With companies focusing on innovation as a core strategy to deliver revenue growth and margin improvements, financial planning and analysis (FP&A) organisations need to rise to the challenge and pursue broad transformation in enterprise performance management (EPM) and business intelligence (BI), says The Hackett Group.
The business advisory group has just published its study, entitled
‘Key Issues 2014: Reinventing Enterprise Performance Management to Support Sustainable Innovation-Based Growth’
. Its research recommends three main areas of transformation focus for FP&A: integration of EPM processes and development of better business partnerships; improvement of core processes to recalibrate FP&A’s value proposition; and development of better business intelligence capabilities.
“EPM and BI are critical competencies as companies pursue innovation-based growth,” said The Hackett Group’s EPM and BI executive advisory practice leader, Sherri Liao. “These competencies extend well beyond the FP&A organisation. But the implications for FP&A are significant. There’s a real requirement for organisations to rethink their value proposition and reinvent their service offering and decision support capabilities.”
According to the group’s vice president of strategic research, Erik Dorr: “Many companies have let these analytics areas fall by the wayside in the past. Over time, the business has grown, mergers and acquisitions have taken place, and markets and customers have changed. But the way they report and plan has not.
“They’re left with outdated systems that don’t generate real insights, compromising competitiveness. In today’s business environment, this simply isn’t something companies can afford to do.”
The research found that for 2014, business volatility remains high and companies face significant risk and instability in areas such as competition, regulation, and talent, yet are reverting to a focus on revenue growth and margin improvements. Many are choosing innovation-based strategies, which historically have been tied to the strategy of growth acceleration, in order to simply maintain growth rates.
Overall finance budgets are expected to see rise of only 0.7% in 2014, while staffing is expected to be reduced by 0.3%. Once expected revenue growth of 6.7% is factored in, the result is expected to be an efficiency gap of 6% and a productivity gap of 7%. Most FP&A transformation efforts will therefore need to be self-funded.
A complimentary copy of the research is available with registration at
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