FP&A stands for “Financial Planning and Analysis” or “Financial Planning and Analytics”. Gartner describes FP&A as a “set of four activities that support an organization's financial health: planning and budgeting, integrated financial planning, management and performance reporting, and forecasting and modeling.”
In this blog, we will discuss the role of FP&A within an organization, the best 2022 FP&A tools and why organization’s need to adopt them.
FP&A solutions enhance an organization’s finance division by assisting with the financial planning, forecasting and budgeting processes that can help leadership teams make important business decisions via insightful data interpretations.
Essentially, they are insightful tools that allow organization’s to dig deeper into the financial operations of the business to identify areas that are over performing or underperforming. While it is usually attributed as a task undertaken by the finance teams, it isn’t just used to analyze data for the finance division only. Instead, the processes within FP&A can be used to reveal insights on areas from human resources and operations through to marketing and tech support.
So why is the FP&A function important for an organization to have? Here are a few key benefits:
When making a business decision, instead of chasing department heads or key stakeholders from different parts of an organization, FP&A provides leaders with insightful data in one place. When the leadership team wants information to support a potential upcoming project, business case or just general insight, they need only to consult FP&A teams or software. This allows for more efficient decisions backed by solid and reliable data.
Not only is FP&A great for immediate business decisions, but you can use FP&A to create forecasted business models, outcomes, cases and projections. Considering investing more in your sales and marketing teams? FP&A can provide you with data that can project how that might go. FP&A can establish scenario models to help optimize business growth by comparing multiple outcomes and leaving leaders with the best outcome or model to choose from.
Having business planning processes concentrated into one area, FP&A will increase productivity as less interactions will be required to produce insightful data interpretations. Less emails back and forth chasing information from one team member to the next, and if your FP&A is fully-automated, less need to store or maintain documents, nevermind the cost-savings due to decreased staffing requirements.
As with many data trends, FP&A is constantly evolving and it’s starting to look more and more digital. If anyone needs further proof of how quickly cloud computing has become the norm in the world of FP&A, consider how the landscape looked back in 2015. According to the American Productivity & Quality Center, 25% of survey participants were using cloud technologies to do their finances and a further 22% were considering a move to the cloud in 2016. Recent data from Google Cloud showed that in 2021, more than 83% of surveyed financial services companies were deploying cloud technology as part of their primary computing infrastructures.
Now, in 2022, FP&A is all about the cloud. And it makes sense - software architecture is typically easier to use and maintain than traditional methods of compiling and analyzing a company’s financial strategy such as developing manual spreadsheets and reports.
To keep up with this trend, it is imperative that FP&A teams ensure they are across the latest cloud-based solutions, especially given the evolving nature of the technology. The cutting-edge aspect of cloud computing solutions means new platforms are constantly launching and those that already exist are being updated. That is why practitioners need to adapt their thinking and strategies to meet what is on the market. Transitioning to new platforms can be a hassle but the benefits of finding one’s right place in the cloud far outweighs the negatives.
Take SaaS (software as a service) solutions as an example of cloud computing. They reduce application support costs and increase application flexibility. Boasting global accessibility, ease of implementation and continual upgrades, modern cloud solutions allow FP&A teams to compile and deliver executives with the information and reports they need more easily and cost-effectively than ever.
With providers of all shapes and sizes offering FP&A software, selecting the right platform for your unique needs can be daunting. That is why we have compiled this list of the top FP&A tools on the market for 2022:
Just as the importance of a quality FP&A team cannot be understated, so too is the need to empower that team with the best cloud-based solution to meet their needs. This list is just a small sample of the products on the market and which to ultimately invest in is a big decision. To find the best solution to meet your needs, take the time to research each solution to see if it is fit for purpose. Some key factors to consider are user experience, security, capabilities and customer experience.
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