How FP&A Teams Drive Business Strategy Forward

Financial Planning and Analysis (FP&A) has emerged as the unsung hero of corporate strategy, transforming from a back-office function into a pivotal force shaping business decisions.

In this period of geopolitical uncertainty, companies are increasingly turning to FP&A teams to navigate choppy waters.

FP&A teams are uniquely positioned to become the central hub for organisational insights, integrating financial data with operational metrics and market intelligence to provide a holistic view of business performance.

As businesses navigate an increasingly complex and fast-paced environment, FP&A is proving to be more than just a financial function — it's becoming the lynchpin of corporate strategy. FP&A is no longer just about the numbers. It's about turning those numbers into a roadmap for success.

Justin Bates-Pinder, Head of FP&A at London-based insurtech Stubben Edge, says: “It’s an area that’s really developed over the last decade, almost to a position where it’s become the CFO’s right hand. The aim is to deliver strategic insights into the business based on historic trends or looking at what we want to do going forward and exactly how we need to meet those targets.

“For me, it’s being the finger on the pulse of the business, knowing everything that’s going on at any given point and translating that into numbers.”

These once-overlooked number crunchers are now at the forefront of strategic planning, using advanced analytics and predictive modelling to chart a course through turbulent times.

How FP&A supports strategic decision-making

The strategic value of robust financial analysis cannot be overstated. By offering a clear picture of an organisation’s financial health and performance, FP&A enables leadership to identify strengths, weaknesses and growth opportunities. This analysis extends beyond simple financial metrics, incorporating broader market trends and competitive dynamics to provide a holistic view of the business landscape.

Justin says: “It’s modelling out different opportunities, what that could mean for you and what it would cost in the short term. For example, if you have 20 different initiatives but you have very limited resources, part of the FP&A remit will be to really decipher what resources will be required to undertake an initiative and what fruits those initiatives may give back to you.” 

The evolution of FP&A also presents an opportunity to elevate the finance function’s role within organisations. As FP&A teams become more strategic, they can transition from being perceived as mere “number crunchers” to valued business partners. 

What tools are used in FP&A processes?

FP&A teams utilise a variety of tools to support their processes and deliver insights to guide business strategy. Crucially, they free up the finance function to deliver more strategic insights, not just tally spreadsheets. Here are some of the key tools commonly used by FP&A teams.

• Spreadsheet software: Microsoft Excel and Google Sheets remain foundational tools for many FP&A teams when it comes to building financial models, creating budgets and forecasts and ad-hoc analysis
• Dedicated FP&A software: Many organisations are adopting specialised FP&A software to overcome the limitations of spreadsheets. Popular options include Anaplan, Cube, Workday Adaptive Planning and Planful
• Business intelligence/data visualisation: FP&A teams frequently leverage business intelligence (BI) and data visualisation software to analyse and present financial data. Popular options include Tableau, Power BI and Looker
• Advanced analytics and modelling software: As FP&A becomes more forward-looking and strategic, sophisticated teams are increasingly using advanced analytics tools such as Python, R and SAS
• Enterprise Resource Planning: Many FP&A processes rely on data from ERP systems such as SAP, Oracle and NetSuite. While not strictly FP&A tools, these systems provide the underlying financial and operational data that FP&A teams analyse
• Cloud-based planning solutions: Cloud-based FP&A tools such as OneStream and Jedox are getting more popular due to their scalability, accessibility, and collaboration features.

Impact on performance

The impact of robust FP&A capabilities on business performance is stark. A recent McKinsey study revealed that firms with strong financial planning prowess were 2.5 times more likely to lead their industries. This statistic underscores the competitive edge that effective FP&A can provide in today's cut-throat market.

Indeed, the tangible benefits of mature FP&A functions are difficult to ignore. Research by PwC found that companies with advanced FP&A capabilities achieved 1.5 times higher revenue growth and doubled their EBITDA growth compared to peers. 

These figures paint a clear picture: in the modern business landscape, robust financial planning is not just advisable — it's essential.

This shift towards more strategic FP&A is not going unnoticed in the C-suite. A survey by Gartner found that a staggering 96% of finance and IT leaders planned to align FP&A with at least one operational planning area by 2024. This statistic signals a growing recognition of FP&A's role, not just in financial oversight, but in driving overall business strategy.

Increasingly complex

However, the rise of FP&A is not without its challenges. As these teams take on more strategic responsibilities, they must grapple with increasingly complex data sets and rapidly evolving market conditions. 

The ability to quickly assess potential outcomes through sophisticated scenario planning has become an essential tool in the FP&A toolbox.

However, this new reality is reshaping the role of finance professionals within organisations. No longer confined to the back office, FP&A teams are increasingly seen as valued business partners, their insights sought after by decision-makers across all levels of the company.

Perhaps the most valuable aspect of FP&A is that it supports other C-suite executives to push back against a decision made by the CEO. That way, they have the numbers to back them up, rather than rely on gut instinct. 

If they have pushback against a decision made by their CEO, it allows them to have the numbers and reasoning to back that up rather than just their gut.

For CFOs and finance directors, the message is clear: a robust FP&A function may well be the ultimate secret weapon.

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