Analyst Perspectives

When considered at all, unintended consequences are expected to be negative. As enterprises and institutions rush to adopt artificial intelligence and generative AI, the focus is on the potentially unforeseen—and unforecastable—unfavorable outcomes. However, one very likely positive impact of AI investments in business computing is the near-effortless availability of consistently reliable data for whatever task is at hand. This is coming about because of the need to have large, relevant data sets to make AI workable as well as the technologies developed over the past decade that have made this possible.

We’ve seen similar positive outcomes in past disruptive cycles in business computing. For example, the widespread adoption of ERP systems led to an almost unintended flattening of corporate hierarchies because layers of middle managers were no longer necessary. Similarly, data management technology is on the verge of changing the role of business analysts throughout enterprises. Especially in financial planning and analysis groups, it will shift the balance of work away from low-value data preparation motions toward doing what these analysts are trained to do: analysis. Putting the “A” back in FP&A is now a practical reality.

I have commented that the mission of financial planning and analysis groups needs to be evaluated and potentially redefined to take advantage of what’s now possible with practical and affordable technology. In many organizations, FP&A professionals have less time for analysis because the mechanical process of pulling together and collating data takes up so much time that little remains for using data to spot trends, find opportunities and isolate issues to create better-informed forecasts, plans and decisions. Our Analytics and Data Benchmark Research found that two-thirds of analysts spend considerable time on data preparation and reviewing data for quality and consistency issues, leaving less time for analysis.

Fortunately, this is about to change. Business software providers are already incorporating data stores on applications and platforms optimized for specific users and use cases. We refer to this somewhat tongue-in-cheek as a “data pantry.” Unlike a general-purpose data store such as a data warehouse, everything the user needs is readily available and easily accessible, with metadata labels that are immediately recognized and understood. By substantially eliminating the time required for data preparation and data quality control, financial and business analysts have more time to concentrate on analytical work. 

By automating the collection of data, reports and dashboards can be timelier. By broadening the set and scope of data readily available with more information on which to base analyses, including external data, the FP&A group can provide more incisive perspectives and insights, enabling executives and managers to make better-informed decisions sooner. Moreover, AI and generative AI, along with natural language processing and agentic devices, are increasing the availability of deeper and interactive self-service reporting, so periodic and ad hoc reports become inherently interactive. ISG Research asserts that by 2027, almost all providers of business planning software will offer a data pantry to facilitate the integration of operational and external data with financials to improve the speed and accuracy of forecasts and plans. As a result, through the rest of the decade, analysts will spend less time on busy work, and executives and managers will use more effective tools for insights and guidance on how to navigate the future rather than simply illustrating what just happened.

The expanding capabilities and substantially reduced data issues brought by FP&A tools are the foundation for building a more predictive finance department. Instead of playing a relatively narrow role in orchestrating the company-wide budget and periodic analyses and reforecasts, FP&A should recast itself in an advisory role designed to support the rest of the organization. To facilitate the planning process, support high participation and shorten planning and budgeting cycles, FP&A must design and implement streamlined processes that reduce the time required to create and update plans and budgets, and enable a structured dialog about them.

Since I coined the phrase in 2007, I’ve written frequently and at length about the need for integrated business planning, which combines operational and financial planning (that is, budgeting) in a more streamlined process. The objective is twofold: One is to have a process that creates more accurate financial budgets in less time. The other is to create a more effective, ongoing operational planning process that enables executives to better understand their options before the fact in addition to what just happened and why after the fact. This combination will allow them to make consistently better choices about the next steps that produce the greatest strategic payoff. We assert that by 2027, one-fourth of FP&A organizations will implement integrated business planning, bringing together operational and financial planning on a single platform to improve the business value of planning and budgeting.

Ideally, the emphasis of the FP&A function should be on the “A.” It should provide executives with the ability for contingency planning to consider alternatives and anticipate the impact of specific positive and negative events (not just a set of simplistic upsides, downsides and base cases). It should enable them to spot opportunities to enhance efficiency or redirect spending to more productive areas. It should aid people in using predictive analytics to make better-informed plans and forecasts that are, hopefully, more accurate. This supports one of the important findings of our Finance Analytics Benchmark Research: Making analytics more accessible is a priority for finance departments. Almost 9 in 10 say that making it simpler to provide analytics and metrics to those who need them is either very important or important.

The pace of innovation in applications designed for the finance department is accelerating. The department doesn’t have to be at the bleeding edge of technology, but it must be a fast follower. Software designed for finance and accounting departments will evolve rapidly over this decade, reducing the significant time spent on repetitive tasks and mechanical processes, allowing staff to focus on more valuable work that requires expertise, experience and judgment. I recommend that finance department executives periodically evaluate the mission and role of the financial planning and analysis group, especially now that technology has made it possible to throw off the constraints that once limited the scope and value of the work it performs.

Regards,

Robert Kugel