Gartner’s FP&A Leadership Vision Report for 2023 focuses on FP&A leaders guiding their companies through the turbulent economic times and challenges. Gartner identifies the main risks and challenges in 2023 as:
Climate & ESG - (Extreme weather, Climate activism, infrastructure failures, etc.)
Economic - (Stagflation, Currency volatility, financial planning uncertainty, etc.)
Technological - (Cloud concentration risk, Personal Data Regulatory Fragmentation, etc.)
Political - (Escalation of conflict in Europe, China trade problems, Socio Political expectations, etc.)
Talent - (Decline in employee productivity, Talent shortages, Increased employee demands, etc.)
The 3 step roadmap mainly focused on the 5 priorities for FP&A leaders in 2023 based on the risks and challenges.
1. Redefine the strategy for planning, budgeting and forecasting.
2. Reevaluate FP&A’s scope and org design to maximize business impact.
3. Evolve finance business partnership for a digital future.
4. Develop a finance data and analytics strategy.
5. Accelerate AI implementation in finance.
Priority 1: Redefine the strategy for planning, budgeting and forecasting.
Unsurprisingly, 85% of FP&A leaders are prioritizing this in 2023. When the economic downturn started, most companies had to redefine their strategies for everything related to finance. Gartner broke it down into 3 recommendations for redefining the finance strategy:
Give finance a more prominent role in integrated business planning to establish, gain agreement on, and ensure accountability for actions aimed at closing gaps that have financial implications.
Remove politics from budget allocation decisions by encouraging a culture that treats in-year budget allocations as the norm, and by making enterprise performance a more significant factor in the incentives given to business unit leaders, compared to their performance at the unit level.
To ensure the success of your rolling forecast implementation, assess the current level of maturity across your FP&A systems, operational data, forecasting processes, and models, in order to identify any pain points in forecasting and determine the business requirements necessary to address them.
Priority 2: Reevaluate FP&A’s scope and org design to maximize business impact
In a close second, 78% of FP&A leaders are prioritizing this reevaluation. This is due to the large amount of automation and tools available to help FP&A maximize their impact on the organization.
Make strategic decisions based on FP&A's comparative advantage, which includes areas where FP&A has expertise and can carry out activities at a lower opportunity cost than other internal groups.
Use five criteria — volume, materiality, commonality, data availability, and specialization — to assess the suitability of FP&A activities for centralization.
Begin your advanced analytics COE journey with a minimally viable COE that can generate fast results to create momentum and enable rapid learning to facilitate the scaling of your future investments.
Priority 3: Evolve finance business partnership for a digital future.
In this important step, 54% of finance leaders said that business partnership and a digital future is a priority for them. While some may look at these two things as separate steps, business partnership is an important skill to have no matter how much automation there is. That being said, it’s important to know how to conduct business partnerships within the digital future. Gartner gives 3 recommendations:
Redefine the roles of Financial Business Partners (FBPs) for digital businesses by prioritizing activities that enhance the value of the available digital tools, while reducing the focus on tasks that can be automated or outsourced.
Organize FBPs according to decision types rather than individual stakeholders, and tier their support based on the potential growth of the business unit rather than the volume of requests they receive.
Determine which of the four common FBP role archetypes — decision expert, co-pilot, operational data expert, or plan evaluator — would best fit your future operating model.
Priority 4: Develop a finance data and analytics strategy.
63% of finance leaders are prioritizing this in 2023. These actions include Data-Driven Vision, Value Propositions, and Stakeholder Outcomes. The benefits of a well thought out finance data and analytics strategy are tremendous as this will help set up the company for long term success. Here are Gartner’s 3 recommendations:
Dedicate time to familiarize yourself with the essential data and analytics concepts necessary to initiate or advance significant finance transformation initiatives.
Utilize the Gartner Data and Analytics Strategy and Operating Model (DASOM) framework to develop a data and analytics (D&A) strategy that is aligned with the needs of a contemporary, future-oriented organization.
Incorporate data lineage into your D&A strategy to enhance the quality of analytics and decrease skepticism and mistrust among stakeholders.
Priority 5: Accelerate AI implementation in finance.
While only 36% of finance professionals are prioritizing AI implementation in finance, it is a very new, and relatively unexplored area. FP&A companies already announced developments in the AI field, potentially improving their decision making and reducing time spent on it tremendously. This number is expected to increase as the development gets more widespread. Here are Gartner’s 3 recommendations:
Assess the 23 most significant AI use cases in finance to identify the ones that are most relevant based on your organizational maturity and business requirements.
Develop an AI roadmap that begins with use cases that generate quick wins and sequence future investments according to the complexity of the input and data sources, as well as the time required to achieve a meaningful impact.
Train internal finance analysts as citizen data scientists to leverage AI technology and make use of the business process knowledge possessed by current staff.