezes on capital expenditures, many chief financial officers have been beefing up their financial planning and analysis (FP&A) capabilities. Research has found that two-thirds of 410 large companies polled in a recent survey have invested in professional advice, systems and talent in the three years since the global capital markets first shuddered in crisis.

The sell-side is thrilled. Kennedy Information LLC, which tracks activity at management consulting firms, reported recently that "more robust analytics and decision support are being provided internally, which is contributing to the increased size and scope of consulting engagements focused on finance and accounting processes and technology."

Leo Sadovy, director of Global Marketing for Performance Management Solutions at SAS, says that during 2011, his FP&A software products grew twice as fast as others in his portfolio.

There are three main reasons behind the investment surge, as revealed in the survey conducted by APQC, with survey distribution support from The IE Group:

1. The pursuit of profitable growth is inherently more risky today due to consumer reticence, the spread of nontraditional business models and brutal competition;

2. In many sectors, a key competitive advantage is the ability to customize products and services. To succeed, business managers need reliable analysis on which customers, products, services and channels are likely to grow and generate the required amounts of economic profit; and

3. Boards, regulators and investors want assurances that financial performance risks are being managed effectively.

This convergence of heavy winds is putting legacy financial policies, processes and systems under pressure. In response, finance executives are actively driving financial management process improvement. Surely, core accounting and reporting processes are being streamlined and automated to drive cost savings. But process improvements aimed at FP&A are also common. And that's a new twist.

Which FP&A repair projects are most popular? According to the survey respondents, the top priorities are: linking the strategic plan, budgets and forecasts; and profitability analysis.

'Adult' Conversations

"The upshot of strengthening FP&A is the ability to drive decisions with real data rather than emotion or opinions," says Sam Garfield, vice president for Enterprise PMO at Discovery Communications, the media giant known for its nonfiction television networks. Garfield recently worked with Simon Robinson, senior vice president of corporate FP&A, on a finance transformation project that involved 350 people globally. The project, undertaken primarily to prepare for listing on Nasdaq, standardized financial data, processes and tools across various divisions.

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The project eventually streamlined and consolidated...