CFOs Frustrated with Return on FP&A Investments

CFOs Frustrated with Return on FP&A Investments

It’s not exactly news that CFOs as a group aren’t satisfied with the quality of their financial planning and analysis functions. That’s been the case for some time. But with investments in FP&A rising as more data becomes available and companies seek to unlock its potential value with top-notch analysis, continuing quality issues are translating to doubt as to whether the investments are wise.

That’s according to new findings from CEB, the corporate research and advisory firm. Drawing from several empirical studies and qualitative interactions with CFOs and FP&A directors, the firm makes a case that the way a large majority of companies go about FP&A is all wrong.

Building a modern FP&A operation is expensive. It requires investments in systems, data, people, and new functions and processes — and the spending might not slow down for some time as the team finds more things to do with data. In fact, one recent CEB study of 99 companies shows that spend on analytics is up 10% this year over 2014.

Still, frustration over analytics performance is on the rise too, says Johanna Robinson, a practice leader in the firm’s corporate finance practice.

“It’s not at a tipping point yet, and we won’t see a drastic change in the next couple of years, but CFOs, and some of the savvier FP&A leaders, are starting to question whether they should keep investing,” Robinson says. “I think everyone would agree that the investments have produced better analysis and decision support. It’s just not good enough, or where they wanted it to be when they made the investments.” Read more on CFO.