CFO FP&A Close-up: finance function’s ‘octopus’

With financial planning and analysis teams growing in size — and importance — across businesses in recent years, having data-focused FP&A executives who can look at the business like a story, with different details and pieces that all come together is key to providing accurate forecasts throughout a fiscal year, experts say. 

CFOs must understand the nuances of the different roles members of the FP&A team play on the finance team in order to hone in on each person’s unique skill sets and prepare their organizations for success.

The corporate octopus

In order to visualize how FP&A teams operate differently than the accounting department, Frank D’Amelio says he likes to think of the finance function as a “corporate octopus.” 

“You’ve got the head of the octopus, which is the FP&A team. But then they’ve got tentacles into every part of the company in order to pull together that consolidated view and that complete picture of the company,” said D’Amelio, Deloitte’s US CFO Program’s CFO-in-residence, formerly Pfizer’s CFO and a veteran finance executive. 

CFOs can think of someone who is a VP of a finance function as being the supporter of a specific sector of the company — like commercial business or research development, and then think of the VP of FP&A as being the supporter of the whole business. 

“Someone in FP&A pulls together the whole company whereas the VP of Finance pulls together just one piece of the company,” said D’Amelio. 

By nature, he said, those in FP&A positions are really high performers. “This snapshot or picture of the entire business that they create is presented to the CFO who then discusses it with the leadership team, board of directors, etc.,” said D’Amelio. 

In terms of how their responsibilities vary on the day to day versus before a year-end board meeting, FP&A execs will spend most of their time putting pieces of the business together, analyzing those pieces, and creating that big picture to then connect with operational folk and prepare for when they need to give the CFO a picture of where the company is. However, no matter what time of the year it is, “these individuals are always working with the financial teams, trying to put together projections for the quarter and for the full year,” said D’Amelio.

A forward looking view 

Although both are a part of the finance function, there is a clear difference between accounting executives and FP&A executives.

Those in charge of the behind the scenes work that goes into budgets and forecasts as well as the analysis of those results, need to have a futuristic, or forward thinking mindset.

“FP&A roles are more cross functional and they might actually be more technical, especially if you’re leveraging more advanced capabilities around machine learning, to support your forward looking predictability,” said Alok Ajmera, CEO of Prophix, a corporate performance management software company in an interview.

When CFOs are recruiting for such positions involved in the FP&A function, it is important that they seek curious individuals, according to Heidi Crane, veteran CFO of companies like BH Cosmetics, SurfAir and TechStyle Fashion Group and financial planning advisor.

“Companies are experiencing a skill gap,” said Ajmera,  “you can’t take your accountant that’s closing the book and then turn them around and expect them to sit with the broader operations and understand how to model and track what’s happening,” he said. 

There is also a shift in demographics that come into play in terms of how these individuals tend to operate, said Ajmera. 

“There was a time when CFOs and finance leaders carried a badge of honor in the sense that they would say ‘I spent my entire weekend pounding out this Excel report and I got it out Monday morning,’ and now we are in time where I would say good luck hiring and retaining talent that is willing to do that,” he said. 

People are now coming into the workforce as analysts and directors, who have grown up completely in digital environments.