The finance function’s planning and performance management activities occupy significant amounts of time and are long established. But how could they be made more relevant, especially in today’s challenging business environment?

A new report, Planning and Performance Management Paradigm, from ACCA and CA ANZ, and in association with PwC, looks at issues with current processes, and offers practical guidance and action plans to assist finance teams in addressing these.

‘Finance will become more value-centric than financial-centric’

The main problems with current performance are set out as follows:

  • The budgeting process is too financially focused and does not embrace the broader operational needs of the organisation.
  • It provides limited insight and its assessment of performance focuses more on the historic than on discovering implications for the future.
  • Its timescales are too long.
  • The process is disjointed, does not use technology and data efficiently, and relies upon many spreadsheets to share information between activities in the planning process.
  • It strives for total accuracy where just-enough may well be appropriate.

However, the survey undertaken for this research found that finance teams are making some progress.

Integrated planning

The case for change is that there is a growing need for finance to offer a broader view of performance: one that is forward looking, embraces both financial and non-financial aspects, and is integrated across the organisation.

The report highlights the significant opportunity for finance teams to use skills to drive value from the planning process across the organisation. ‘In so doing, they will be increasingly collaborative and data driven. Finance will become more value-centric than financial-centric,’ it says.

This will involve taking a broader view of performance. While over 80% of the nearly 3,000 finance professionals who responded to the survey say they accept that performance measures need to be broader, the requirements for resourcing, data and systems make this challenging.

‘Finance teams should play a pivotal role in leading in troubled times’

Finance teams need to continue to invest in the development of the necessary skillsets, such as those in operational modelling, data, technology and business partnering, to ensure that they remain effective.

Focus on culture

The risk is of not taking action is that the finance function sees other teams take this pivotal role away from them.

‘CFOs need to engage on the broader agenda of value and performance across the organisation,’ the report states. ‘Finance teams should play a pivotal role in leading in troubled times. Having a focus upon the culture of the organisation and leading through effective business partnering are essential. The role of the CFO is increasingly becoming value centric.’

Some of the key findings of the research are as follows: