Putting the A back in FP&A with Automated instead of Analysis

Oracle's Phumzile Skosana outlines how to move beyond Excel and automate your FP&A process.

To the uninitiated, the concept of financial planning and analysis – known as FP&A –  may sound boring and not important. But for finance professionals, if FP&A is done wrong, it could make or break the organisations they lead.

This is according to Phumzile Skosana, a senior solutions consultant at Oracle South Africa, who delivered a presentation at the Finance Indaba Africa last week Thursday about the future of FP&A and moving from Microsoft Excel-based systems to ones laden with technology.

“FP&A helps organisations define their strategies, execute their strategies and forecast industry trends over a certain period,” Phumzile told the audience. 

She likened FP&A to using GPS navigation software Waze. “You cannot use Waze if you don’t put in a destination. First, I have to plan to get somewhere and then Waze will help get there,” she said.

In the finance world,  FP&A allows professionals to devise a forecast of the company’s profit and loss (income statement) and operating performance for the upcoming quarter or year, and determine budgets needed to execute strategy.

Phumzile cautioned:

“FP&A uses a lot of money and resources and if it’s not used well, it can impact a company’s return on investment.  You will end up wasting a lot of money and reducing the chances of financial and operational goals being achieved.”

“A good FP&A is supposed to play as an advisory role for an organisation to ensure that it meets its goals. It also helps to coordinate an organisation’s goals across its departments and monitors if they are being achieved.”

But many organisations don’t appreciate the importance of having sound FP&A processes. A survey of CEOs and finance professionals, which was conducted by Oracle, revealed that 55 percent of companies have moderately planned and integrated FP&A processes that are underpinned by advanced technology. 

“It is a huge gap especially when there are automation tools available. A lot of companies have disconnected FP&A systems that don’t use technology such as cloud solutions that automatically integrates data from various sources,” said Phumzile.

Microsoft Excel still plays a big role in the space of FP&A.

“We are not dismissing Microsoft Excel; it is still a good tool. But it doesn’t achieve an automated or artificial intelligence (AI) effect in an organisation’s planning.”

  • Here are Phumzile’s tips on how organisations can move beyond Microsoft Excel and start to automate their FP&A process:
  • Start by having the right organisational culture that embraces new ways of working. “Focus on the people element and structure an organisation in a way that will allow the introduction of new technology.”
  • Integrate the FP&A process by leveraging high-quality data. Collect data into one place and consider what kind of data you need to bring into the FP&A process.
  • Employ effective technologies in the FP&A process. “You need to explore buying cloud solutions that are AI-driven. They will help you consolidate various business functions such as human resources, marketing, finance and IT into one FP&A model. It will also enable you to use AI models, which Microsoft Excel doesn’t.”

Oracle offers enterprise performance management systems that embed things like intelligence performance management (IPM) or AI. “IPM is now embedded in our solutions, allowing organisations to fetch data from their external AIs and bring it into their planning solutions. It can link to Python Artificial Intelligence and Amazon Web Services.”