The pandemic is still raging across most of the world but there is light ahead in the tunnel. The vaccines are coming and so is the next normal. I am sure that most FP&A professionals will be happy to put the pandemic behind them. How great is it that we can go back to doing things the way we used to do? Hold on… This is the Next Normal where we continue to do things differently, virtually, with agility, and with real-time scenario-modeling.
Instead of breathing a sigh of relief that the pandemic is soon over, we should reflect on what we have learned and how that can make FP&A better in the future. The first thing that comes to mind is that we must retain our seat at the table. When in crisis everyone looks at us but when things are going well suddenly, they figure it out for themselves again. That should make retaining our seat the key priority and let us look at what lessons we learned from the pandemic to do that.
How to make FP&A always in-demand
To start with let us look at why FP&A was in high demand during the height of the pandemic.
- Firstly, companies simply needed to know their run-rate – how long could they keep operating when revenues were significantly down?
- Companies also had limited visibility about what would happen in the future – this led to more frequent forecasting cycles
- Despite limited visibility decisions still needed to be taken so options were needed – options that should be quantified and qualified as best as possible
- In a changed world situation despite the troubling circumstances opportunities arose in many ways and where possible companies took advantage of them – business cases were reviewed and qualified at a high pace and soon it is the moment of truth for many of them
FP&A played a key role in all these situations. Only FP&A can give a proper view of the run-rate. Only FP&A can do proper forecasting. Only FP&A can meaningfully qualify and especially quantify strategic options. Only FP&A can evaluate the economic consequences of business cases.
Not all of this will be needed in the next normal so to best understand how FP&A can remain in-demand let us remind ourselves about the mission of FP&A which is to “drive the right strategic choices in the company”. To do this we need to understand what choices are possible and put a value on those choices.
Using lessons learned to deliver on the mission
While FP&A might not always know what options are available, they should at least ask these questions to their business stakeholders. Once options are known we can draw on the lessons from the pandemic. Quantify and qualify the options and firm up a business case. In addition, we should utilize our improved forecasting techniques to provide better visibility into if the choices we make deliver the results we expect. If not, FP&A should go back to ask questions about available options or re-assess those discussed previously. Lastly, if the FP&A team did well during the pandemic likely they have built up a lot of credibility inside the company. FP&A must use this credibility to put weight behind their input and become a trusted business partner. Would that not be a great outcome for FP&A from the pandemic?
What lessons did your FP&A team learn during the pandemic? How are you putting them to use in the Next Normal? Do you agree that it will be hard for FP&A to keep its seat at the table or at least not take it for granted? Share your thoughts and let us make sure that FP&A continues to increase its influence and impact in 2021!
This blog is presented by ValQ in collaboration with Anders Liu-Lindberg, Business Partnering Institute.
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