Recent technological advancements and constant changes in the business environment enable the finance function in general and FP&A teams in particular to adopt new ways of work, new practices, new tools to meet the needs of their internal and external customers.
FP&A maturity has been a hot topic for a while. This food analogy can be used to assess the state of the FP&A function.
Lagging FP&A = Side dish
At lagging stage of maturity, FP&A does not exist as a separate function and its typical activities are performed by other entities within the finance function, such as accounting or treasury. For these teams, FP&A is not a primary focus and responsibility, hence can be compared to a side dish.
FP&A roles are not clearly defined, and processes lack formal description. Reporting, planning and forecasting exercises are usually highly manual, require significant efforts and are based on standard general ledger information.
FP&A roles are not clearly defined, and processes lack formal description. Reporting, planning and forecasting exercises are usually highly manual, require significant efforts and are based on standard general ledger information.
Lagging stage is common to:
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Some recently founded startups
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Mature organizations focused on accounting and reporting rather than on analytics
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Companies that prefer not to invest in the evolution of their FP&A.
The positive side here is that there are plenty of opportunities for improvement, so if you are an enthusiastic leader and recognize your FP&A function in the description, it’s time to roll up the sleeves and get to work.
Defined FP&A = Sushi
At this stage of maturity, roles, responsibilities and processes within the FP&A function are clearly defined and described which distinguishes FP&A professionals from other members of the finance team.
Accurate and complete data contributes to generating valuable insights and providing strong analytics with an emphasis on what happened and why.
Defined stage is the FP&A organization based on the established, proven standard practices that can support FP&A processes in their traditional forms.
However, FP&A activities are independent and not connected to each other and/or to the strategic objectives of the company. In that way they can be associated with sushi pieces on the plate.
Visionary FP&A = Spaghetti
Visionary FP&A is characterized by the adoption of a range of advanced systems and tools used to optimize and automate its processes.
Like spaghetti in a bowl, all FP&A activities are interrelated and integrated: self-service real-time planning, reporting and KPIs are aligned with business strategy, analytics is focused on the future aiming to predict what will happen, model risks and opportunities, drive change.
Continuous team development plan is focused on business acumen, strategic thinking, interpersonal skills to support the role of FP&A as trusted business advisors.
Of course, FP&A organizations vary significantly and even within the same company various FP&A processes can be positioned differently in terms of their maturity.
Though this food analogy is obviously a rough simplification, do you recognize your FP&A team as a Side dish, a Sushi or a Spaghetti?
This article was first published at FP&A Club dot com