Financial Planning & Analysis and Performance Management

5BUILDING ANALYTICAL CAPABILITY

CHAPTER INTRODUCTION

As evidenced by your opening the cover of this book, you have a desire to improve and develop your analytical capabilities. As a manager or executive responsible for FP&A, you may also want to strengthen the overall analytical capabilities within your organization. Many CEOs and CFOs rate their organization's FP&A as “satisfactory” or “needs improvement.” FP&A is more important than ever, due to the pace of change and uncertainty in today's business environment. Many efforts to improve FP&A fail to achieve that objective because they focus on technology as the “silver bullet” and don't address opportunities to develop people and improve processes.

This chapter offers a number of ways the author has found helpful to improve financial planning and analysis (FP&A) and performance management (PM) for the individual as well as to improve the capabilities across the finance department of an organization.

Several factors typically arise as root causes of ineffective FP&A efforts:

• Insufficient time and resources: “Our team is too busy with closings, requests, and multiple iterations of plans, and has been reduced as a result of business conditions.”
• Inadequate analytical skills: “Our team has fallen behind on the use of technology and best practices.”
• Absence of business orientation: “Analysts are often accounting focused and do not understand the business.”
• Poor communication and presentation skills: “Too often, I get a spreadsheet ...