People & Organization
When contemplating the ‘beyond’ and redefining the FP&A function, a CFO should address three dimensions; organization (people), process and technology. The scope of this article is limited to People & Organization, so what are the service delivery models that can move FP&A into a more strategic and forward-looking function? As companies drive service delivery and structural improvements to enable future growth, EY sees three key focus areas: being bold and rethinking the model, expanding and focusing on dedicated Centers of Excellence (COEs); and leaning out Business Unit (BU) finance.
“Being bold and rethinking the model means developing an FP&A operating structure that meets business needs, rather than redesigning around current people and processes,” says EY’s Van der Wal. “Expanding and focusing on Centers of Excellence requires the creation of dedicated COE groups for reporting, data, analytics and controls. And leaning out Business Unit finance calls for clarity on roles and responsibilities within the FP&A function, best achieved by eliminating dual controllership and capitalizing on automation opportunities.”
How to create central uniformity
Van der Wal has no doubt that the FP&A function of the future must be organized at lower cost and higher quality. “This will not be achieved overnight by simply tweaking what we already have,” says the CFO consulting partner. “Finance directors need to lead a transformation from local to central to retain proper oversight and control.” Those finance professionals who accomplish this will help their business to make a greater impact. “The key to this is central uniformity spiced with local creativity,” he emphasizes. “The small, local FP&A team that remains co-located with the business can redirect work – such as research, data analysis, report writing and design – to the COEs. This frees up the co-located FP&A team’s time to better focus on business partnering and decision support. Moving high-level FP&A analysis and reporting to COEs nurtures uniformity.”
Driving change within FP&A
Although there is no one-size-fits-all FP&A model, structures cannot remain static and need to evolve continuously to address the changing needs of the business. EY believes four milestones need to be achieved to drive change within FP&A in the next 10 years:
- Incorporate new subfunctions to strengthen the analytic and decision-making services that FP&A delivers.
- Develop the role of the FP&A business partner, focusing on strategic business value areas, and rethink the skills needed in other roles such as analytical, finance/accounting and ‘softer’ skills that boost personal communication, presentation and persuasion/influencing qualities.
- Rethink the FP&A organizational structure, keeping state-of-the-art technology options in mind such as machine learning, reporting automation that enables self-service for business leaders, as well as (geographic) access to FP&A talent.
- Expand the scope and scale of FP&A within fully-focused COEs that can better handle ad hoc questions from the business such as standard reporting implementation because a COE has a better overview of all available management reporting (rather than each BU coming up with its own report).