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The Business Partnering Institute (BPI) has released an interesting analysis of the potential of FP&A and how it will evolve in the near future. This report titled “FP&A Transformation Talks” includes detailed feedback on the components, strategies, and skills the future FP&A team will require. They expect a continuous FP&A transformation to occur.
This report offers a lot for FP&A professionals to be excited about but also cautions them to upgrade their skills to survive in the new FP&A landscape. In addition to individual skills, the report warns companies to develop a culture that permits the new FP&A model to thrive.
This report starts by outlining the true mission of FP&A as follows: "The real mission of FP&A that is 'to drive the right strategic choices in the company.'"
Next, they describe a needed transformation that is likely to occur within FP&A:
FP&A is due for a transformation. In fact, it's been long overdue. FP&A knows it. CFOs know it. Even business leaders know it. They know it because the pandemic made it clearer than ever that a strong FP&A team is needed to ensure companies make the right choices.
The transformation of FP&A is not driven by choice but rather by necessity. Global forces and other market conditions impacting the ability for enterprises to succeed continue to change at breakneck speed. The report explains that technology will continue to disrupt most businesses. They even offer the Metaverse as one example to be on the lookout for. We have already experienced the dominance of e-commerce technology in the brick-and-mortar retail model. Not too long ago, many leading brands, including Sears, Toys-R-Us, and Blockbuster, fell asleep at the wheel, and we now know how those chapters unfolded. At the same time, new innovative business models were born from a generational paradigm shift in technology, including the likes of Netflix, Tesla, and Amazon. Other traditional players, including Best Buy, Walmart, and Ford, have been able to navigate these changes and find a path to survive and thrive under entirely new game rules and market conditions. This report predicts these shifts will continue to occur more frequently. They highlight the importance of the FP&A transformation as a critical enterprise capability to navigate these coming waves. Will your organization become the next Blackberry or the next Nike? The key to this answer may depend on how well your FP&A function can modernize and transform.
One famous example of the potential of the FP&A function is how the Prime business model was created at Amazon. As per reports, Amazon Prime was driven by the future-looking analysis performed by their FP&A team. Today Prime boats over 200 million members, and this singular program has been instrumental in Amazon becoming valued at over $1 Trillion.
BPI expects amazing results to take place within the future enterprise driven by the corporate finance team. This view places the corporate finance team squarely at the center of enterprise transformation, decision-making, and strategy formation.
This exciting opportunity for members of the finance team is possible, given their unique placement within the enterprise.
In the report, this opportunity is described as follows:
Finance professionals are ideally placed in the business to maximise the success of the FP&A transformation strategy. We hold a unique place in every organisation with a holistic view of operations, a seat at the decision making table, and strong relationships with peers in every function. To achieve a genuine and valid transformation, the vision must be shared both within FP&A and throughout the organisation. Communication, collaboration and trust at the highest levels are essential in taking the whole business along for the transformation ride. After all, the roadmap for transformation benefits everyone, taking FP&A from an inward looking culture to one that faces its customers and delivers on their needs. Finance is in a unique position to draw the company together. FP&A engages with every function in the business. This collaboration and cooperation is essential for transformation success.
Now you’re sold that FP&A has to transform! This transformation includes culture, technology, process, and capabilities. What will the FP&A team of the future look like? They offer these three predictions:
What specific skills will FP&A professionals require to adapt? They also offer 3 to keep in mind:
What will the future FP&A team be able to accomplish when they acquire these new capabilities? Here are three ways they will effectively convert strategy into action:
As a bonus, this report includes a summary of interviews with three FP&A thought leaders and social media influencers. Read it to find out who they are.
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