Forecast and budgeting, financial planning, performance management, and financial modeling are some of the core activities of the Financial Planning and Analysis (FP&A) function of an organisation. The role of any financial analyst in an FP&A function is to furnish key management with the information they need to estimate the organisation’s future financial performance, evaluate economic and business trends, review past performance, predict business challenges and ultimately recommend actions to overcome them.
Digitalisation has disrupted how FP&A processes have been carried out in the past. At the same time, the advancement of data technology has introduced many new opportunities to help businesses generate more insights through the application of data and analytics (D&A). Data from various sources can be ingested and analysed far better and faster than ever before. So, the question arises as to how should FP&A analysts adapt to the latest challenges to thrive in their roles in this modern era?
Today, complex analytics underpin many important decisions that affect businesses and how decisions are formulated. As a result of this, many companies are investing in emerging D&A technologies such as Business Intelligence (BI) solutions and artificial intelligence (AI). The use of these advanced data platforms, ridding on AI and machine learning– will transform the way that future FP&A team’s work.
Here are some of our observations:
Financial analysis with deeper insights
With the help of robust BI solutions in an organisation, FP&A analysts would be able to create interactive dashboards that get linked to all the data sources. Using smart visualisation of graphs and charts will automatically uncover insights and trends hidden in the data. BI tools enable them to collectively fetch and visualise data in real-time and near real-time. Financial planning and analysis can be performed effectively with just a few clicks on the dashboards.
Accomplish ‘single source of truth’
In many business organisations, we observed that different software applications are being used across business units to handle specific operational and functional requirements. Data in these systems sit in individual databases. This inherently creates one critical issue – data silo. Consequentially, this brings many data-related challenges such as heterogeneous data sources, poor data integration, data quality issues, and lack of data accessibility. BI solution combines all the data in a centralised data warehouse architecture. Effective implementation of company-wide BI solutions ensures the availability and consistency of data for the FP&A analysts to perform forecasting, budgeting and business modeling in the same environment, all done without facing any difficulty and synchronisation requirements.
Seamless integration with the Enterprise Resource Planning (ERP), Customer Relationship Management (CRM) and Planning Management (PM) systems
One of the most dominant benefits of using the BI tool is its unique feature to connect data sources from hundreds of systems to draw insights. It does not matter if the systems are hosted either on cloud or on-premise servers. This is why most of the new-era FP&A analysts are turning to these latest BI solutions to run their analysis, cash flow projection and financial modeling.
Spend more time on strategic activities
FP&A is an important consulting function of any organisation that helps key management teams with data-driven decisions. With efficient use of BI technology, the FP&A analysts can shift the bulk of their work from manual data cleaning to highly automated dashboards analysis. This means that they get to spend more time on strategic activities like business performance management, formulating new products or services, driving corporate actions and strategic planning.
There are many advantages of using BI solutions such as centralised data storage for data consistency through a single source of truth, advanced analytical functionalities, improved data accessibility, better user experience and enhanced security protection features, amongst others. Furthermore, BI solutions have excellent projection capability for the FP&A analysts to churn out in-depth ‘what-ifs’ analysis for the business operations.
In conclusion, as the roles of FP&A analysts and other financial professionals evolve away from conventional finance, accounting, and reporting tasks and toward a mandate of strategic, forward-thinking leadership, adapting to emerging data technology such as BI solution is crucial to empower this dynamic shift.