Pi Planning Perfomance v4

IN ASSOCIATION WITH
PLANNING AND
PERFORMANCE
MANAGEMENT
PARADIGM
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About this report
Planning and performance management are two key aspects of the responsibilities that
a finance function has in an organisation. As the world continues to face challenging
economic times and uncertainty, so the relevance of effective collaborative processes
and a culture of planning is important to assist navigating the rough waters.
ACCA, Chartered Accountants Australia and New Zealand (CA ANZ) and PwC have
been conducting a series of research projects that have considered the future role
of the finance function and the use of data and insight. Planning and performance
management represent a combination of these. Through a series of globally conducted
roundtables and interviews, combined with a survey of nearly 3,000 respondents –
ACCA and CA ANZ members together with PwC contacts – several recommendations
to ensure the effectiveness and relevance of this activity have been identified and
are presented in this report. The survey was conducted in July 2022 as the economic
prognosis in many developed economies was starting to worsen. The economic
uncertainty we are now facing serves only to increase the importance of the role finance
plays. Regional, location-based and sectoral breakdowns of the key survey results are
available as separate documents.
Foreword
Finance professionals have a key role to play in guiding their organisations through uncertain times, towards
their strategic objectives. Arguably, this role has never been as important as it is now, given the level of economic,
geopolitical, and environmental volatility. By playing a leading role, financial professionals can reduce risk exposure
for their organisation, and maximise their positive contributions to society.
Achieving success will be challenging, but it can be done with robust planning and performance processes that are agile and flexible. This
requires processes, skills, technology and therefore cultures that are sufficiently flexible, adaptable, and forward looking in times of uncertainty.
Organisations face challenges on multiple levels: inflation, resource allocation, sustainability, and social issues. It is a complex picture.
Finance professionals need to shake off the traditional view of annual planning cycles and replace them with adaptable, technology-enabled
processes and collaborative planning driven by data. This whitepaper aims to fast-track this change.
It won’t be easy, however. In many organisations, it will necessitate a transformation of people, processes, technology, data and organisational
culture. The forward-looking finance professional will be recognised for their skills to analyse and interpret data and to present cogent
evidence-based arguments to stakeholders to support the inevitably challenging decisions that their organisations must make.
This is an opportunity for the finance profession to think differently about its approach to planning, forecasting and budgeting. It also
represents a significant opportunity for finance teams to demonstrate that they possess the skills to add significant value to the organisations
for which they work. To do so, the individuals in the team need to build upon their core skill sets and to ensure that they learn continuously.
Helen Brand OBE Ainslie van Onselen Brian Furness

chief executive, ACCA Chief Executive Officer, global head of finance
CA ANZ consulting, PwC
4
Contents
Executive summary 6 3. A broader view of performance 31

3.1 The future not the past 32
Key actions summary 9 3.2 A view of stakeholder capitalism 33
Building ESG into the planning process 34
Preface 10
3.3 Integrated business planning and connected planning 36
1. Planning and performance today 11 3.4 Supply chains 37
1.1 An assessment of planning and forecasting today 11 3.5 Working capital management 37
1.2 Financially focused 12 Cash & Working Capital management have now become
1.3 Limited insight 13 critical to performance management 38
1.4 Historic and less future focused 13 3.6 Stakeholder expectations 39
1.5 Disjointed planning processes 15 Planning and Performance Management – a shared
1.6 Perfect is the enemy of ‘good enough’ 16 service centre perspective 39
What does a good Financial Planning & Analysis (“FP&A”)
4. Role of finance in broader planning and performance 41
function look like? 17
4.1 An overview – our hypotheses 42
1.7 Planning and performance challenges for the small
4.2 Collaborative not siloed 44
and medium-sized enterprises 18
4.3 Organisation-wide performance 45
2. Drivers for change 19 4.4 Cross-functional business partners 46
2.1 Economic challenges 19 4.5 Skill sets 46
Managing in challenging times – lessons from Sri Lanka 21 4.6 Data-driven finance 47
2.2 Environmental, social and governance issues 22 4.7 From CFO to CVO 48
2.3 Faster response in an agile world 23
Conclusion 49
2.4 Customer-centricity 24
2.5 Data and systems 24 Glossary 51
Data 24
Systems 25 Appendix – Survey demographics 52
xP&A implementation case study 27
2.6 Centres of excellence 28 Acknowledgements 53
Enabling planning and performance 29
References 55
5
PLANNING AND PERFORMANCE MANAGEMENT PARADIGM | EXECUTIVE SUMMARY
Executive summary
Planning and performance management are key activities for finance functions. They are long
established and occupy significant amounts of time within the function. This report considers the
options for finance functions to make them more relevant, especially in the light of the challenging
climate of the early 2020s.
Several perceived issues for this process are explored broader view of performance to be able to discharge
in Chapter 1. There is a contention that the budgeting these responsibilities. There is also a need to be agile in
process is too financially focused and does not embrace the process: one plan will not suffice for a year and this
the broader operational needs of the organisation; agility relies upon the availability of data and systems to
that it provides limited insight and in its assessment of provide insights into customer behaviour and across
performance it focuses more on the historic than on supply chains. Integration of the planning process is a
discovering implications for the future. Its timescales complex multidimensional narrative of people, process,
are too long. Finally, it is contended that for the typical technology and data.
organisation the process is disjointed, does not use
technology and data efficiently and relies upon many It is therefore to a broader view of performance that we
spreadsheets to share information between activities in need to look (Chapter 3): one that is forward looking,
the planning process. The results of the survey that was embraces both financial and non-financial aspects and
undertaken for this research found that while there is some is integrated across the organisation. The evolution of
validity in some of these assertions, equally, progress is integrated planning in an organisation can be expressed
being made by finance teams. through the following maturity model (Figure ES1).
What is clear, from the nearly 100 people who participated In turn, this means that the role of finance in the
in the roundtables conducted as part of the research, is that performance process needs to evolve. In Chapter 4 we
there is a need for finance functions to develop the process explore several hypotheses for the future of the activity
and ensure that it is relevant. Chapter 2 discusses several (Figure ES2).
drivers of change. Firstly, the uncertainty of the economic
There is a significant opportunity for finance teams to take
climate of the early 2020s means that annual plans have
an organisation-wide view of performance and to use their
limited validity, being at best statements of intent at a point
business partnering skills to drive value from the planning
in time. While scenario analysis may assist in some respects,
process across the organisation. In so doing, they will be
the rapid changes in circumstances that many organisations
increasingly collaborative and data driven. Finance will
are facing may mean that extreme volatility becomes the
become more value-centric than financial-centric. The
order of the day. Dealing with this is becoming a mantra.
need is to accept a broader view of performance. While the
The need to embrace the environmental, social and survey results indicate that over 80% are willing to accept
governance (ESG) agenda and commitments towards that the performance measures need to change and to be
net zero, not least driven by forthcoming expanded broader, the requirements for resourcing, data and systems
disclosure requirements, means that finance teams need a make this challenging. Embracing the broader view, for
6
example through adopting a stakeholder-capitalism

approach, may be a key priority for finance teams amid FIGURE ES1: Integrated Performance Management maturity model
the challenges of reinvigorating organisational strategy,
planning and purpose. • Integrated multi-capital
planning
Underpinning these hypotheses is the development of • Strong link to risk management
the finance function in relation to the organisation and • S&OP and finance planning • What-if and scenario modelling
of the skills of the team members for achieving good integrated into one techniques used
outcomes. Finance teams need to continue to invest in planning process
• Stable sales and • Strong link to strategic
the development of the necessary skill sets, such as those • Data governance in place decision making focused on
operational (S&OP)
in operational modelling, data, technology and business planning process • Predictive analytics utilised to organisational purpose
• Low confidence in basic
partnering, to ensure that they remain effective. drive strategic decision making • Ability to rapidly respond to
demand and supply planning • Operational and financial
planning processes • Self-service reporting and changing circumstances
• Little or no finance integration
The risk is that if finance teams do not embrace this remain disconnected modelling for key stakeholders • Organisation wide view of
• Basic reporting to
opportunity, they may watch as other teams take this • Financial focus to • Focus on value and purpose performance management
stakeholders
pivotal role away from them. Chief financial officers (CFO) performance not just financial return • Data lake in place
• Data siloed
need to engage on the broader agenda of value and
performance across the organisation. Finance teams
should play a pivotal role in leading in troubled times. Ad hoc Capable Data driven Continuously improving
The challenge of the early 2020s is that the breadth of
events means that many aspects of the operating model
are challenged. Having a focus upon the culture of the
organisation and leading through effective business FIGURE ES2: Hypotheses
partnering are essential. The role of the CFO is increasingly
becoming value centric.
Driven by organisational strategy and Uses big data and machine learning
Purpose Technology
purpose not just financial performance (xP&A) to drive insights that are
In planning and performance management, the planning focused enabled
and embraces ESG parameters based upon a predictive analysis
process is a cycle that is changing fundamentally: are the
finance teams ready for it?
Incorporates organisational
Data Integrated into the technology
Net zero objectives towards net zero
centric and data architecture
‘I do not even think we have a planning cycle anymore. as part of planning process
For the last six months the anticipation of what may be
around the corner has driven our planning. It is turning
into a game of chicken as to what you know, when do Continuous Continuous and flexible activity that can
we blink and what do we do? And that is why cash is Supports Supports a culture of innovation
and accommodate both short- and longer-
innovation and creativity; being forward looking
now so significant’. UK-based CFO adaptive term changes in forecasting parameters
Financial Perceived by stakeholders as adding

Includes both financial Value
and value to the organisation rather than
and operational dynamics adding
operational as a compliance activity
7
Overview of global survey results

The focus of planning and forecasting The future focus of planning and forecasting Incorporating ESG
What is the focus of planning and forecasting in your Which of the following characteristics of your planning and To what extent is forecasting of environmental, social and
organisation? forecasting process do you envision will be implemented in your governance (ESG) components either seen now, or do you expect
organisation in the medium term (3 to 5 years)? to be seen in the medium-term (the next three to five years), as an
80%
Yes Maybe No Already implemented Don’t know
integral part of the (financial) planning and performance process?
70% Now (short term) In Medium-term
100% 4% 5% 7% 6% 5% 5%
60% 12% 9%
9% 6% 5% 5% 6% 8% 50%
5% 4% 7% 9% 9% 7%
50% 56% 80% 12%
19% 27%
26% 40%
40% 31% 30% 28%
33%
60% 37% 36%
30% 34% 30%
36% 35% 30%
20% 40%
20% 23% 24%
10% 56% 51% 50% 52%
47% 18% 19%
8% 20% 39% 16%
0% 29% 27%
Financial profit To a significant There is an equal
10% 11%
9%
is the sole focus extent however focus on a number 0% 7%
some other of both financial Driven by Include org Continuous Financial Integrated Utilise big Forward Adds value
0% 3% 3%
objectives, such as and other, such as organisa- objectives and and into data and looking to org
tional towards flexible operational operation momentum innovative Fully Partially Primarily on Not Don't Not
operational, are operational, purpose net zero and tech culture integral integral an ad-hoc integral know applicable
considered objectives architecture basis
New forms of performance measures The tools we use Key areas of focus
Are new forms of performance measures needed for To what extent are any of the following used to help manage What are the key areas of focus for Financial Planning and
investors, analysts and capital markets as opposed to pure planning and performance in your organisation? Analysis (FP&A) activity in your organisation, if any?
financial measures? A great deal To some extent Not at all Don’t know
80%
100% 5% 6%
n Yes, 82% 13% 9% 10% 70%
8% 14% 16%
n No, 10% 23% 17% 60%
80% 20%
10% n Don’t know, 8% 57%
43% 50%
37%
53% 47%
60% 40%
41% 50% 43%
30% 35%
40% 82%
30% 20% 24%
32%
21% 10%
20% 31% 2% 2%
27% 28% 6%
17%
0%
13% 15% Real-time Predicitive Real time Robust Other Don't None of
0% plans vs. analytics forecasts what-if know the above
Spreadsheets Planning xP&A tools Scenario Nowcasting Foresight Application
historic and scenarios
modules modelling of machine
82% within learning variances Forecasts
financial after the
applications event
8
PLANNING AND PERFORMANCE MANAGEMENT PARADIGM | KEY ACTIONS SUMMARY
Key actions summary

The following actions are identified in the report for finance teams to consider as they evaluate their approach to planning and performance management.
It is the sum of these individual actions that will create improvement. The references are to section numbers in the report for detailed explanations.
ENABLING THE STRATEGY • Look to integrate data across the value chain to facilitate agility in the planning process (see 3.3).
• Define a set of key performance indicators (KPIs) that reflect a broader view of performance
• Do not be afraid to make radical recommendations for change, demonstrating the value that (see 4.3).
finance can bring to the table (see 1.1). • Re-evaluate performance systems to focus on team and organisational performance rather than
• Focus planning activities on cash and working capital management (see 3.5). individual contribution (see 4.3).
• Ensure that the range of stakeholder expectations of the planning process are met (see 3.6). • Develop business / value cases for performance engagement (see 4.3).
• Develop a roadmap that embraces a broader view of performance (see 4.1). • Reflect on-going changes in the operating model in the performance management metrics
(see 4.3).
ROLE OF FINANCE FUNCTION
• Develop a case for change and a business and value case for investment (see 1.5). PROCESSES
• As CFOs, focus on the development of value-based reporting, both internally and externally
(see 4.7). ssess the strengths and weaknesses of the current planning and performance processes (see 1.1).
• A
• Interview key stakeholders to ascertain whether the process is effective, especially in the light of
COLLABORATION changing operating models (see 1.1).
• Critique your current processes against the current issues (see 1.1).
• In developing an integrated view of planning, consider how resources can be mobilised to create • Refine the planning process to ensure that it is sufficiently agile to enable the organisation to
a responsive planning infrastructure for the organisation (see 1.5). reflect economic uncertainties (see 2.1).
• Implement a culture of integrated planning and collaboration around the process (see 3.3). • Ensure that those working on planning and partnering activities have a detailed understanding
• Ensure that the culture of the finance function is collaborative and not siloed (see 4.2). of the levers in the operating model (see 2.1).
• Assess your current and aspirational states against the integrated planning maturity model
SKILLS AND TALENT (see 3.3).
• Develop / reinforce the finance team’s business partnering skills (see 4.4). TECHNOLOGY
• Hybridise talent, combining business and analytics (see 4.5).
• Provide access to data custodians / stewards (see 4.5).
• Ensure that an appropriate set of planning tools is included within the overall systems architecture,
using xP&A capabilities where appropriate (see 2.5).
BROADER VIEW OF PERFORMANCE
• Ensure that there is sufficient understanding of the conflicting pressures on the business model to DATA
ensure that a robust sensitivity analysis can be undertaken (see 2.1).
• Create a strong link to the risk-management function / risk assessments and develop an • Look closely at the data model to ensure that you are developing a more integrated and
understanding of the early warning signs that risks could be crystalising (see 2.1). collaborative view of planning, necessary to support the dynamic operating environment (see 2.5).
• Define a broader view of performance that embraces purpose, people and profit and ensure that • Consider the risk of data availability bias in formulating integrated plans (see 2.5).
that planning process is aligned to this (see 3.2). • Integrate operational big data sources into the planning models using real-time links where
• Ensure that the relevant metrics of non-financial information are included in the planning process, appropriate (see 4.6).
including sustainability and social components (see 3.3). • Ensure that the focus is on reporting on data-driven performance measures (see 4.6).
9
PLANNING AND PERFORMANCE MANAGEMENT PARADIGM | PREFACE
Preface
As we began to emerge from the effects of the pandemic I do not think many people could have predicted the challenging environment we would all be facing
now with rising inflation, supply chain problems, labour and skills shortages and a range of geopolitical events which have affected organisations of all shapes
and sizes not just the complex multinational giants.
With that backdrop it has becoming increasingly difficult for similar markets to get their sense on how the markets are n Drive the organisation to adopt a more holistic view
organisations to plan and to generate the insight needed to responding to the challenges we mentioned earlier and of planning and business performance considering
make critical decisions in real time. Our frame of reference how the challenges in one sector may feed into another. non-financial performance and elements such as the
is shortening as we look to make the short-term decisions Often this insight is qualitative rather than quantitative organisation’s purpose and ESG.
needed to survive but we need to balance this with the and finance teams then need to consider how they reflect
n Search for new data sets and insights that might help
longer-term decisions needed to thrive in the future. it in their planning models. This requires a broad business
inform their planning either from within the organisation
understanding from the finance team and collaboration
In our roundtables supporting this research we heard CFOs or outside.
across the organisation.
refer to this balance many times and a number of them were n Develop a deep understanding of the business and what
struggling to provide the support needed given a backdrop The roundtables and survey showed us that for many affects its performance so that they can explore this data,
of complex and outdated systems, poor data and, in some spreadsheet models still form the core of their planning include that which is relevant, filter out the noise and
cases, finance teams who did not possess the skills or and performance reporting processes. Although we have provide a balanced view that can drive challenge and
experience to adapt. seen lots of institutions move to the Cloud in an attempt debate across the organisation.
to standardise process, reduce cost, focus on value and
It is clear from the research that organisations are create a platform for rapid analytics using complex and n Re-examine their planning and performance processes to
demanding more insight, more quickly, and often finance large datasets, the humble spreadsheet is still central ensure they are fit for purpose given the levels of volatility
teams are struggling to respond. Many have tried to adapt to finance’s activities. In part this is due to the flexibility we are seeing and which will be with us for some time.
their planning cycles and look to develop plans that can spreadsheets bring and in part it is down to the fact that n Consider how the vast array of new Cloud-based
be quickly and easily flexed, with scenarios modelled to finance teams are comfortable with the tools they have planning and performance management tools can
reflect a number of potential complex outcomes across a and are not seeking to drive change. support the process and facilitate faster analysis of
range of cost and revenue drivers. But others seem stuck in
more complex scenarios.
the annual planning cycle with, at best, quarterly refreshes A number of finance teams also referenced the planning and
of the plan and a long process to generate a five-year performance process in their organisations and the fact that In conclusion, the finance teams that are most valued will
strategic plan which, for many, is wrong from the moment it structure and history meant the process was slow to adapt. be those that are closest to the business, have people with
is generated. Accelerating the turnaround time for planning They spoke about top-down and bottom-up budgeting and the right skills and behaviours and support and challenge
and forecasting and building in more scenario-based analysis periods of rework and debate to align the two views together their organisations around their short-term decision making
was a key focus for most of the CFOs we spoke to but with the need to plan for short term performance whilst and longer-term plans. The mood of those we spoke to was
challenges around data, technology and the organisational balancing this with a longer-term view around investments buoyant about the future and excited about finance’s role in
structure itself were hampering progress. and strategic decisions. The length of this process is not helping organisations deliver on their corporate purpose...
a problem in itself if the time is spent on understanding all we need to do now is get on with it!
From a data perspective finance teams are increasingly and debating the plans, exploring the data and generating
looking for data from across the organisation to support insight but all too often it seemed the time was spent
their forecasting, for example from supply chain, marketing in sourcing, cleansing and reconciling data or following
and infrastructure teams. Many are also looking outside their governance processes without quality conversations.
organisation for data and reference points they can factor
into financial plans which might give them a view of future For me, five clear actions came from the discussions and
market conditions or customer behaviours. This can include our research and never have they been more important Brian Furness, partner and Global Head
speaking to suppliers, retailers or other firms operating in than today. Finance teams need to: of Finance Consulting, PwC UK
10
PLANNING AND PERFORMANCE MANAGEMENT PARADIGM | 1. PLANNING AND PERFORMANCE TODAY
‘The reality has changed and those old ways

now are just not fit for purpose’. Australia-based
roundtable contributor
1. Planning and 1.1 An assessment of planning and

forecasting today
The adage ‘failing to plan is planning to fail’ is often
performance today ascribed to Benjamin Franklin (although there is no

evidence he said it1). Nevertheless, it is an often-repeated
statement and one that finance teams have embraced with
rigour in their organisations.
Planning2 and performance have long been key activities

in finance functions. Budgeting cycles consume significant
amounts of time and effort, and many organisations create
specific financial planning and forecasting (FP&A) teams to
oversee the process. Many of the roundtable participants
highlighted how the importance and relevance of the
planning processes had increased through 2020 and 2021,
with finance teams providing valuable input into strategic
decisions. One finance leader commented that in their
organisation finance became part of the organisation’s
crisis management team for the first time, placing finance
at the top table, but it was important to have something to
contribute, otherwise that place would be lost.
There is a sense, however, from the roundtable participants

that, as one CFO described it: ‘we are very much stuck
in the traditional way, [but] it is so volatile at present and
things are changing so much that your planning has to be
a lot more agile, and your forecasting has to be that too’.
In contrast to this, another CFO commented: ‘the bank still
wants an annual budget, the board want to see a five-year
plan’. The challenge for finance teams is to use a planning
and performance process that adds value while satisfying
varying stakeholder needs.
1 The quote itself may have been first recorded by Reverend H. K. Williams in
1919 although it was in circulation before this (Quote Investigator 2018); its
origin is unknown.
2 Several terms are explained in the Glossary.
11
A finance leader commented that: ‘the planning process is 1.2 Financially focused forecasts were taking a broader view of the objectives of
pretty much the same in every single place that you go to. the organisation than the traditional financial focus. As
The first such comment is that the budgeting and planning
It is what people are taught. It is what they are comfortable will be discussed in Chapter 3, taking a broader view of
cycles are too financially focused: that the effort expended
with, and it rarely changes. When you get disruption in the performance is essential in today’s challenging times.
relates only to the financial aspects of the organisation.
way that we have had disruption and [consequently] that
need to respond quickly, there is often a distinct lack of For many roundtable participants, the planning cycle
The survey respondents were asked to consider their
ability…to do that because everybody just falls back on represented the development of the traditional profit and
perspective on whether the process was too financially
what their process is’. loss account and balance sheet. Although 2020 and 2021
orientated. Figure 1.1 shows that 56% of the respondents
had seen an increased emphasis on the importance of cash,
A CFO noted that: globally indicated that, for them, the process was broader
the modelling of the financial statements remained common.
than the traditional finance remit and included other areas,
such as operational objectives. These operational objectives A finance leader who works across a range of organisations
‘The budget necessarily doesn’t have value. But I think might include sales, supply chain and sustainability issues, in the mid-tier sector ‘I find nearly every business I look at it
it is probably a benchmark to set something for the year for example, to varying degrees. A further 34% thought that [has] a version of planning and forecasting which is P&L only,
going forward, or for six months going forward. The these issues were included in their remit to a certain extent. and sometimes the balance sheet and cash flow as well and
problem… is that in today’s world things are dynamic. then just “actual” [figures] versus “budget” and that is [all]’.
Budgets have a purpose but it has to be a reference The strength of these results seems to indicate that, at least
point more than anything else’. from the perspective of the respondents, those preparing This in turn leads to the next comment.
Yet 2020 and 2021 might be seen as an exceptional period,

one where staff across the organisation pulled together FIGURE 1.1: Is the focus of the planning and forecasting activity principally focused on financial profit objectives?
in challenging times. A return to ‘normality’ may have (n=2,884)
led to the expectation of a return to a pre-pandemic 60%
position. Yet another series of ‘black swan’ events has 56%
disrupted organisational behaviours (Taleb 2007). How 50%
are finance teams placed to manage these challenges? To
start to address this it is important to consider the several 40%
comments made generically about the effectiveness of this
34%
process, which should be considered before analysing the 30%
opportunity that now presents itself for these teams. Is it time
to unlearn the traditional ways of approaching these activities 20%
and relearn new ways and new purposes for activities?
10%
This report explores the planning and performance 8%
1% 1%
paradigm for finance teams in a continually disrupted world. 0%
There is an equal focus To a significant extent Financial profit Don't know Prefer not to say
It starts by reviewing several comments that stakeholders on a number of both however some other is the sole focus
assert about the apparent failings of the current approach. financial and other, such objectives, such as
as operational, objectives operational, are considered
12
1.3 Limited insight 1.4 Historic and less future focused not helpful to demonstrate that sales have increased from
The second comment frequently made is that the planning The third comment stakeholders often make is that finance say, ‘100’ to ‘120’, without being able to explain whether
processes provide only limited insight into the operational functions focus too much on the historic and not enough that 20% is a price or volume variance, and understanding
effectiveness of the organisation. Finance teams are providing effort is expended on understanding the drivers of future what has driven this variance – whether it results from
limited insight to the financial implications of performance performance, the risks and opportunities the organisation positive interventions by the organisation (eg advertising)
alone. The evidence suggested by roundtable participants, is going to encounter, and the actions needed to ensure or from the actions of competitors or a change in customer
and those who were interviewed as part of the research, success. Figure 1.2 shows that, for 57% of the survey behaviours. Finance should be providing these insights
was that this was a narrow view of the performance of the respondents, the key area of focus for the FP&A activity and a view as to whether the patterns can be expected to
finance teams. In fact, as discussed in section 4.2, effective was on understanding the performance of ‘actuals’ against continue into the next quarter and beyond.
finance business partnering in the context of the planning budget, with 35% suggesting that they focused on real-
and performance processes was fundamental to its success. The survey results tend to imply that finance teams
time forecasts.
understand the change required, to a certain extent.
The importance of scenario modelling was indicated While clearly explaining the events of the past is a Nonetheless, finance teams still focus closely upon telling
by several CFOs who participated in the roundtables. significant factor in planning for the future, how this is done the story of the past. The future, while difficult to predict,
One commented that: ‘we have now more capabilities, is also significant. One interviewee commented that it is is where significant value can be added.
technology, better understanding of drivers and are able to
do sensitivity analysis, scenario planning to maybe forecast
or look more at short-term…results’.
FIGURE 1.2: What are the key areas of focus in respect of for Financial Planning and Analysis (FP&A) activity in
In the complex world that currently faces organisations, your organisation, if any? (n=2,884)
as discussed in Chapter 2, having a purely financial focus
60%
cannot be enough. The constraints for many organisations
57%
are resource driven and if a financial plan stands in isolation
50%
the value that it provides will be limited. It will be hard to
47%
justify the seat at the top table. 40%
An experienced consultant based in the UK commented 35%

30%
that: ’The role of finance has changed into a more business-
partnering role and finance teams and their stakeholders are 24%
20%
starting to utilise technology directly. So, the finance teams
have got access to self-serve business intelligence tools. 10%
They are starting to look at predictive analytics, looking at the
2% 6% 2%
trends from past data, projecting it forward and they’re doing 0%
it all themselves. Now they’re having these relationships Real-time plans Predicitive analytics Real-time Robust Other Don't know None of the above
vs. historic variances and forecasts forecasts what-if scenarios
with key stakeholders from across the organisation’. after the event
No longer will the finance-focused approach serve.

Organisations are more dynamic and complex. The events
of 2020 and 2021 have taught us to appreciate different
FOR 57% OF THE SURVEY RESPONDENTS, THE KEY AREA OF
constraints and the prognosis for the remainder of 2022, FOCUS FOR THE FP&A ACTIVITY WAS ON UNDERSTANDING
2023 and beyond is that the relative stability of the 2010s THE PERFORMANCE OF ‘ACTUALS’ AGAINST BUDGET, WITH 35%
is unlikely to return for the foreseeable future. SUGGESTING THAT THEY FOCUSED ON REAL-TIME FORECASTS.
13
Being able to look to the future also requires flexible and

straightforward processes. Figure 1.3 indicates that it takes FIGURE 1.3: How long does it take to complete the annual (financial) planning (and budgeting) process in your
most organisations (57%) between one and three months organisation? (n=2,884)
to complete an annual planning cycle. This is a substantial 60%
amount of effort and would imply that the traditional 57%
planning cycle still holds sway. Interestingly, 4% of the 50%
respondents no longer completed annual budgets, a trend
on which several roundtable participants focused. The ability 40%
to prepare rolling plans on an increasingly ad hoc basis to
enable the management of a changing macro environment, 30%
is essential. Whether traditional budgeting processes have
a role to play in such a scenario is explored in Chapter 4. 20%
16% 16%
In contrast to the annual planning processes, the time to 10%
4% 4%
complete the more strategic view was more varied, with 3%
only 37% completing it in one to three months (Figure 1.4), 0%

Less than 1 month 1 to 3 months 4 to 6 months 7 to 12 months Annual plans Don't know
and 13% recording that their organisations did not prepare and budgets are
medium-term forecasts. Clearly, forecasting is a balance not prepared
between these long-term and short-term dimensions.
Having an integrated plan that tracks potential investments
and the value that they create for the organisation is
essential, but in volatile circumstances it needs to be FIGURE 1.4: How long does it take to complete medium-term (three to five years) forecast processes in your
conjoined with the short-term plans. organisation? (n=2,884)
60%
There is a clear opportunity for finance teams to support
their organisations effectively by becoming more forward 50%
thinking and not focusing only on the past.
40%
IN CONTRAST TO THE ANNUAL 30%

37%
PLANNING PROCESSES, THE

TIME TO COMPLETE THE MORE 20%
20%
STRATEGIC VIEW WAS MORE 13% 14%
10%
VARIED, WITH ONLY 37% 7% 8%
COMPLETING IT IN ONE TO 0%
THREE MONTHS. Less than 1 month 1 to 3 months 4 to 6 months 7 to 12 months Medium-term
forecasts
Don't know
are not done
14
1.5 Disjointed planning processes

FIGURE 1.5: A traditional view of planning and performance – manufacturing example
The next comment that is often made about planning
processes in organisations is that they are disjointed. That
is, that each function – sales, finance, procurement and so
forth – may have its own process that embraces databases
and its own data set, with perhaps some limited sharing
of data through spreadsheets. Indeed, the whole process
may well be very manually based, spreadsheet heavy and Finance Operations Sales
silo based. Figure 1.5 shows a typical view of a planning
process in an organisation. In such scenarios any plan can
only be suboptimal, as impacts are hard to model across
the various functions.
Many roundtable participants would be likely to recognise

such a model. Planning in siloes is not effective. This reflects
how data management and other accountabilities remain
established in many organisations. A structure such as this
lacks goal congruence: it is easy for different teams to have Human Supply
different goals and objectives, although there may have capital chain Marketing
been improvements, made out of necessity, in 2020 and
2021, which several roundtable participants highlighted.
A financial sector FP&A lead reflected upon their experiences

before undertaking a transformation of their planning
process. They commented that: ‘some of the key features in
FIGURE 1.6: What is the extent of the responsibility that the Financial Planning and Analysis (FP&A) (or
our planning process… we felt [were] fundamentally broken
equivalent) team has for planning and forecasting across your entire organisation, eg marketing, workforce,
…[because] as a large organisation planning was done in a
sales and supply chain? (n=2,884)
siloed manner. It was undertaken business unit by business
unit. There was no cross-integration. There were no 40%
hand-off processes, even from a functional point of view.

It was finance … leading the planning process and there 34%
30% 31%
was no direct integration [with] the other core functional
areas that need to contribute’. This contributor continued
25%
by explaining that, utilising a spreadsheet-based approach,
20%
the process did not allow the finance teams to add value to
their stakeholders. The process was one that focused solely
on the production of the plan itself.
10%
Figure 1.6 indicates a mixed picture. with 34% suggesting

2%
that they were responsible for solely the financial aspects, 4% 4%
0%
while a further 25% had partial involvement outside this. It is responsible only It has full responsibility Only in some areas It has no responsibility Don't know Not applicable
for financial aspects for all areas
15
1.6 Perfect is the enemy of ‘good enough’

FIGURE 1.7: What is the relative amount of time that is spent on the following activities of Financial Planning
Figure 1.7 shows the respondents’ view of the relative and Analysis (FP&A) across a year? (n=2,884)
amount of time spent on several planning-related activities.
Significant amount of time Moderate amount of time A little time No time at all / not doing Don’t know Not applicable
Among those who responded, 42% stated that they spent a
significant amount of time on the preparation of the plan 100%
7%
5%
and budget, with another 43% spending a moderate amount 9%
10%
12%
of time. The next most significant amount of time was spent 20%
80% 21% 27%
on the preparation of management information. These two
24%
elements underline the significant proportion of finance 43%
60%
time, and hence investment, spent in the planning and 48%
budgeting process. The question has to be: is the investment 50%

50% 47%
of such a significant amount of time producing returns that 40%
39%
are appropriate for the current challenging economic and
operating environments that organisations face? The total 20%
42%
31%
time may be fine – but it should not all be spent on gathering 22% 18% 18% 18%
data, reconciling data and emailing reports. If that part is
done quickly, the time then spent discussing the plans, 0%
Preparation of the Preparation of Regular analysis Adjustments to Ad hoc reporting Scenario modelling
understanding the scenarios and working cross-functionally plan and budget management of variances plan and budget
information packs (eg quarterly replanning)
to get a better result is time well spent. This is a fundamental
issue which can only be addressed, at least in part, by the
tone from the top and how this supports the planning and THE QUESTION HAS TO BE: IS THE INVESTMENT OF SUCH A
performance management activities of the organisation. SIGNIFICANT AMOUNT OF TIME PRODUCING RETURNS THAT
Finance teams can be too precise in their approach ARE APPROPRIATE FOR THE CURRENT CHALLENGING ECONOMIC
to forecasting. One CFO related an experience in the AND OPERATING ENVIRONMENTS THAT ORGANISATIONS FACE?
pandemic: ‘I vividly remember [a] weekend where I had
to do a quick analysis for my chief executive officer (CEO) Another CFO, working in the clothing industry, built Scenario modelling and ad hoc reporting also represent
because we were reporting to the board. I [put] the same upon the issue of informality by explaining: ‘there are significant finance activities. When stakeholders in
question to my team and this was a Saturday and they now informal ways of … predicting the future…[you need organisations may well have the ability to self-serve data,
couldn’t give me the answer immediately and …[so] I discussion] with the CEO as he has the business idea and, 79% of respondents spend either a significant or moderate
did a back of envelope calculation and then had a quick being in the finance [team], you can correlate things, drive amount of time on the preparation of management
discussion with my CEO and we decided to present that the numbers [where] that “what if” analysis would be very information packs. Also, 72% spend either a significant
to our boss with certain caveats. True enough, the team much to the point …[where] we don’t have any trends in or moderate amount of time on the regular analysis of
only came back to me on [the] Monday [but] my high-level [the] historical data. Things are changing daily. … we usually variances. Other analyses undertaken by organisations
estimates with my CEO [were] quite close to what my sit with our salespeople on a daily basis [to ask what] their suggest that up to 90% of reports prepared by finance
team came up with. I realised my team spent the whole of customers [are] doing. We predict data from our sales team teams are not used by their intended stakeholder.
Saturday and Sunday trying to give me the same numbers [about] what their customers [are currently] doing: are they
that I spent about 30 minutes [estimating] with my CEO. buying on a bulk basis, or they are restricting their quantities Is finance leading the way in effective planning? What are
The 80% rule. As finance practitioners, … we are so used demand to [a] daily basis?’. This contributor continued to the disruptive factors that cause finance teams to need to
to dotting the i’s and crossing the t’s that we are not doing explain that he also speaks to his suppliers and contacts in further rethink their approach to planning and forecasting?
ourselves justice [by] being that trusted business partner for their ecosystem to find out how customer behaviours are
business …[providing] timely relevance’. changing and then factors these into his plan.
16
What does a good Financial Planning & Analysis (“FP&A”) function look like?
Today’s leading FP&A functions typically have highly skilled specialists who can harness the power of leading data visualisation products to create almost-live,
valuable commercial insights, and usually run continuous planning processes using advanced integrated Cloud planning solutions. The data is fully connected to
ERP systems and usually they will run weekly – and sometimes daily – flash reporting processes on key metrics. Month-end is typically closed in three to five days.
As a result of having the right tools and optimal processes, 3. When – what are the FP&A cycles? as a ‘managed service’ provided by a skilled third party is
they are able to spend most of their time analysing business now a realistic option.
4. How – what are the processes and the underpinning
performance, rather than gathering data and reporting on it,
technologies? Getting this right. A high-performing FP&A function
and they’ve often evolved into business partners for wider
management. A good FP&A analyst can be a crucial support quickly comes to be regarded by the business as a valuable
So, what can you do – now?
to both commercial and operations leaders in the organisation. ‘internal consultancy’, advising on critical commercial topics
Move up the value chain. The quickest way to improve
like pricing, customer and product profitability, as well
FP&A capabilities is to first optimise other finance processes
What are the challenges faced in organisations as ensuring the business can adapt quickly to changes in
in order to create capacity for FP&A and higher value
with limited FP&A resources? short (and longer) term planning scenarios. Enabled by
activities. For example, if your senior finance people are
However, in less mature and smaller organisations, typically an integrated Cloud-based planning solution, the finance
tied up in month-end reporting for 15 days, look at how to
there are no specialist FP&A roles resulting in finance team itself will see real benefits: a much shorter budget
shorten those close processes through process optimisation
staff adopting a ‘jack of all trades’ approach, with limited process cycle time (weeks not months); joined-up planning -
and automation. Good practice demands these activities are
bandwidth (or knowledge) to make improvements in everyone is working with the same assumptions at any given
optimised; by reducing ‘production time’, often significant
analytics, reporting and planning processes. moment; data integrity is guaranteed – no ‘orphan’ products,
capacity can be created for value-adding analytics.
customers, locations codes etc; easily changed hierarchies
Here, Excel is king, with poorly constructed and governed Keep it simple and engage the business. Once you’ve in the event of a restructuring, eg. site rollups, product roll
models rife and a prevailing over-reliance on key created some capacity for business partnering, consider ups, P&L structure etc; a full planning audit trail; an easy
‘modelling’ personnel. introducing some basic weekly ‘flash’ reporting and an process for pushing down top-level adjustments; and a user-
in-month forecast process, highlighting top-line revenue friendly interface leading to much better engagement from
Analytics usually don’t go much beyond high-level analysis; non-finance personnel in a traditionally ‘finance’ planning
numbers for the week and balance of the month (or
product and customer profitability analytics and insights process. Forecast quality and accuracy is a key consideration
quarter if meaningful) and some known costs, eg payroll.
are rarely in evidence. There is often a lack of awareness of for investors and can impact investability and valuation.
Ask business leaders to give a high-level ‘best estimate’
the ‘art of the possible’ and how today’s leading FP&A and
forecast for the period in question, and ideally report this
business intelligence (BI) solutions can very quickly be spun Summary and takeaways
forecast against budget for that period. Doing this will
up to provide immediately actionable insights. Regardless of the size of your finance function, good
help put the business on a much more commercial footing,
with management becoming more aware of performance commercial business intelligence analytics and planning
Month-end reporting can often be a 10 – 15-day process, processes will drive real value throughout your company, and
tying up finance resources for most of each month. When in almost real-time, presenting them with an opportunity
to quickly remediate any problems, and at the same time at the same time will elevate your finance team to the role
performance information finally becomes available, it is of true ‘business partners’. Being able to bring deep insights
usually too late to be actioned. forcing them to think ahead.
into how the business is currently performing, and at the
Use the right tools. There is no doubt that technology same time enabling the most ‘connected’ planning processes
What initial steps can I take to improve my
can transform the FP&A function, and there has never to manage future growth, sets your business up for success.
FP&A function?
Regardless of business scale there are a number of been a wider range of technology choices available.
fundamental questions that CFOs should address in Cloud-based solutions offer real-time collaboration and
relation to FP&A: faster actionable insights. Modern finance systems offer
API technology that can link data between operational and
1. Why – what is the purpose of FP&A? finance planning systems, dramatically reducing collation
2. Who – who owns it and who are the customers? and reconciliation efforts. Should investment in technology Paul Cullen, Director, Deals Insights &
and FP&A capability be hard to secure or justify, planning Analytics, PwC, UK
17
1.7 Planning and performance challenges

for the small and medium-sized enterprises
The challenges for the small and medium-sized enterprises
in the planning and performance process are broadly
similar. Our survey results show strong similarities in the
overall trends between this sector and larger organisations
(an analysis of the results for this sector is available as
a separate document). Indeed, the survey respondents
indicated, as might well be expected, that in this sector
the finance team has a greater responsibility for the overall
planning than in organisations overall. With more limited
resources and expertise this is to be expected.
The challenges faced by smaller organisations are likely to

be more significant, but potentially less complex than in
larger ones. Overall, the respondents indicated that there
is less effort expended on the preparation of plans and
budgets as well as on reporting against outcomes and
potential scenarios. These do, however, remain significant
activities, with 34% of respondents in this sector indicating
that they spent a significant amount of time in the
preparation of the plan and budget.
So, what should I do?

✓ Assess the strengths and weaknesses of the current
planning and performance processes.
✓ Interview key stakeholders to ascertain whether
the process is relevant, especially in the light of
changing operating models.
✓ Critique your current processes against the current
issues highlighted in this section.
✓ Develop a case for change and a business and value
case for investment.
✓ Do not be afraid to make radical recommendations
for change, demonstrating the value that finance
can bring to the table.
18
PLANNING AND PERFORMANCE MANAGEMENT PARADIGM | 2. DRIVERS FOR CHANGE
‘The cycle hasn’t changed, but the importance

of it has been elevated and we know how important
it is to be agile and flexible.’ Caribbean-based
roundtable participant
2. Drivers for change 2.1 Economic challenges

Before the current uncertainty in global economies, the
budgeting process could be long, taking three to six
months for completion, as shown in Figure 1.3, but in
a volatile environment, the macroeconomic indicators
can change significantly and rapidly. Such changing
environments disrupt long-range plans. If budget cycles
are to remain useful, a move to quarterly or even monthly
process may be necessary, with a rolling plan closely
following the volatility in key macroeconomic indicators
of interest rates, exchange rates and staff remuneration
increases. Such macroeconomic assumptions affect not just
finance but also other lines of business. Applying sensitivity
analysis to potential scenarios creates an understanding of
what could happen to logistics costs, sales and any other
areas under investigation.
A variety of macro- and microeconomic factors have the

potential to affect revenue. So, trying to understand what
uncontrollable factors, such as inflation, exist that might
impact revenue, allows consideration of the economic
levers that might be pulled to minimise or mitigate their
impact. The implication is that the finance team need to
be proactive rather than reactive. Forecasting in times
of inflation can be challenging and this is particularly
true for the developed economies in late 2022. While
commentators focus on headline inflation rate, the reality
is that this is a theoretical composite and the individual
components of that number are moving in dramatically
different manners. Cost increases across a range of
expenses are also subject to a complex series of lags which
may take some time to ‘normalise’. No two organisations
will be affected in the same manner. An India-based CFO
commented, ‘because of the current macro uncertainties
19
that are there and because the responses from the the requirements have moved from luxury clothing to on their short-term forecasting, with 35% considering
government are going through a lot of variations, the more essential items. Predicting any of these changes is that they had the same level of impact on their medium-
biggest challenge is: how can you forecast and plan in a impossible. This CFO explained that: ‘cotton prices are term planning and 23% on the long-term, and 45%
very agile manner?’ volatile and exhibit significant swings even within 24 hrs. reported that they had at least a marginal impact on
The energy prices are moving in both directions, so it is their long-term planning. There are significant challenges
The economic challenges of the second half of 2022 may becoming very difficult to go with the current planning relevant to organisations’ planning activities and their
well extend into 2023 and beyond, serving to remind us process. You have to be very dynamic’. impact cannot be ignored by any organisation. There is
of the importance of scenarios, extraction of non-financial no longer a clear view of the future. Many roundtable
metrics from operational systems and use of external Another CFO, who is based in Canada and works in the participants spoke of uncertainty and the need to produce
economic data feeds. consumer electronic industry explained: ‘myself and my various alternative models of possible futures. Indeed,
CEO are concerned about the next 18 to 24 months. one categorised these as the ‘worst case’, the ‘even more’
As we consider the medium-term, decarbonisation policies The whole world is going into a recession. I am seeing it worst case and the ‘dire case’, and it was the dire case that
will impact economic performance. The introduction of in the numbers. I am forecasting record unemployment, seemed most likely to occur.
carbon taxes may cause organisations to devote resources record write offs, things like that. That gives a perspective
to reducing emissions thereby reducing gross domestic of what is going to impact our community in the next year Having a rigid view of the potential outcomes will not
product. In turn, this may increase costs to organisations 18 to 24 months’. enable finance teams to provide relevant insight as
whilst also reducing consumer demand. These aspects conditions change.
need to be included any future looking model. As these economic challenges continue to develop, the
survey respondents were asked to consider the impact One economy that experienced significant turbulence in
A CFO who advises several mid-tier businesses in the UK on their planning and forecasting activities (Figure 2.1). the early part of 2022 was Sri Lanka.
questioned: ‘how do we deal with inflation? Do we focus Overall, 58% indicated that they had a significant impact
on the core business and its performance? And then layer
over the potential impacts of inflation? Or do we take
more drastic steps? I think once we have got our heads
around that, what it is like to operate in a high-inflation FIGURE 2.1: To what extent has the pandemic disrupted short-, medium- and long-term planning by the finance
environment, we can then focus more on innovating’. function in your organisation? (n=2,884)
Significant impact Marginal impact No impact Don’t know
A CFO based in North America commented: ‘We like to
rely on our past. We say we have a playbook and, while 60%
58%
that gives some structure, what has been keeping me up
at night is [the question], “are we changing that playbook 50% 52%
fast enough?” Because to put it in very simple terms, we are 45%
dealing with a different recessionary environment post Covid 40%
than we did in recessionary environments before Covid’. 35% 35%
30%
As an example of these uncertainties, one CFO working in
the textile industry in a developing economy noted that 23% 24%
20%
the period since 2020 had been one of significant
challenges. Firstly, lockdowns had caused a complete 10%
10%
cessation of production. When these were eased, demand 6%
8%
1% 3%
dramatically increased and the organisation made capital 0%
investments to address this. Now, with the emerging Short-term Medium-term Long-term
geopolitical position, the situation has changed, and
20
Managing in challenging times – lessons from Sri Lanka

The fallout from the global pandemic has hit many economies. Perhaps one of the most visible has been Sri Lanka, where the combination of reduced tourism
and the energy price shocks caused underlying inflation to reach 43.9% in June 2022, according to the Central Bank of Sri Lanka (Central Bank of Sri Lanka 2022).
This further increased to a headline rate of 60.8% in July 2022, exacerbated by a weak currency and political instability, as reported by Trading Economics (Trading
Economics 2022). How do finance teams plan and forecast in such circumstances? In the year to 12 May 2022 the Sri Lankan Rupee had depreciated by 44.3%
against the US dollar (ADA derana Business 2022).
The first lesson learned from those who participated in the business objective and how the various scenarios being These trigger points need to be aligned to the organisation’s
ACCA / PwC roundtable was that planning in organisations developed are constructed. The extent of the uncertainties risk-management strategy. The CFOs who took part in this
had increased relevance. While the pandemic had created involved, as one roundtable participant noted, a forward research found that their organisations were undertaking
uncertainty, the current climate was more challenging. exchange rate that was far from certain, so understanding strategic reviews on a far more frequent basis than before.
Finance teams were ever more relevant as the leaders of the levers to pull to ensure survival is vital. The reporting of risks and their assessment had become
organisations sought to steer a path through the uncertainty. an intensifying focus of senior management discussions.
The CFOs spoke of a shortening of the planning cycles. That in turn leads to the need to understand the trigger Creating a stronger link between risk management and
Activities that were previously conducted on an annual basis points where action needs to be taken, identifying the forecasting improved management of the uncertainties.
had become quarterly. Time horizons had shortened but leading indicators that highlight opportunities and risks.
against this there remained a need to manage effectively the These trigger points must be built into any forecasting model. Being able to model these trigger points requires sufficient
time spent on planning activities and to be efficient. In challenging situations such those being experienced now, accurate data and a clear understanding of the operating
having well-researched trigger points fully aligned to the model. Having an integrated plan and forecast across the
The second lesson was that organisations are planning for operating model is essential. These can give an early warning organisation was deemed essential by the CFOs.
resilience, not for growth. This changes the nature of the – especially necessary given the shortened planning horizons.
21
2.2 Environmental, social and The ESG agenda helps move the focus away from making Given the increasing relevance of the ESG agenda, the
governance issues short-term reactive decisions based on profitability or survey respondents were asked whether they saw a need
cash flow towards a more distant future, projecting what is for new forms of performance measures (Figure 2.2): 82%
ESG principles take into consideration both the internal and
required to achieve net zero across the entire value chain, said that there was. An analysis of the respondents who
external ways of working that the business adopts, while
with ESG as a significant parameter of overall planning. work in FP&A roles shows consistency in this question, as
having a global impact. The ESG agenda no longer sits
ESG is wider than net zero in its focus but, as an example, with all others in the survey, with 84% indicating that there
isolated but is built into the organisation’s strategy, taking
this will represent a challenge for organisations in 2023 is a new need. This resounding agreement indicates that
net zero targets into account in the financial operational
and beyond as climate targets, such as those agreed at finance teams are ready to embrace new performance
planning and processes making stakeholder capitalism
COP26 in 2021, become ever closer, yet investment is measures beyond the traditional financial objectives.
a reality (as discussed in section 3.2). Even during these
constrained by increasing operational costs. A roundtable With the development of draft reporting standards by the
uncertain times, ESG provides an opportunity to develop
participant queried: International Sustainability Standards Board (ISSB), for
long-term trust in a brand and improve profits. ESG provides
example, finance teams recognise the need to embrace
a way for organisations to develop a culture and attract
these measures.
new talent while retaining existing employees. Since brand
‘How do you create the business case to fund
building already transcends the short-term transactions of improvements, where are those efficiencies going to
a business, companies need to invest in ESG if the brand is come from and how do you justify the business case?
to reflect the values of a future workforce. With consumers, FIGURE 2.2: Do you believe that there is a need for
In the world of scarce resource, where do you spend new forms of performance measures for investors,
alongside investors or lenders, more environmentally the money?’ analysts and the capital market which are less focus
conscious than ever, now is the time to scale up innovative
less on solely financial objectives? (n = 2,884)
solutions for the well-being of the planet and its inhabitants.
It is important to recognise that the ‘S’ component of 8%
n Yes, 82%
In legacy industries such as steel manufacturing, ESG is n No, 10%
ESG includes diversity, equity and inclusion (DEI). ESG
helping drive ‘green’ steel development, providing the 10% n Don’t know, 8%
quantifies and measures the initiatives making DEI ideally
potential for cheaper financing through sustainability loans.
suitable for collaborative planning across all areas of the
The impact of ESG on budgeting means the inclusion of
business, paving the way to document the investment
metrics that are not limited to turnover but include non-
in human capital systematically, today and the future.
financial items, such as carbon emissions, data on social
Organisations provide significant information about
mobility and workforce composition. By taking ESG into
executive team compensation, but scant information
consideration, the planning and performance management
about employees. Since this is often a major component
process is no longer just about financial performance but
of operating expenses. It makes sense for the finance 82%
is instead a holistic plan taking into consideration sales
team to collaborate on this area with human resources
and operational plans that require monitoring on a
(HR) and all other parts of the business for planning and
continuous basis.
performance. This ‘S’ component is a broader agenda
of social value which has a multitude of challenges in
measurement and data sources.
82% OF SURVEY RESPONDENTS
SAID THAT THERE WAS A
NEED FOR NEW FORMS OF
PERFORMANCE MEASURES.
22
2.3 Faster response in an agile world

FIGURE 2.3: How often are you currently fully adjusting your annual plan (and budget)? (n = 2,675)
Any one change in a variable during uncertain times has
potential to create widespread economic shifts affecting all 50%
aspects of any business. Agility in forecasting and budgeting

is essential. To provide this agility, finance needs the support 40%
of relevant tools, technology and methodologies. While the 37%
existing methodologies of developing a budget, financial 30%
forecasts and strategic long-range plans remain, the finance
team and CFO require tools and processes to support
20%
constantly changing assumptions and macroeconomic 21%
factors such as inflation and employment levels. More 17%

13%
frequent revisions of strategy plans require moving to a 10%
greater than annual review, so decision makers remain 7% 2%
1% 1%
well informed of the strategy. Clearly, the biggest shift in 0%
responding in an agile world is the frequency of updates Weekly Every 2 weeks Monthly Quarterly Every 6 months Annually Irregularly Don't know
needed, seen in the shift from monthly to weekly to daily
plans, owing to the widespread changes.
A traditional cycle of planning and budgeting may well FIGURE 2.4: How often are you currently fully adjusting your medium-term (3 to 5 years) forecasts? (n = 2,263)
have changed, with the previous annual plan now being 50%
reviewed and reforecast on a quarterly basis. Many
46%
organisations have favoured the 3+9, 6+6 and 9+3 cycle.
40%
With the disruption of 2020 and 2021, many finance teams
have increased the frequency of their re-forecasting as
business circumstances changed. Figure 2.3 shows that 30%
the greater percentage of survey respondents are still
using the quarterly cycles, with Figure 2.4 showing that 20%
annual revisions of longer-term plans remain the norm. 17%
As economic uncertainty remains, so the period between 15%
10%
revisions can be expected to shorten once more. 10%
2%
0% 0% 5% 4%
A finance lead from South Africa commented: ‘During 0%
Weekly Every 2 weeks Monthly Quarterly Every 6 months Annually Irregularly Not making Don't know
Covid, my organisation ran many playbooks on a weekly any adjustments
basis because there was so much uncertainty in the market.
We have moved away from that, and I think that is a shame
because that really gave quick insights to enable decision FIGURE 2.3 SHOWS THAT THE GREATER PERCENTAGE OF SURVEY
making. So, from [a Utopian] point of view, we should really RESPONDENTS ARE STILL USING THE QUARTERLY CYCLES, WITH
think about that, especially on some key risk aspects that
are prevalent, whether that’s economic factors or…socio-
FIGURE 2.4 SHOWING THAT ANNUAL REVISIONS OF LONGER-TERM
economic or so forth’. PLANS REMAIN THE NORM.
Above all, the need for this faster response is driven by
changing customer demands.
23
2.4 Customer-centricity 2.5 Data and systems Data

During the pandemic the conversation for many There are two aspects to the data: having the right Data is a critical success factor in achieving agile forecasts
organisations moved towards how to serve the customer data that can support the planning process and then for use by the finance team and organisational decision
better. As demands changed, understanding customer having the systems, or applications, to be able to use makers. Access to, and the use of, both internal and
behaviour became a key requirement. Several roundtable that data effectively. external sources of data is becoming essential for making
participants working in either retail or fast-moving consumer effective forecasts.
goods (FMCG) organisations explained how customer An India-based CFO commented:
Sourcing external data, including economic data, inflation
reactions increasingly drove the forecasting approach
and unemployment data, is a necessary first step in
during this time. The balance of the operating model has
‘In the last two years we have figured out [that] the understanding the variables and level of impact on key
changed for many organisations and being customer-centric
key is not getting together the plan but being able performance metrics. Even so, a CFO commented: ‘in the
leads to the need to focus on planning activities, starting
to automate the inputs that go into the plan itself’. Caribbean. I think we have a lack of data for our region. It is
from a deep understanding of customer demand. A more
not current, at least. In terms of any feature trends in…GDP
traditional approach to planning, based upon volumes of
or inflation or growth rates, it is very [scant compared with]
production expecting to be sold, is no longer effective.
A roundtable participant reported personal experience developed markets. So that is a challenge for us’. Having
In becoming more customer-centric, organisations need to with an organisation that was: ‘coming off an old access to external data cannot always be taken for granted,
understand the customer journey, and be able to model technology and onto a new adaptive planning platform. but it is becoming an essential tool in forecasting.
effectively the cost-to-serve of each major customer or I think that that is going to greatly enhance their planning
process and make it a lot more streamlined than it was and Sourcing and integrating real-time market data into
customer group.3
a lot [closer to] “real time”. They will be able to update forecasting helps finance support agile decision making.
An Australian consultant passionate about driving business assumptions monthly, and they will be able to move to a Automatically extracting data from the general ledger
agility and lean thinking recognises ‘you know the whole different space where they can regularly forecast without is no longer sufficient: operational systems including
ESG agenda and you know the consumer and the kind of all the effort that used to go into it’. procurement, customer relationship management (CRM),
shifts that might be happening in that kind of space where sales and marketing are needed to generate automatic
people are becoming a lot more environmentally conscious’. A CFO from mainland China noted: ‘there should be two updates for the forecasts and help populate scenarios in
cornerstones…to support the transformation to strategic real time. Simultaneously, the systems need to make any
Having such a detailed understanding of the customers planning and strategic performance management. outliers or anomalous data known to the finance team.
and their potential behaviour and incorporating it into First, performance [management] without a [suitable]
plans and forecasts requires two things. It needs, first, a culture is imperfect. Second, performance [management] A Republic of Ireland-based roundtable participant
close integration between sales and financial forecasts, and without a complete financial system to support it cannot commented:
secondly, the data on which to base these forecasts. play a supporting role. It is necessary to follow the trend
of digitisation, which is going to weigh in on improving
A CFO from mainland China commented, ‘let’s take the the driving efficiency of the entire business, transforming ‘Hopefully organisations can see benefits of in terms of
matter of [the] “consumer first” [principle] as an example. decisions they make and [can obtain the data that] can
the entire business, and even transforming finance itself.
If we really mean it, this must be a top-down consensus. impact that or add value to the decision making process’.
In my opinion, of the two cornerstones one is a tool, the
How to make it happen given the current competition? other a concept’.
There are many systems going with their respective rules,
especially the financial system, exposed to a serious lag
rather than forward-looking, which poses a problem that
needs to be solved’.
3 The concept of cost-to-serve is explained in ACCA/IMA/CIPS 2022.

24
To place the data challenge in context, another Republic of Systems respondents (30% to 50%). The responses suggest that
Ireland-based roundtable participant noted: ‘it takes years Automating the data-driven business using advances finance teams are very traditional in their approaches to the
of investment in the underlying architecture to get the data in tools and technology helps ensure the integration tools that they use in planning and forecasting. While well-
into a presentable format. I think that the organisations of forecasting initiatives into the overall business, while developed spreadsheets can provide acceptable models,
that use consultants to do this have an advantage and a overcoming the issues of traditional forecasts that are there are challenges. If finance teams seek to integrate the
structured process that…comes through. I think a good slow to react to change. Despite a variety of purpose- financial planning activities with other planning across the
underlying data model that can take years [to create] is built planning tools or enterprise resource planning (ERP) organisation, the challenges of real-time data feeds become
important and it could be years before you see the benefit modules, spreadsheet models remain prevalent. an issue. One interviewee highlighted the challenge of
of some of this stuff, which is the problem really’. bringing many lines of customer data into a financial
Figure 2.5 shows that the survey respondents still use forecasting model and the need to aggregate this data.
Another CFO commented: spreadsheets as their main tool in managing planning and
performance in their organisations. Indeed, 82% use these A CFO in South Africa had a perspective on the reliance
with a further 31% using the planning modules within their upon spreadsheets, claiming that as the use of spreadsheets
‘The higher use of technology, machine learning [ML] financial applications, such as ERP applications, while 34% is embedded in so much of the work that we do, even an at
and AI [artificial intelligence] is the only thing that can of respondents make use of next-generation tools such entry level, that we naturally adopt it as the tool of choice,
bring more change and the dynamic planning that you as extended planning and analysis (xP&A) applications. whether or not there are alternative solutions available. It is
currently need can only be derived from these things. an inherent fear of change that needs to be overcome if the
Techniques such as foresight,5 scenario modelling and
You cannot wait for the period to close. You need the role of the finance professional is to continue to develop.
nowcasting have relatively strong take-up among the survey
real-time data, which can only be derived from AI and
machine learning. This is the future. So, you must accept
you have to learn. You must apply things that can only
bring the change in your organisation’.
FIGURE 2.5: To what extent are any of the following used to help manage planning and performance in your
organisation? Select all that apply (n = 2,884)
Across the roundtables there was a sense that there is A great deal To some extent Not at all Don’t know
an opportunity for using AI and ML but a concern about 90%

the lack of trends from 2019 to 2021 upon which to base 80% 82%
such use. Some participants said that they were willing to
explore their use, but only to provide additional comfort in 70%
their traditional planning processes. 60%
50% 53%
Having access to data from across the organisation is 50%
important in driving integrated planning. However, there 40%
41%
43% 43%
is a risk that organisations suffer from data availability 37%
30% 32%
31% 30%
bias4 where they focus on the data that is readily available 28% 27%
20% 23%
and do not consider what data is needed for an effective 20% 21%
17% 17% 16%
forecast. Not having data readily available is not an excuse 10% 14% 15% 13% 13%
11%
2% 1% 9%
for omitting it from the integrated data model. 0%
5% 6%
Spreadsheets Planning modules Foresight Scenario modelling Nowcasting Application of xP&A tools
within financial machine learning
applications
4 The concept of availability bias is discussed in Bannerjee and Nunan (2019).

5 Explanations of these terms can be found in the Glossary.
25
Another participant in the same roundtable continued this A generation of xP&A has been developed that provides While not new, it is known by a variety of names, including
theme by noting that technology is only the enabler, but data integration between the various systems and aspects integrated business planning, integrated financial planning,
with changing the technology you need to change the of the planning process (Figure 2.6). No longer can financial connected planning and collaborative enterprise planning.
culture. This participant continued that: ‘People are very forecasting be an isolated function, if the finance team Some names are synonymous with the vendors of xP&A
comfortable with what they have got…even if that process are to add value in a rapidly changing world, they need systems and with platforms referring to the underlying
does not really work and they complain about that process. to integrate the financial plans more fully with the other methodology. Another feature of xP&A, differentiating it
They have still got control over that process because they aspects of operational planning. from traditional FP&A, is the availability of a real-time single
have been doing it for many years. Implementing a new source of truth not impeded by any silos of data arising
technology disrupts all of that. And even when it delivers a xP&A represents a pivot of financial planning. Moving well from different business areas. Automation ensures not only
whole lot of benefits that the business [can] see the benefit beyond the use of corporate financial data for planning, that data is updated in real time but also that it ripples
of, they are still resistant to that change. They don’t want xP&A focuses on connecting financial data with operations. through the system to update forecasts and plans.
to move away from Excel because that [means] going
into a “black box” kind of concept, whether you use AI or Having a Cloud-based xP&A tool at the core of the
machine learning or a more advanced application. Excel organisation’s application architecture is a key component
FIGURE 2.6: xP&A of its (digital) transformation journey.6 Even so, as one
gives them an illusion of control’.
roundtable participant noted, technology is not the
An India-based CFO commented: ‘you know the manual whole story: ‘technology has improved a significant way
efforts [involved] in crunching hundreds of Excel sheets from where it was many years ago, [but] I don’t think the
S&OP
and coming up with insights; can we really not use artificial process has necessarily changed…people are expressing
intelligence and machine learning? How can we really a desire…to be agile, but their ability to work outside of
leverage technology to make this entire process efficient?’ Forecasting the constraints of the planning and the five-year forecast
and the capex structures is constrained because [it’s] the
Many roundtable participants struggled with the use of AI
IT
process that needs to be reviewed and changed’.
Human Capital
and ML as forecasting tools. Their line of argument is that
2020 and 2021 were substantially different from 2019 and will A roundtable participant who leads the implementation of
Planning
Analysis
not reflect the trading conditions of 2022. Therefore, these xP&A xP&A applications noted that, ‘there’s been a trend in recent
techniques do not have substantive value. To apply the years [of] moving into the Cloud and some of the vendors
logic to a whole year may be an excuse for inaction. While are giving bespoke processes. They say, “here is a standard
Data
it is true that 2020 and 2021 were unique, nevertheless, planning process now that can work for an ERP”. It doesn’t
trends have developed and therefore using techniques work, in my opinion. It doesn’t work for a planning process.
such as ML can yield some value if the data is understood. Budgets It could work for a consolidation process. But planning is so
subjective to the organisation, to the industry they’re trying
Not only is having access to appropriate and accurate data to go out-of-the-box and standardise through technology.
essential, but, while spreadsheets can handle a certain Sales Marketing
It just creates more of a change management issue because
volume of data and are increasingly incorporating aspects people are even more disconnected, not just from the tech
of both AI and ML, there is also a need to take an extended but also from the process being implemented’.
view. Having a financial team that uses the latest generation
of xP&A software provides an opportunity to sidestep the
skills for AI/ML and instead benefit from the inbuilt functions.
6 The development of an effective Cloud-based application architecture is considered in ACCA / CA ANZ / Generation CFO 2021.
26
xP&A implementation case study

A small, listed conglomerate entered the pandemic with an Excel-based budgeting and forecasting model which reflected the profit and loss account, balance sheet
and cash flow, along statutory lines. Some of the sectors in which it operated were particularly challenged by operating conditions during the pandemic. It soon
became obvious that refinancing was necessary, but the Excel-based process was not flexible enough to respond to the demands of the prospective investors. The
existing process was slow and leadership confidence in it was low. Units were presenting plans that they anticipated that corporate headquarters wanted to hear.
Before the pandemic, the organisation had purchased several n There was a move from statutory to operational modelling n xP&A should be treated as an organisation-wide tool,
licences of a planning and analysis (P&A) tool, although based upon performance KPIs. not just a finance one. Steering and working committees
little had been done to progress the implementation. should reflect finance, operational and sales functions.
n Greater confidence in outputs was experienced at all
The assumption had been that the tool was ready to use As a project, implementation needs to be part of the
levels of the organisation.
upon purchase. Seizing the opportunity at the time of the overall organisation-wide transformation.
refinancing, it was decided to implement the tool to improve n Finance was able to conduct scenario analyses rapidly,
n Having personnel with appropriate skills within the
the forecasting capabilities, especially as a further refinancing particularly in response to queries during the due
implementation team is essential. In this instance, the
looked likely. diligence associated with the second refinancing.
organisation invested in one individual to ensure that they
The organisation invested in developing the skills of one of n Scenarios and forecasts became ‘go to’ tools for senior had the appropriate software implementation certifications.
its existing FP&A team members, who became responsible commercial management across the divisions and group. The product vendor provided quality assurance support
for supporting the development of the model inherent in but investing in in-house expertise was essential.
The lessons learned from this implementation of an xP&A
the tool, ensuring consistency of design language n Modelling the organisation into the xP&A tool requires
tool were as follows.
throughout. Implementation focused on the operating a detailed understanding of the operating model to be
structure and the key drivers, both current and anticipated n The xP&A tool is a business tool, not just a finance tool. It successful. A good implementation uses the understanding
in each unit. The initial implementation lasted from June to needs to be treated this way. of the operational KPIs to model the organisation.
October 2020, although there have been refinements and
n The tool needs to be a component within an organisation- n Investment is needed in interfaces with financial and
improvements since.
wide digital transformation strategy, recognising inputs operational systems to ensure that data feeds come from
Such was the success of the implementation that those required from systems and areas across the organisation in the breadth of the applications that the organisation uses.
involved in the second refinancing complimented the order to generate outputs to aid decision support across
organisation on the quality of its implementation and the the organisation. The next steps in the implementation are to build upon the
ability to answer challenging ‘what-if’ scenarios quickly existing data feeds from financial systems to include feeds
n The implementation needs to be treated as a formal
and with confidence. As the constraints of the operating from operational systems. This will further speed the end-to-
project. Having a formal project with leadership buy-in
environment have changed, introducing new variables, end process while ensuring data integrity (big data). Linking
and resource commitment significantly improves the
such as inflation, at quite granular levels has been easy. the xP&A tool to a data visualisation application will enable
chances of success.
the finance team to provide business-wide commercial and
Several advantages were gained from the xP&A n It is important to build confidence in the tool early on. financial insights to unit and corporate leaders as required.
implementation. Having a success story will increase leadership support for
the remainder of the implementation.
n A more flexible approach to planning and forecasting
moving to rolling forecasts was possible. This provided n The former planning model must not be brought across into
not only greater insight and control but also reduced the tool. The opportunity should be taken to re-evaluate
emphasis on the set-piece annual budgeting process. the purpose of the budgeting and planning process.
27
Anderson et al, in providing an assessment of the may be able to access some comparable functionality 2.6 Centres of excellence
xP&A market in 2022 comment that: ‘xP&A remains in through their application stack and new software solutions
Since forecasting and budgeting take on a whole-of-
early maturity with progress being made by major ERP are starting to emerge in this market which provide
organisation perspective by integrating ESG, finance has
vendors and a small number of best-of-breed solutions integrations with common small business and mid-tier
the opportunity to take responsibility for leading all aspects
providers. Some operational planning solutions may lack accounting, HR, sales and marketing and CRM solutions,
of planning. As a potential central function supporting
functional depth and breadth compared to stand-alone there are challenges for this sector in delivering some of
planning for the entire organisation and given the need
solutions’. They also note that: ‘through 2024, 30% of the integrated planning. A CFO who advises medium-sized
to support agile forecasting and budgeting for all lines of
FP&A implementations will be extended to support organisations commented: ‘for small businesses there
business, a centre of excellence provides a home for both
operational finance processes, with 50% requiring a are quite a few affordable apps that cover any day-to-day
the tools and the finance team members who are focusing
substantial cloud xP&A roadmap from their FP&A planning. The issue is to ensure that you look forward and
on planning and generating real-time forecasts.
vendors’ (Anderson et al 2022). tie this with the strategy. But for my businesses that are
getting a bit further up the chain, not quite medium size The role of the centre includes normalising the non-
The advantages of an xP&A solution are summarised in yet, but you soon hit your restrictions in the capability of financial data from different operational systems, inclusive
Figure 2.7. the software available’. of sales, procurement and CRM, and automation of forecast
However, the xP&A market is only really developed for updates. The data needs to form an integral part of the
The view of integrated data and systems can be matched by
larger organisations with some developments starting to forecasting and planning models and allow real-time
creating a centre of expertise in planning and forecasting.
happen in the mid-tier. Although some smaller entities updates of forecasts. Only in this manner can a variety of
plausible what-if scenarios be considered in advance.
At the same time, such a centre must collaborate with

FIGURE 2.7: Advantages of an xP&A solution all aspects of the business and generate an operational
plan supporting the most likely scenarios. Only through
adopting an agile approach to budgeting and forecasting
can the business anticipate changes in direction by
switching to an appropriate off-the-shelf scenario – one
Automated Improved representing the closest match to the prevailing headwinds
Single source Real time, Changing continuous Full business Thinking beyond governance and of the economy. The switch to another scenario is best
of the truth holistic, visibility business demands planning alignment chart of accounts risk management
preceded by providing an information briefing to decision
makers. Finance teams operating without such an approach
to planning are prone to making reactive decisions,
mistakes in strategy and errors in operations.
xP&A REPRESENTS A PIVOT OF FINANCIAL PLANNING.
MOVING WELL BEYOND THE USE OF CORPORATE FINANCIAL Such a centre, of course, may not be a physical department:
DATA FOR PLANNING, xP&A FOCUSES ON CONNECTING rather, it can be a virtual construct of expertise upon which
other teams, such as crisis management teams, can call
FINANCIAL DATA WITH OPERATIONS.
upon when required.
28
Enabling planning and performance

Today’s CFOs are faced with a complex, constantly changing business environment in which their business units are demanding to be supported by a finance
organisation that unlocks insight efficiently and drives business decision making and performance. As demand in evolving markets reignites and economies
manage the outcomes of the Covid pandemic, the finance function can help the business navigate new opportunities. Volatile global complexity, unpredictable
currency fluctuations, shifting and new business models requires finance to leverage cross-functional and commercial acumen to support critical business
decisions and serve in a true integrated planning (xP&A) capacity. Ability to navigate high volumes of data are needed to unlock insights for quick decisions,
including scenario modelling for strategic pricing and new product development. In addition, greater financial transparency and control is required as regulations
shepherd new controls and requirements (such as ESG).
It is no longer practical to operate in the status quo. at the cost of idealism. For those activities that cannot be cross-teams collaboration by breaking down organisational
Finance organisations must transform from a reporting immediately automated on a short time horizon, explore how silos and team boundaries.
and ‘descriptive’ function into one that provides cohesive, outsourcing or shifting repetitive tasks to a shared service
forward-looking insights around value creation. Finance centre may produce results more quickly. xP&A enabled by technology and data
can support commercial and strategic decision making to The substantial growth in technology solutions opens up new
drive growth by pivoting to xP&A and becoming a valuable Business partnering and culture play an important role in the and exciting possibilities for organisations as they streamline
and trusted business partner. Our last PwC Pulse (Dhar and planning and performance management operating model. their xP&A capabilities. In an ever-changing environment, an
Lapierre 2022) survey revealed CFO’s top performance integrated technology and data framework serves as a key
Business partnering skills by finance team – Too often it is
management priorities are: enabler for xP&A. This framework demands agile processes,
assumed that workforce and talent development will happen
well-structured data, and leading digital solutions.
1. building predictive forecast and modelling capabilities, inherently, as a by-product of finance transformation without
2. automating processes using intelligent automation, and explicit intentional programs to upskill or hire the right Agile process and technology platform – Recent market
people. Finance and technical acumen are now table stakes. instability has highlighted the importance of dynamic and
3. establishing finance as a partner to the business.
Finance leaders need to invest in their teams to develop agile xP&A processes. This uncertainty has created a shift in
In order to support this CFO agenda, the anatomy of the strong ‘soft’ skills such as business acumen, communication, the focus of finance, highlighting the need for regular views
future business partner is changing. The foundational and leadership, in addition to ‘hard’ technical skills such as of future performance. This focus on short-term business
elements of people and technology have become more technology and data analysis. Business partnering requires outlooks and metrics has prompted organisations to move
important than ever. data savviness and insight, but also the human element from periodic forecasts to weekly (and even daily) forecasts.
of understanding the business and building relationships A finance process backed by manual workarounds will find it
xP&A enabled by people across the enterprise. Establishing upskilling programs and challenging to produce such forecasts timely and accurately.
Fundamental shifts in the way finance organisations operate, learning and development opportunities is often overlooked, Time will be spent purely on producing the numbers instead
will help position FP&A to be a true business partner. but monumentally supports both business performance, of stepping up as a valuable partner during this crucial
This includes shifts to the operating model, roles and as well as employee retention. The most successful finance period. Current day technology and analytical solutions can
responsibilities, the skillsets demanded of finance professionals, organisations instil a ‘growth mindset’ that permeates across now enable an agile finance team.
and the culture of the organisation (including beyond finance). the organisation and down to individuals.
Data and analytics – The pandemic has created a ‘new
The operating model must enable optimal allocation of Culture – Building on the heels of people development, normal’ and the need for an insightful forward-looking xP&A
time and resources to support the FP&A agenda. One of finance must also evolve to a culture of collaboration across data framework is higher than ever. Finance can start by
the fundamental requirements, and biggest challenges, the enterprise. Both finance and non-finance function teams partnering with business leaders to frame critical business
of serving as a good business partner, is freeing time for can collaborate to design an integrated finance function questions that need to be addressed. Leading organisations
more of the ‘A’ in xP&A. Finance organisations can assess that will better serve its purpose. This includes moving away build a data framework that utilises both financial and
two key levers to enable an effective operating model: from an ‘information is power’ mindset, to recognising that operational data to answer these questions, tapping into
automation and outsourcing. Often organisations wait too sharing, not hoarding, information such as performance some more traditional sources of information (eg ERP) as
long for automation, which sacrifices transformation progress metrics creates greater benefit for the business. Facilitate well as newer sources (eg CRM, Operations Systems, Supply
29
Chain) to gain additional insights into their data. As the Further, advanced finance functions are increasingly So, what should I do?
technology landscape expands and capabilities continue leveraging Cloud-based hyperscale solutions to
to grow around both predictive and prescriptive analytics, complement their baseline EPM system. These platforms ✓ Ensure that there is sufficient understanding
availability and access to data becomes foundational for how can help amplify finance’s ability to serve as a true of the conflicting pressures on the business
we can derive value from this information. This allows the integrated business partner, as their potential is not limited model to enable a robust sensitivity analysis can
conversation to change from ‘What Happened?’ to ‘What by system performance due to data or analytics limitations. be undertaken.
Will Happen?’, and eventually ‘What Should Be Done?’ This opens the door for much more robust reporting and ✓ Refine the planning process to ensure that it is
insight, more advanced analytics (including predictive sufficiently agile to enable the organisation to
Digitalisation – Digitalisation is a final important foundation forecasting), and more holistic business intelligence. respond to the economic uncertainties.
for enabling organisations’ agility and strengthening their
xP&A capabilities. From The Digital CFO study (PwC and 3. Artificial Intelligence (AI) and Machine Learning (ML) ✓ Create a strong link to the risk-management
WHU – Otto Beisheim School of Management (2022)), as the game-changer function / risk assessments and develop an
organisations’ finance functions have achieved moderate From the study (ibid), most CFOs see a high potential for the understanding of the early warning signs that
levels of digitalisation in recent years, but there is potential future use of AI and ML in budget planning. However, only risks may be crystalising.
for deeper transformation in most cases where the average about one-third of them indicate that their firms are likely
✓ Look closely at the data model to ensure
response of the CFOs on the 7-point-scale was 4.50 (firm-level to apply AI in the next two years, and only 5% of the CFOs
development of a more integrated and
digitalisation) and 4.53 (finance function digitalisation) (ibid). indicate that they plan to use it ‘very extensively’ (ibid).
collaborative view of planning, which is necessary
The use of digital technologies can be split into: This is not surprising, given the current state appreciation to support the dynamic operating environment.
of how AI can be effectively used in the finance function
1. Dashboarding as a catalyst ✓ Consider the risk of data availability bias in
is relatively nascent. Data is the critical enabler. To fully
‘Digital management reporting / dashboarding’ is currently formulating integrated plans.
leverage AI or ML, organisations need to use data science
the only technology that is widely applied in practice to make sense of its historical data under the ‘new normal’ ✓ Ensure that an appropriate set of planning tools is
according to the study (ibid). to be used to predict the future and prepare the business. included within the overall systems architecture,
This facilitates a move towards self-service reporting and Majority of finance functions tasks today are based on using xP&A capabilities where appropriate.
an excellent opportunity for finance to up-value its rules and regulations which can be easily standardised and
✓ In developing an integrated view of planning,
relationship with management, that is move away automated. Will CFOs become mere administrators of
consider how resources can be mobilised to
from producing profit and loss statements and toward automated processes, or will digitisation add importance to
create a responsive planning infrastructure for
management information and management reporting that the CFO role and finance functions?
the organisation.
is rich in analytics and insight. Many CFOs seem confident that their functions are on
the right trajectory. However, their confidence may not
2. Single enterprise performance management and
necessarily be reflected in their budgets for finance
analytics platform as the enabler
innovation. This leaves us to wonder – will finance move
Enterprise Performance Management, is traditionally,
quickly enough?
at best, a fragmented portfolio of applications stitched
together by spreadsheets, or even solely using spreadsheets.
While it may have worked previously, such solutions are not
really designed to help organisations (especially large or
complex ones) excel in this new post-pandemic environment.
A new dynamic single xP&A structure that is fit for the
future would enable businesses to house and leverage
varied data sources and processes that are strong and Daryl Wang, Managing Mu Hassan, partner,
common across the business. Director, PwC, Singapore PwC, US
30
PLANNING AND PERFORMANCE MANAGEMENT PARADIGM | 3. A BROADER VIEW OF PERFORMANCE
3. A broader view of
performance
‘We have got to look for the right performance

indicators within our business to ensure that we
are planning for the right numbers, and that those
numbers do not drive outcomes that we don’t want’.
Australia-based roundtable participant
31
3.1 The future not the past If organisations are to have a broader review of
performance, as indicated by the responses in Figure
The future success of organisations in the turbulent times
2.2, to what extent do the respondents feel that their
of 2022 and the coming years may well be defined by those
organisations consider the broader objectives? Looking
who are able to manage the risks effectively and to plan
at the results beyond the traditional financial objectives
accordingly. Being rearward looking or having a ‘fixed’ view
(Figure 3.1), 44% felt that they included organisational
of the future which is appraised in an annual cycle will not
purposes while only 24% currently included sustainability
help organisations to survive.
and social factors. The reassuring response was that a
Organisations are increasingly being assessed upon a significant proportion, 57%, of the respondents claimed
broader view of their performance. This can be from the that they were considered, to some extent.
perspective of their contribution to society as considered
It is important that finance leaders recognise this broader
in their published purpose. The pandemic highlighted that
view of performance. For 2022 and 2023 the clear imperative
many consumers and investors are increasingly expecting
for many organisations will be liquidity as the global
organisations to ‘do the right thing’ and not to act with a
economy adjusts to the new realities of energy pricing and
focus on profitability alone. As the economic pressures start
other constraints. The balance between operational and
to build, so performance is being assessed through how
capital expenditure, especially as it relates to addressing the
organisations respond to the challenges of their customers,
ESG and net zero agendas, will be challenging to maintain.
suppliers and workforce.
FIGURE 3.1: To what extent do you feel that your organisation considers the following objectives in its
forecasting processes? (n = 2,884)
A great deal To some extent Not at all Don’t know Not applicable
100%
7%
22% 15%
80%
45%
60%
57%
40% 75%
20% 44%
24%
0%
Financial objectives Organisational purpose Non-financial objectives, such as
sustainability and social factors
32
3.2 A view of stakeholder capitalism is going to have to be linked to ESG and, if they are going
to be able to do the reporting to comply with those new
The view of performance increasingly includes the ESG
standards that come out, it will present issues for larger and
agenda. As standard setters and regulators are focusing
mid-tier organisations’.
on requiring organisations to report on climate and other
related issues, so the need to include these in the planning Extending the analysis from the question in Figure 3.1,
and performance cycle is increasingly important. It is in the question illustrated in Figure 3.2 the respondents
clear that organisations will continue to need to invest in were asked to consider whether the ESG components
addressing net zero commitments. Consumer demands were part of the current forecasting process or would be in
are also likely to change as disposable income becomes three to five years. The results show a clear trend to more
constrained and those who are able seek energy resilience incorporation of these components, with 59% saying that
through green investment. they would be either fully or partially integrated in this
medium term.
In the view of one Republic of Ireland-based roundtable
participant: ‘the whole budgeting process is going to A finance leader commented, ‘I think [for us] as accountants,
need to take into consideration metrics around ESG… while we may be involved in those areas of business, it’s very
and [firms are] going to have to report on that’. The rare that [ESG] actually comes into a planning process’.
participant continued that it is: ‘going to have to be part
of the planning process, the budgeting process, how they Bringing ESG into the planning process is essential and
are projecting and forecasting to spend money. Revenue requires the development of an integrated planning process.
FIGURE 3.2: To what extent is forecasting of environmental, social and governance (ESG) components either seen
now, or do you expect to be seen in the medium-term (the next three to five years), as an integral part of the
(financial) planning and performance process (n = 2,884)
Now (short term) In Medium-term
40%
36%
30%
30%
24%
23%
20%
19%
18%
16%
10% 11%
9%
7%
3% 3%
0%
Fully integral Partially integral Primarily on an Not integral Don't know Not applicable
ad hoc basis
33
Building ESG into the planning process

Historically, corporations around the world have published reports on sustainability as part of their corporate and social responsibility initiatives and specific
regulatory filings. With the immediate problems such as climate change and growing inequalities in front of us, it is time to act – and businesses should lead the
way. In various jurisdictions and driven by regulators, the pressure on corporations to report on ESG parameters is increasing. The performance-management
teams (FP&A) in businesses are pivotal in this journey as they are the ones who prepare and analyse the business plans and integrate with other functions to
understand the risks and opportunities in order to inform stakeholders, including investors. It is important for the FP&A teams to understand where to start on
ESG and how best to partner with other parts of the organisation. Here are five considerations for building ESG into planning process,
1. Identifying the ‘applicable and acceptable’ see changes. Performance-management teams should also data aggregation in a timely manner, followed by intelligent
Standard be prepared for more demand for KPIs on ESG from wider analysis, insight generation and wider internal and external
The world of FP&A looks into strategic and future years’ stakeholders in the coming years. reporting. While they may also be involved in liaising with
business plans for an enterprise and hence is ideally placed external ESG-rating agencies as part of their business
to embrace the challenge of incorporating the ESG metrics 3. Wider business partnering and sourcing the partnering role, FP&A teams need to make sure that
in its outer years reporting. While there is demand for ESG right data corresponding targets are communicated to the data stewards
information from multiple areas, it is crucial for the FP&A One of the leading roles of the FP&A teams is business of ESG within the different functions in their organisation.
teams to recognise what is important for the firm, its wider partnering with wider functions in an organisation. It must be
stakeholders (employees, customers, community) and what recognised that ESG is an overall organisational imperative 4. Technology as an enabler
is acceptable to the investors and regulators. ESG can and not specific to a particular department. Hence, sourcing FP&A teams generally rely on modelling and analytics tools,
present a challenge of multiple standards and frameworks the right data from the right place is critical to ensure quality which can also provide a great platform for ESG reporting.
to choose from (ISSB, TCFD, GRI, CDP, ESRS, CSRD etc) in reporting. In instances where FP&A still operates with spreadsheets,
as it is still evolving and has a jurisdiction-specific flavour. this is a good opportunity to consider an ESG-integrated
For example: FP&A tool for your organisation. There is the option of using
FP&A business partners will have to think of what is most
appropriate and applicable for their businesses – this can be n the ‘E’ (environmental) aspect of ESG, relating to niche tools for ESG reporting, such as Normative, Workiva
done by checking with industry peers and taking a view of emissions, energy consumption, product life cycle, etc, or Moody’s, or those from more traditional providers such as
what standards are mandated and hence acceptable to their would be in the domain of the product/manufacturing or SAP, Oracle or Microsoft. The traditional platform providers
regulators or reporting authorities. supply chain functions are also investing heavily in ESG capabilities, not just for
reporting, but also for data capture and calculations, such as
2. Evolving the necessary KPIs in line with n the ‘S’ (social) aspect of ESG in talent development, an ESG ledger, sustainability Cloud and emissions calculator.
stakeholder demand diversity, inclusion, social mobility, impact on local When ESG metrics are integrated into enterprise operations
There are Regulator-prescribed KPIs in various jurisdictions community, etc, would be managed within the HR metrics leveraging the breadth of technology platforms (HR, supply
as well as Industry-specific KPIs in some of the disclosure n the ‘G’ (governance) aspect of ESG, relating to internal chain, manufacturing, finance, controls), data is readily
standards (eg ISSB). The CEO, CFO and/or CSO (chief risks and opportunities, corporate governance and crisis available for consumption and analysis by FP&A tools –
sustainability officer) will have to provide perspectives in management, lie within the risk or group functions remit. thereby helping drive ESG goals in an integrated manner.
analyst or shareholder briefings about these KPIs, their
financial materiality and the plans to manage the associated There is a need to source data from all parts of business to 5. Solution scalability and reskilling
material risks and opportunities in the future through the cater to the demand for information – FP&A teams will need The ESG landscape is still evolving. The continuing
business plan. The data that is being reported will have to to assess the feasibility of gathering this data from different standardisation initiatives and changes to investor and
cater to these demands, but FP&A teams should be careful parts of the enterprise through their partnering function. jurisdictional priorities will affect the requirements for ESG
not to expend an enormous effort to collect and collate analysis and reporting. The standards and frameworks will
this data, as they are not the primary ESG data stewards. It is also important for FP&A teams to recognise that they continue to evolve and KPI calculations may change. FP&A
Note that as the Standards keep evolving, the KPIs too will are not the primary data generators for ESG: their function is teams will have to recognise this and be the first ones to
34
In an article published in January 2022, Hunt notes that A qualified accountant CEO in the banking sector
help their businesses understand the forthcoming ‘Stakeholder capitalism’7 is the buzzword du jour for commented: ‘part of my current planning process is that
and evolving changes. Those creating the application business practices that strive to achieve more than profits I must assess the impact of my plans on all stakeholders.
for ESG data capture, aggregation and reporting must and a high stock price’ (Hunt 2022). The concept serves, There is no formal part of my planning where I would not
also recognise the scalability challenge in its design. however, to illustrate the shift in planning that organisations get away with the shareholder projections. And that is
The ever-evolving landscape of ESG also presents a need to consider as the broader view of performance easy for us. But now you must model and speak about all
reskilling challenge for finance professionals. They will becomes accepted. your stakeholders, and what the impact will be on each
need to keep themselves abreast of these changes one and to each other. I must provide some sort of
to effectively inform the right decision-making for For many organisations this represents a shift from a purely commentary on that, which is proving to be much more
their businesses. short-term focus to a longer-term view of performance difficult. My finance teams are struggling to populate,
for the benefit of a broader range of stakeholders. In the discuss and come up with ways to quantify those new
ESG is a highly dynamic topic with multiple standards
economically challenged times of the early 2020s finance metrics, which makes them feel a little bit unprepared so
and frameworks at different maturity levels, with
leaders may well be troubled by the balance of short-term if I add to that the evaluation of the company’s impact on
evolving regulatory and jurisdictional nuances. Given
that the FP&A function is forward looking in any survival against longer-term investment priorities, such as the environment from a quantitative standpoint there is a
enterprise, there is no time to wait till a final standard the need to achieve net zero targets. As Hunt notes: lot of work being done’.
is published before taking the first step. Countries
and regulators are quickly imposing mandatory
ESG reporting (for example, Canada in 2024, UK in ‘Eighty percent of CFOs tell us in surveys that they would reduce discretionary spending on potentially high-NPV [net
2024/25) and hence it’s high time to consider and present value] activities like R&D and marketing to achieve short-term earnings targets. They are literally sacrificing the
include this in the strategic planning, budgeting and long term for the short term. Yet research shows companies that think long-term – meaning five to seven years ahead –
forecasting processes. substantially outperform, achieving 47 percent higher revenue growth over a 15-year period, for example’ (Hunt 2022).
FIGURE 3.3: Evolution of stakeholder capitalism

George Abraham, Director,
PwC, UK
Shareholder Capitalism Sustainability Stakeholder Capitalism
Shareholder centricity Sustainability = value Stakeholder centricity
Integration of sustainability
Planning, creation and
Maximisation of economic to achieve long-term
distribution of long-term
and financial value for the sustainable financial value
sustainable value for the
benefit of shareholders for shareholders and
benefit of shareholders
addressing value for all
7 The concept of Stakeholder Capitalism was first promoted by Bearle and Means in 1932 (updated as Bearle and Means 2017). The concept has been placed in the context of the 21st century by Schwab (2021).
35
3.3 Integrated business planning and By taking this more integrated view there is a greater ability (IFRS Foundation n.d. a). This concept builds upon the
connected planning to focus upon the risks and the constraining factors in times model of six capitals – the appropriateness of which for the
of turbulence. finance community was explored in ACCA / PwC 2020.
The broader view of performance requires organisations to
develop an integrated planning process. Figure 3.4 provides Integrated business planning inter-connects multiple Above all, integrated planning is a culture. Many of the
an overview of an integrated business planning model. At applications in the planning process, of which the xP&A roundtable participants highlighted the importance of
the core are the customer, operational and stakeholder tool is a key component. It is typically, although not totally, an integrated planning culture in organisations as a key
components, which are closely integrated with the financial a Cloud-based solution which is developed around best of component of the future planning and performance model.
model. Supporting these are the functions that provide breed applications. xP&A is the evolving component. It is only through a collaborative culture, one which is led
the product that the sales and operational teams support. effectively from the top, that true integrated planning can
Linking these procurement functions to the sales plans is The adoption of such a model promotes the concept of take place.
vital and will be discussed further in the next section. integrated thinking.8 This is ‘integrated decision making
and actions that consider the creation, preservation or For many organisations there is a journey towards
erosion of value over the short, medium and long term’ integrated business planning as shown in Figure 3.5.
FIGURE 3.4: Integrated business planning
Customer demand FIGURE 3.5: Integrated business planning maturity model

Supplier management
Plan
Human capital
• Integrated multi-capital
Inventory planning
Optimise
Respond
Sales and Operations • Strong link to risk management

• S&OP and finance planning • What-if and scenario modelling
integrated into one techniques used
planning process
• Stable sales and • Strong link to strategic
Integrated • Data governance in place decision making focused on
Demand
operational (S&OP)
Supply
• Predictive analytics utilised to organisational purpose

business • Low confidence in basic planning process
drive strategic decision making
demand and supply planning • Operational and financial • Ability to rapidly respond to
planning planning processes • Self-service reporting and changing circumstances
• Little or no finance integration
remain disconnected modelling for key stakeholders • Organisation wide view of
Anticipate
• Basic reporting to
Simulate
• Financial focus to • Focus on value and purpose performance management

stakeholders
performance not just financial return • Data lake in place
Finance • Data siloed
Manufacturing
Ad hoc Capable Data driven Continuously improving
Collaborate
Data and technology
8 An overview of integrated thinking and the relevance to the profession is provided in ACCA (2021).
36
This maturity model (Figure 3.5) comprises steps and stages 3.4 Supply chains 3.5 Working capital management
built on an original set of hypotheses providing a view of
In a model of integrated planning, the resourcing of Many roundtable participants commented that planning
how planning and forecasting might change in the future,
materials is an essential lever in the plan. The years 2021 and is increasingly focusing on working capital management.
from a very traditional view of planning and forecasting to
2022 have seen significant disruption to supply chains across Liquidity is key for organisations in times of turbulence.
something more integrated. At one end of the range is the
many industries.9 With ever-changing delivery schedules, Having a clear understanding of the levers of working
low-confidence ad hoc model: a very basic unsophisticated
organisations have found their production constrained. capital is becoming essential. While some of the
demand-and-supply planning process. Moving through the
principles of just-in-time systems have been challenged
‘Capable’ step, the next stage is a data-driven step with While much of the conversation has been about component by the pandemic, with potential decreases in consumers’
a more continuously innovative side and a broader sense supply chains, human capital has also become constrained disposable incomes, so the management of working capital
of purpose. Using a lot more ‘what if’ scenario-modelling and the availability of labour has become a key issue. will become key.
techniques, this stage is starting to be more dynamic and
flexible, with tool use across the organisation. This stage Bringing accurate forecasting of supplies into the plan and With economic uncertainty and a move to investing in
sits at the heart of the data structure, the organisation itself. forecast has become essential. The use of technologies such net zero commands a lot of emphasis on working capital
as control towers, which create visibility across the value and free cash flows rather than revenue. For example,
A CFO commented, ‘looking at the potential maturity chain, is an important next step in developing an integrated raw materials purchase might take up significant working
model I think that it is the journey that I have seen during planning model. With the intensifying focus on disclosures capital to counter anticipated future higher prices of these
my career, having started [very much from an] operational across the value chains in organisations, awareness not materials. ‘The pendulum has swung to very many cash-
level and … moving upward to the managerial levels. Some only of financial but also of non-financial metrics, such centric forecasting rather than a traditional profit and loss
of the transformation projects in my company are aiming as carbon emissions and employment data, means that balance sheet type approach, cash is king then working
for this kind of maturity model – the continuously improving planning needs to embrace some of the key issues for this capital is queen’ (Xenia 2021).
model, in the end’. evolving reporting requirement. The ability to monitor and
report upon Scope 3 emissions,10 as they are termed, is a
The term ‘connected planning’ can be taken to mean
requirement of most proposed standards. Embracing data
shifting from planning based upon data consolidation to
transparency across the value chain is essential.
a more risk-focused assessment of future opportunities.
Like integrated business planning, and the continuously All this is also a key step, as highlighted in the roundtables,
improving state in the maturity model (Figure 3.5), it in focusing the planning process on working capital.
focuses on decision-making in real time, with full and
transparent access.
9 ACCA / IMA / CIPS (2022) considers the role of finance professionals in supply chains. It also discusses the use of control towers to improve awareness of data flows.
10 Scope 3 emissions are the result of activities from assets not owned or controlled by the reporting organisation, but that the organisation indirectly affects in its value chain. Scope 3 emissions include all sources not within an organisation’s scope 1 and 2 boundary.
37
Cash & Working Capital management have now become critical to performance management
As economic turbulence mounts and liquidity becomes harder and more expensive to secure, the focus of planning and performance management needs to adjust
to these critical drivers. This makes it more important than ever to sharpen the focus on cash flow management and drive working capital optimisation when
setting performance priorities.
PwC’s Working Capital Study (Windaus and Brady 2022) n Improving the cash culture and awareness across other risks. Post-risk management Risk and Finance teams
showed how working capital and supply chains were slow to the business. are increasingly looking to automated solutions for high-
react to external shocks during the pandemic, though they risk customer identification, continuous monitoring, and
did subsequently begin to recover. In this year’s analysis of Controlling forward stocking decisions identification of proper timing of debt collection.
the largest 18,000 global corporations, working capital ratios Inventory performance has been remarkably steady when
show some signs of recovery. But, when we dig into the looking at overall trend numbers at consolidated level. Improving the cash culture and awareness across
details, there are still some worrying trends and untapped However, this is likely to have been masked by the fact that the the business
opportunities to boost capital efficiency. Overall, we believe continued disruption in supply chains is leading to shortages of Quarterly performance actually shows that the most
there is likely to be €1.49 tn of excess working capital some materials, as well as panic overstocking of others. More consistent trend since the shocks of early 2020 is a steady
currently on companies’ balance sheets. and more businesses have adopted a ‘just-in-case’ approach climb in nominal working capital. So, companies need more
to bolster resilience, which is likely to have negative impacts cash to continue to operate. NWC days have fluctuated by 6.5
The macroeconomic headwinds heighten the pressure on on working capital. Looking ahead, leading organizations now days (17%) over the two-year period and have experienced a
managing working capital more actively. Economic growth has need to be more analytic when planning forward inventory further 3.4 day increase more recently. A key driver has been
been sluggish and the slowdown looks set to continue, which commitments. Pro-actively tempering the recent ‘just in case’ a mindset dominated by cheap and plentiful liquidity,
will filter through to changes in demand and supply chain inventory is key, as the pain of supply chain disruption coupled enabling a focus to manage disruption. Now that this
requirements. Further, inflationary pressures are intensifying with forward revenue ambitions risk draining cash flow as well paradigm has changed, a shift in mindset and culture has to
and are likely to continue for the next two years. Adding to this, as potentially increase the risks of obsolescence write-off. follow. Many leading organizations are now actively
interest rates are increasing in most major economies. Forward addressing how to establish a cash culture across functions,
signals from the Federal Reserve, the ECB and the Bank of Preparing for a deteriorating payment morale not just in finance. Moreover, establishing a cash culture needs
England all show a clear upwards trend. As a result, funding The main source of improvement in working capital has to cover a range of dimensions, including a clear transparency
and working capital will come at a higher price. Not only is been closer management of customer receivables. This on performance data, changes in policies to adjust the
there an impact on the cost of capital, but the availability of is to be expected given the pressure on payment morale operational ‘rules of the road’, as well as clear ac cascading
liquidity is also changing. Early warning signs can be seen in during the pandemic. Slow and delinquent payments, as targets around working capital throughout the business.
the leveraged loan and high yield bond markets, where new well as payment plans were a common theme over the last
issuance has dropped significantly and costs have risen. two years and laid bare gaps in credit collection processes. Addressing these areas are critical to strengthening operational
Looking ahead, the headwinds on energy costs, interest rate resilience and steering though the turbulence ahead, and
The current economic and geopolitical challenges will rises and demand volatility is likely to increase financial stress therefore need to become a key part of the planning and
continue to weigh on net working capital (NWC) performance across sectors. Proactive management of credit terms and performance management process going forward.
and also make forward planning more challenging. As receivables overdues is becoming a key theme for planning.
businesses come up against a combination of sluggish
economic growth and increasing cost pressures, maintaining a Detecting and managing credit risk is complicated during
healthy level of working capital will become even more crucial. the most benign economic periods and is even more so in
Uncertainties over supply chains mean that determining the the current unstable economic environment. Increasingly,
right level of working capital will be increasingly important we are seeing Finance working with Risk teams to address
and even more complex. Looking ahead forward, leading these challenges. Pre-risk management, this involves system-
companies are focusing particularly on three areas: driven automatic customer categorization using external and
internal financial and non-financial information via system Daniel Windaus, Belinda Zhang,
n Controlling forward stocking decisions,
interfaces. Risk management adopts the risk monitoring partner, Working Capital partner, PwC mainland China
n Preparing for a deteriorating payment morale, dashboard technology for an overview of the credit and Optimisation, PwC, UK
38
3.6 Stakeholder expectations

The range of stakeholders who require insight into the FP&A in GBS – Getting into the Deep End
future plans and stability of organisations is increasing.
Global operating model and recent trends for FP&A Increasingly, mature GBS organisations are getting
The interested stakeholder groups are no longer just
Shared Service Centres, now evolving as Global Business involved in the end-to-end process – annual planning,
the providers of capital or internal leadership. Rather,
Services (GBS) have been a widely accepted operating opex target setting, forecasting and budget management
as performance becomes more broadly defined, the for specific P&L items. For example, the GBS of one
model to drive efficiency in finance operations. The impact
stakeholder groups are also becoming broader. There is global FMCG giant we have worked with not only gets
of GBS is well established in ‘transactional finance’ areas.
pressure to give fact-based explanations of the impact of involved in technology cost targets / budget setting, but
However, migration of FP&A into GBS has been slow
key decisions. and sporadic because it is often considered to be the also does rigorous scrutiny of cost/benefits. The GBS team
strategic part of finance, which is too important and too also handles contract negotiation of technology service
The role of the stakeholder leads to an interesting discussion
collaborative to be delivered from offshore. provider to deliver savings targets. Additionally, they
when considering boards. Whether they are progressive or deliver various transformation and automation projects to
not, lending institutions are still requiring annual forecast However, the addition of FP&A services to GBS is on the bring costs down.
cash flows when the dynamics are often more fluid. rise due to a number of factors:
Mature GBS organisations have also significantly improved
The business plan is not just an internal tool. Rather, it is the n GBS organisations are successfully demonstrating their the FP&A process in the enterprises they serve. GBS are
basis of a range of external engagements. Achievement, ability to deliver complex processes. in the forefront of driving standard management reporting
or otherwise, of any plan requires justification on many n Post Covid, there is wider acceptance of collaborative system and framework across the enterprise. The GBS of
levels. Finance professionals need to ensure that they have multi-shore working one large engineering and technology company is the hub
sufficiently robust integrated plans to be able to articulate for management reporting and business analytics for all its
outcomes clearly. A projected P&L and balance sheet are n The rise of digital analytics tools (including low- / no- strategic business groups, and it also chairs cross functional
no longer sufficient. code ones) data analytics council covering six different functions.
n Greater adoption of Cloud ERP and enterprise data
FP&A services also evolved into creation of more inclusive
architecture. GBS is at the centre of it and widely seen
analytics COEs, combining analytics for multiple functions,
as the go to place for the single source of the truth.
and providing it ‘as-a-service’. Digital platforms have
Rise of offshore FP&A GBS Services significantly enabled the GBS to deliver productivity as
In recent years, we have begun to see signs of a strategic well as improve forecast accuracy. The GBS of a Food
shift in GBS capability for FP&A services. The move up and Beverages company focuses on Digital Management
the value chain from transactional finance started with reporting (using Tableau), Integrated Digital Planning (using
performance reporting, that is, gathering data from IBM Planning Analytics powered by TM1) and Predictive
various system for reports that contain key financials. Analytics (leveraging AI and machine learning).
These reports generally contain reconciliations, evidence,
Focus on FP&A and analytics has further led to the GBS
and key controls. Gradually this move continued into
taking lead in enterprise-wide Master Data Management
the P&L, balance sheet and cash flow forecasting. As
processes covering customer, product, vendor masters and
understanding is established, GBS has moved into strategic
stewardship of the finance data governance process.
aspects of cost and performance management. Not only
do they track, report and forecast – they take ownership A lot of untapped potential still
of managing cost and performance, as well as driving A recent ACCA survey of GBS organisations, completed
transformation projects designed to increase the efficiency with the help of PwC, (ACCA 2022) shows 55% have yet
and effectiveness of these processes onshore and offshore to take on any FP&A work within the GBS. An earlier PwC
and to improve the connectivity between the two.
39
survey (Suska et al 2021) found that, of those who are n Building new capabilities by drawing talent from a So, what should I do?
servicing FP&A from GBS, only 23% have sent more wider range of industries and skill sets, for example
than 50% of their processes. data scientists and analytics experts) ✓ Define a broader view of performance that
embraces purpose, people and profit and ensure
n Around a quarter of respondents plan to add more n Collaborating with consulting partners to set up that the planning process is aligned to this.
FP&A in future (highest among all support functions technical / digital capability and infuse functional /
and processes) process expertise ✓ Ensure that those working on planning and
partnering activities have a detailed understanding
n Over 30% of respondents are performing business n Leveraging business knowledge from existing onshore of the levers in the operating model.
analytics and Finance business partnering within teams and infusing that within GBS for initial set up
their GBS operations. ✓ Ensure that the relevant metrics of non-financial
n Investing in training and development for people with information are included in the planning process,
So the direction of travel is clear but while adoption a flair for the role. including sustainability and social components.
and coverage of services is rising, a few areas will still
Hiring the right talent is important and should follow ✓ Look to integrate data across the value chain to
be outside the purview of GBS, until GBS organisations
different norms, giving justice to the nature of the work. facilitate agility in the planning process.
develop new capabilities and new ‘ways of working’
Since this work is far more collaborative, building trust and
evolve. Areas such as strategic planning, a significant ✓ Assess your current and aspirational states against
confidence between onshore and GBS teams is also critical.
and increasingly important part of finance’s remit are the integrated planning maturity model (Figure 3.5).
When a leading multinational consumer credit reporting
high effort activities and require extensive onshore /
company created a FP&A GBS, it ensured that the GBS ✓ Implement a culture of integrated planning and
offshore collaboration and as a result they remain largely
team is seen and treated as the extension of onshore teams. collaboration around the process.
uncovered by GBS.
Overall, exciting days are ahead for FP&A work in the GBS. ✓ Focus planning activities on cash and working
Creating FP&A capability in the GBS capital management.
This is a great way in which GBS organisations are creating
The nature of FP&A activities require different skill sets
enterprise-wide value. Both the GBS organisations and ✓ Ensure that the range of stakeholder expectations
to those needed for transactional processing. Deeper
enterprises are acknowledging the fact and latching on to of the planning process are addressed.
business and industry understanding is critical. An ability
the opportunity.
to explore the data you are presented with, consider
new data sources and drive insight using a range of
digital tools, and collaboration and stakeholder front
facing skills are necessary too. While technical skills are
now widespread, business/industry acumen needs
development and the gaps that sometimes exist
between shared service operations and the front-line
business need to be closed. For both initial set up and
rapid scaling of the FP&A capabilities, GBS organisations Gaurav Agarwal, Sambit Panda, Director –
are taking the following route: partner, PwC, India Management Consulting, India
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PLANNING AND PERFORMANCE MANAGEMENT PARADIGM | 4. ROLE OF FINANCE IN BROADER PLANNING AND PERFORMANCE
4. Role of finance in broader

planning and performance
‘I think the key to key to any planning in the future

is going to be agility’. CFO based in India
41
4.1 An overview – our hypotheses At one level, finance now has to maintain a strategic point activities across an organisation, eight hypotheses were
of view on the UN Sustainable Development Goals (SDGs), defined. These are summarised in Figure 4.1. These were
Organisations and finance teams must think about the
net zero, diversity and inclusion, and tie these strategic discussed with the roundtable and interview participants as
role of finance in business and ask whether finance is the
imperatives into planning and processes cascading into well as being evaluated by the survey respondents.
planning function and supporting the entire organisation.
company and team objectives. Finance as a business
What is the rationale for this now? The role of finance is The hypotheses are as follows.
partner has a natural role in communicating the planning,
morphing into business partnering enabled by technology.
budgeting and performance management processes and n Purpose focused – that planning and performance
As purveyors of the business case, the finance teams
helping the business and teams to understand how to activities would be driven by organisational strategy and
are turning attention to the very technology of business
navigate the journey through uncertainty. purpose, not just financial performance, and embrace
intelligence and predictive analytics. Applying this
technology to the data available to finance, including ESG parameters.
To support the definition of the role that finance can, and
operational teams, places finance in the driving seat for should, play in the broader planning and performance n Net zero – that the activities would include
organisation-wide planning and processes. organisational objectives towards net zero and
biodiversity as part of the planning process.
n Continuous and adaptive – that planning and
FIGURE 4.1: Hypotheses performance are a continuous and flexible activity that
can accommodate both short- and longer-term changes
in forecasting parameters.
Driven by organisational strategy and Uses big data and machine learning
Purpose Technology
focused
purpose not just financial performance
enabled
(xP&A) to drive insights that are n Financial and operational – that the activities include
and embraces ESG parameters based upon a predictive analysis both financial and operational dynamics.
n Technology enabled – that teams use big data and
machine learning (through xP&A) to drive insights that
Incorporates organisational
Data Integrated into the technology are based upon a predictive analysis.
Net zero objectives towards net zero
centric and data architecture
as part of planning process
n Data-centric – that the activities are integrated into the
technology and data architecture.
Continuous Continuous and flexible activity that can n Supports innovation – that teams support a culture of
Supports Supports a culture of innovation
and accommodate both short- and longer- innovation and creativity; being forward looking.
innovation and creativity; being forward looking
adaptive term changes in forecasting parameters
n Value adding – that finance is perceived by stakeholders
as adding value to the organisation rather than being a
compliance activity.
Financial Perceived by stakeholders as adding
Includes both financial Value
and value to the organisation rather than
and operational dynamics adding Underpinning all these hypotheses is the need for the
operational as a compliance activity
finance team to develop and maintain the appropriate
range of skills and knowledge.
42
Figure 4.2 summarises the responses from the survey

respondents. There was general acceptance of most of the FIGURE 4.2: Which of the following characteristics of your planning and forecasting process do you envision will
hypotheses, although few had already been acted upon be implemented in your organisation in the medium-term (3 to 5 years)? (n = 2,884)
across the respondents’ organisations. Two hypotheses Yes Maybe No Already implemented Don’t know
were less firmly accepted: that the planning and 100% 4% 5% 6% 6% 5% 5%
performance processes would include the organisational 12% 9%
9% 6% 4% 5% 6% 8%
objectives towards net zero and that they would embrace 5% 4% 7%
12% 9% 9% 7%
big data and machine learning, where only 27% agreed that 80%
19% 27%
this was likely in the next three to five years. 26% 31% 28%
33% 30%
60% 37%
Figure 4.3 asks the respondents to rank their areas of
investment in the remainder of 2022 and into 2023. 36% 35%
The responses were split between areas of investment 40%
in traditional FP&A processes and extended or xP&A 56%
51% 52%
47% 50%
processes. In both cases, the most significant investment 20% 39%
area is in process efficiency, with staffing and investment 29% 27%
in applications being the lowest priority. It should be
0%
noted, however that, using the scale applied in this Driven by Include org Continuous Financial and Integrated into Utilise big data Forward looking Adds value
question, there are no areas standing out and most are organisational objectives and flexible operational operation and and machine innovative culture to org
purpose towards net zero tech architecture learning
clustered around the median.
IN BOTH CASES, THE MOST FIGURE 4.3: Rank the following investment priorities of your organisation for the remainder of 2022 and into
SIGNIFICANT INVESTMENT 2023, in respect of FP&A / xP&A (1= most important, 7 = least important) (n = 2,884)
AREA IS IN PROCESS FP&A xP&A
EFFICIENCY, WITH STAFFING Process efficiency
and cycle time Improving Skills of the Closer collaboration Staffing of the New or enhanced
AND INVESTMENT improvements reporting FP&A team Automation with other teams FP&A team applications
0
IN APPLICATIONS BEING
Most important
THE LOWEST PRIORITY. 1
3 3.30 3.38
3.55 3.70 3.81 3.84 3.95 3.89
4 4.22 4.35 4.44 4.40
4.56 4.61
5
Least important
43
4.2 Collaborative not siloed Being collaborative requires a cultural change from The availability of the collaboration tools helps team
focusing on assessing why an outcome was not achieved members rapidly discuss new insights such as the need to
The planning and performance processes need to be
and seeking explanations for it to recognising that the incorporate new external factors, create a new business
organisation-wide. If they are siloed then the ability of the
past is precisely that, and what matters is what it can tell vision for a division, and even consider new business
organisation to address the challenges that the coming
us about the future and the actions that we need to take. models, as part of the planning on a continuous basis.
years might well bring will be constrained.
If the planning process is collaborative, so must be the
performance of finance’s counterparties. Collaboration with HR potentially creates a special
A public sector finance lead noted:
opportunity. A closer relationship with HR not only
A CFO put this collaboration in the context of planning, leads to an understanding of the talent pool available
‘I think maybe the one thing that has come positive giving the view that: within the business but HR may have insights that will
post pandemic is that it has forced us to work closer affect organisation-wide planning now and in future.
together – to get each other all in a room and During planning collaboration sessions, DEI is a valuable
discuss what issues we are facing and how we can ‘Predictive analysis is also another journey to look at. component of the work environment and career planning.
deal with them.’ I do think that this is the phase and stage [where] the A simple four-core model of DEI built on principles of
companies are aiming to be. However, we also need representation, participation, appreciation and application
to be mindful of the efforts required to get there. (Beach and Segars 2022) has potential for integration into
This cannot be done by the finance team alone the planning cycles managed by finance.
Innovative cultures are essential for organisations to thrive in
because it is an integrated process that comes from
these times. Finance cannot be seen to be siloed. As several
cross-functional teams.’ Collaboration and finance planning and analysis tools
roundtable participants commented, if finance remains
siloed and does not take responsibility for integrated working in unison help reduce friction between different
planning across the organisation it will lose its ‘seat at the business teams such as sales, marketing, finance,
While collaboration on financial plans has always been production, and logistics, especially with deadlines
table’; another function may well assume the role.
important, the difference in today’s uncertain environments looming for revised revenue forecasts and other qualitative
Through involving all business teams in the planning process, is the readiness to collaborate, integrating it into every indicators. The differing objectives of each stakeholder
planning cycle times are reduced significantly, providing the aspect of the planning process. The tools support two-way make finance team collaboration with participants essential,
opportunity for continuous planning with company-wide and team conversations and are available in standalone especially when developing best and worst-case future
data. Collaboration not only apparently does away with the fashion, including the popular Salesforce, Slack or Microsoft scenarios, to try to avoid surprises. Through reviewing worst-
silos within departments but also creates a social approach Teams messaging applications. Users can annotate budget case scenarios, the collaborating team members have an
to planning, fostering lateral thinking across business data, sales charts and forecasts output from business approach to uncovering potential problems and conducting
teams. Since data is available centrally to team members, a intelligence tools and discuss them as a team for decision a ‘premortem’ (Klein, 2007). This requires simulating an
single source of truth builds on accurate financial data and making. Online team-meeting experiences have improved initiative failure and working to understand the critical success
minimises contradictory or erroneous data as continuous with new versions of software, while collaboration can use factors, identifying the known unknowns (Logan 2009).
collaborative planning evolves through human interactions, emoticons (gestures), speech and data visuals between Nonetheless, ‘unknown unknowns’ (ibid) such as the global
with the availability of one common source of data ensuring team members to elaborate upon forecasts or variances. pandemic or the tsunami that destroyed Japan’s Fukushima
transparency of the planning for all stakeholders. Daiichi Nuclear Power Plant, may never have been planned
for by any organisation. Planning collaboratively rather than
in silos will help to reduce the risk of ‘known unknowns’ but
the only way of addressing unknown unknowns is flexibility
and organisation-wide collaboration when they materialise.
44
4.3 Organisation-wide performance We probably should get away from the annual cycle, but
maybe not the depth and consideration that goes into it’.
Planning is an activity that draws on the expertise of every
team in the organisation. This is equally true of performance. Most traditional performance management systems are
The measurement of performance has traditionally been at based upon direct accountability. This is increasingly
a functional or individual level. Targets were set at the start something that is hard to justify against the integrated
of the year and individuals assessed on those targets. As we planning principles. Causes and effects are increasingly
have seen in 2020 and 2021, setting a target at the start of complex and require potentially detailed explanations.
the year may well not relate to the outcome. Although the
nature of the challenges may be different it is likely that the A mainland China CFO commented that: ‘more often
same may well apply in 2022 and 2023. than not we can’t predict too much, and it is annoyingly
miserable. The so-called three- or five- year plan is likely
When assessing performance, it is important to take a to rest on paper. We only have a general direction, so we
broader view and focus upon team achievements, to need more appropriate and humanised KPIs. Unrealistic
support integrated thinking and collaborative behaviours. goals will only discourage our employees as they fail to get
The KPIs used in performance assessment need to reflect their due remunerations, which will end up being a loss to
the totality of the operating model, both in its financial and our entire group’.
non-financial aspects.
An Australia-based roundtable participant commented:
The report Finance – a Journey to the Future (ACCA /
PwC 2019) included the concepts of the work of Beyond
Budgeting, which advocates that organisations should, ‘We talk about performance management, and I
‘evaluate performance holistically and with peer feedback would ask the question, do you need to manage
for learning and development; not based on measurement performance? Because if I look at the best organisations
only and not for rewards only’ (Beyond Budgeting n.d.). in the world, they don’t manage performance, they
So doing creates a stronger link between the financial and enable performance, they set up the systems and the
human capital aspects of performance management. environment to enable people, too’.
A South Africa-based roundtable participant commented:

‘if you look at the literature, the research and the leading Performance is also strongly linked to transformation.
practices about 15 years ago, they started talking about The fourth industrial revolution is changing the operating
Beyond Budgeting, which talked about removing the models of organisations and as cost pressures increase
annual budgeting process and just becoming much more so automation can be more attractive. As an accounting
iterative in your forecasting process or every single month practice leader who consults in this area commented: ‘as
you are reviewing your plans; looking forward and you are organisations adopt new pieces of technology and change
adjusting by exception. However, what we have also learned the way workflow happens what I have been seeing is a level
in the last 15 years is [that] organisations don’t like letting of frustration by employees, because they are still working
go of the control that that annual budget provides them on the same performance measures that were developed
with. It is typically the largest exercise that organisations a year to three years ago, but what they as individuals are
get involved in and the whole organisation gets involved doing has changed. Performance management needs to be
to understand exactly what they are doing for the next year, realigned regularly’. In turn this needs to feed back into the
what they are going to be incentivised on, and so forth. planning process itself. Modelling an out-of-date operating
model will not drive growth.
45
4.4 Cross-functional business partners Business Insight is the key domain for the finance business 4.5 Skill sets
In their report Finance Insights – Reimagined (ACCA / PwC partner. Business insight entails effective partnering Agile forecasting requires a blend of financial and non-
2020) ACCA and PwC considered the development of the with the business to create value. In a high-performing financial information to generate budgets and forecasts,
role of the finance business partner as key to organisational finance function: and this creates a need for data specialists. Yet such skills
success. The report also addressed how finance business are in short supply in the marketplace. Since much of the
n time is concentrated on planning and decision making,
partners should embrace the six capitals of the Integrated planning work revolves around acquiring data, cleaning,
not transactional processing and data manipulation
Reporting Framework (IFRS Foundation n.d. b). processing and interpreting data from disparate operational
n scorecards and balance metrics are linked with systems and external data, there is potential for developing
Many roundtable participants stressed the importance of enterprise-level strategic objectives the talent in-house. This hybridisation of talent (ACCA / CA
this role from a finance perspective in relation to planning ANZ 2020) helps nurture employees and team members
n performance measures are directly tied to business
and performance. Having effective business partners who who understand the value of business and analytics. Rather
strategies
understand the operating model within the context of the than just hunting for analytics star talent, upskill staff to
current macro- and micro-economic environments and are n data and reporting are standardised, and necessary use predictive and prescriptive analytics. Nonetheless, the
able to communicate the effect on performance of the governance is established recruitment of external staff helps participation in strategic
variable factors which have an impact on it, especially in the conversations and bring knowledge into the planning
n an efficient strategic planning process is used in which process to support the business with the right metrics. So a
operating environment of late 2022, was seen as essential.
finance is actively engaged. balance of new and upskilled existing staff is ideal.
The importance of finance operating effectively in three
The effective finance business partner, as part of the finance Besides this, to support the planning and performance
domains was highlighted in this report (Figure 4.4).
function, has an extensive skill set which extends beyond processes, the finance professional requires the softer skills
the technical skills into a range of interpersonal skills. of communicating data insights and narratives to decision
FIGURE 4.4: Domains of an effective finance function makers. The additional skills of business partnering boost
A CFO noted that:
the future trajectory of the finance team in supporting
company-wide planning efforts.11
‘Younger people can better understand why we leaders Key team members include the data custodians/stewards,
make certain decisions. They understand how leaders with their specialist skill sets. While progressive companies
Business talk and how leaders think during those leadership
insight race ahead and embrace ‘data lakes’, a lack of governance
meetings as well. So, all this over time will give them and oversight is resulting in ‘data swamps’ (Rao 2018) and
the exposure and the confidence to do all this business data warehouses cannot keep up with the business changes
Strategy partnering and this is not going to happen overnight. and regulatory demands. The data stewards and the
It is going to be a process where we as leaders need to
management of data they can provide lead to success with
invest in the future generation’.
data-centric planning projects, including those involving AI.
nsformation
Financial Insight & Often overlooked, the role of the data steward is instrumental
Monitoring
reporting strategy
in using data to help overcome business challenges and
identify new business opportunities, providing value from
leveraging data. While data stewards are seen as helping
Tra
Non financial
reporting
manage data better, these individuals have a critical role in
creating a data-driven culture within organisations as well
Compliance Data Transactional as co-designing a new generation of information and AI
and control efficiency
systems. Surprisingly ‘…very little formal training [is] available
for Business Data Stewards’ (Datavault 2022).
11 The skill sets of a finance business partner, among other related roles, are defined in ACCA (n.d.).
46
4.6 Data-driven finance A roundtable participant commented: ‘non-financial

data [is] at the heart of what we talk about, and your
Data is essential when reviewing performance. Having
planning process should never be last year plus inflation”.
trusted data drawn from a range of business areas and big
It should be [about] the true drivers of your organisation,
data sources is essential for making the best decisions. That
and typically those drivers are not financial. They are the
data needs to be acquired in as near real-time as possible,
operational or the non-financial metrics of what you do
so that decisions made reflect the current position.
that results in the financial results that you are looking for.
Managers need directional data quickly to make appropriate
The integration of your non-financials and your financials
decisions. Finance teams are used to providing ‘correct’
and the change in your methodology of planning is what
data much more slowly (Table 4.1) – this cannot continue.
is driving a lot of these organisations today to give
Reporting performance one month in arrears is no longer
them insights into what’s happening, why they are not
useful. If finance teams wish to drive performance, they need
making their budgets, why their actuals are different to
to be able to articulate what that performance is today.
what they forecast’.
For many organisations, challenges created by legacy
Being data-driven requires a strong link between financial
systems and processes mean that they struggle to achieve
performance and operational big data. The natural
this goal. It is easy to say that investment is necessary, but it
evolution requires a focus on tools: the dashboard and
can be very hard to develop the business or value case.
data visualisation tools that allow an understanding of
Understanding what is possible can be the difference what drives the results of the business. Such tools in the
between survival and failure. Those organisations that are right hands among planning team members help them to
on the path to becoming data driven are able to undertake generate the information stakeholders need.
corrective action more quickly than those that are lagging.
TABLE 4.1: Operational big data sources and areas of business
AREAS OF BUSINESS OPERATIONAL BIG DATA SOURCES

Property, plant and equipment Online databases complementing historic value
Social media, email, Google searches, website data and even health data from
Marketing
wristband devices and smartphones
Accounts receivable Full textual description (unstructured data) of goods and services
Purchases and sales Radio frequency identification (RFID), GPS and Bluetooth beacons
Mobile payments, electronic credit, Apple Pay and Android via near-field
Cash
communications (NFC)
Customer service Email, social media and call centre records (CCR)
Supply Chain RFID, GPS, video (logistics centre) and temperature
Inventory RFID, GPS, video (stocking warehouse)
Source: ACCA / CA ANZ 2020
47
4.7 From CFO to CVO Delphine Gibassier of Audencia Business School, writing At a time when investors are increasingly looking at
in AB Magazine in 2020, commented that to achieve performance through the lens of ESG ratings and similar
In accepting the proposition that measures of performance
this, CFOs: ‘will need to use a mixture of measures and perspectives, planning activities need to become all-
now need to be far broader than those considered from
indicators – financial, non-financial and pre-financial. Tools encompassing. It is a different planning and performance
a traditional financial perspective, the finance function is
currently under development (such as new scorecards, management paradigm from that of the past.
moving towards a value-driven perspective.
capital expenditure tools and internal carbon markets) are
The CFO is no longer just the custodian of financial rapidly becoming multidimensional. They include various
assets, and the effective finance function has a range of types of metric, which themselves need to be put into the
responsibilities in driving great performance across the context of external trends, business models, sector shifts So, what should I do?
organisation (Figure 4.5). As the leader, the CFO is now and stakeholder demands’ (Gibassier 2020).
becoming the chief value officer (CVO) with a broader ✓ Develop a roadmap that embraces a broader view
CFOs need to develop a broader range of skills, both of performance.
view of performance and responding to a wider range of
among their teams and for themselves.12
stakeholders who scrutinise and assess that performance. ✓ Ensure that the culture of the finance function is
The concept of ‘value’ embraces many different drivers, as It is clear that performance in the broadest sense now collaborative and not siloed.
discussed in this report. The Climate Disclosure Standards has a far wider measure than the achievement of financial ✓ Define a set of key performance indicators that
Board (now absorbed into IFRS Foundation to support the objectives alone. The need for CFOs to have a perspective reflect a broader view of performance.
ISSB) commented in 2021 that: ‘As an expert in sustainability on non-financial dimensions is important, perhaps even
accounting, the Chief Value Officer (CVO) integrates all ✓ Re-evaluate performance management systems
essential. Planning and performance management
value creation of the company with a multi-capital vision’. to focus on team and organisational performance
therefore needs to reflect the broader agenda. A failure to
It continues that: ‘this requires a new strategic way rather than individual contributions.
develop an integrated plan can lead to goal incongruence.
of thinking in multi-capital accounting practices that ✓ Hybridise talent, combining business and
demonstrates responsible leadership’ (CDSB 2021). analytics skills.
✓ Provide access to data custodians/stewards.
✓ Reflect on-going changes in the operating model in
FIGURE 4.5: Lead with performance
the performance management metrics.
EPM Blueprint FP&A, Business ✓ Develop / reinforce the finance team’s business
Close and
Selection Partnering and partnering skills.
consolidate
Roadmap Insights
✓ Ensure that the focus is on reporting data-driven
performance measures.
✓ Integrate operational big data sources into the
Integrated
Performance End-to-end planning models using real-time links where
Business
Excellence Finance Reporting appropriate.
Planning
✓ Develop business / value cases for performance
engagement.
Performance Data and analytics ✓ As a CFO, focus on the development of value-
Zero based
reporting and modelling and based reporting, both internally and externally.
budgeting
KPI framework governance
12 The range of skills for a CFO was discussed in ACCA / IMA (2020).
48
PLANNING AND PERFORMANCE MANAGEMENT PARADIGM | CONCLUSION
Conclusion
‘Trying to forecast is like trying to nail jelly to a wall
because we are going through so much now in terms
of economic challenges, rising costs and changes in
consumer buying. If you haven’t got a good planning
process that you complete mentally or you know you’re
constantly looking at, then you are going to fall foul of
some of these things that are happening to you, and
you will not notice [until it is too late]’. UK-based CFO
Planning and performance management are

key processes for all organisations. Certainty,
or near certainty, is something that we can
strive for but never obtain. The events of 2020
and 2021 have shown us that certainty can be
rapidly overtaken by uncertainty. Subsequently,
2022 has its own challenges.
With the business environment changing ever more

rapidly, the traditional planning and budgeting cycles are
being called into question. The respondents to the survey
conducted for this report nonetheless indicated that many
of the traditional cycles were being maintained.
This is concerning. If finance teams are to remain relevant,

they need to embrace the more dynamic nature of the
operating models that are evolving. FP&A needs to be
extended: xP&A is the future, with integrated planning
taking data from multiple sources and providing a broader
view of performance. Finance teams need to be true and
trusted business partners working across the organisation.
That broader view is also being required by stakeholders.

As interest in the ESG agenda continues to grow among
a variety of stakeholders commensurate with stakeholder
49
PLANNING AND PERFORMANCE MANAGEMENT PARADIGM | CONCLUSION
capitalism there is also a need to embed aspects of a variety Planning and performance systems should have all or at n Planning must be data driven – in the customer-centric
of issues in the planning and performance processes. least some of these characteristics. business environment, understanding and modelling
behaviour are key to great performance. This can only
Uncertain times require dynamic actions. Working capital n Planning must be agile and use real-time data where
be achieved by drawing on data from both inside and
and cash are increasingly vital as keys to organisational possible – in the challenging economic environment,
outside the organisation across multiple systems.
success. Yet it no longer seems relevant to view today’s plan can well be out of date tomorrow. A
performance through a financial lens alone. Those leading cumbersome system will not support effective decision n Technology is enabling – where feasible, financial
organisations face a critical balance between the short- making and will lose finance its ‘seat at the table’. planning should be integrated into the Cloud-based
term impact of inflationary and other economic pressures application architecture of the organisation, rather than
n Planning should allow for several possible scenarios
against a need for longer-term investment. Those standing alone and based on spreadsheets.
– uncertainty is the watchword. There are no certain
organisations that survive in challenging times embrace outcomes and stakeholders need to be presented with n Integrated and muti-capital forecasts – a purely
this conundrum. Agile planning does not represent a loss a range of potential performance outcomes, rather financial forecast is no longer enough; rather, forecasts
of control, perfection will not guarantee success; rather than one tightly defined budget that is out of date the must reflect the integration of all components of the
agility presents an opportunity to increase control through moment it is published. operating model as well as the strategic imperatives,
a close focus on customer-centricity through utilising data including sustainability.
effectively. The choices are clear but the culture of planning n Planning is a predictive undertaking – so the team’s
and performance needs to adapt accordingly, including the work must be forward looking to support decision n Effective business partnering drives planning and
tone from the top. making: encompassing the levers of the business performance – the planning and performance processes
model and embracing technology such as ML and AI, should support self-serving of data to stakeholders;
The attributes of an effective planning and performance where appropriate. where finance adds value is through analysis and
system can be summarised in Figure 5.1. interpretation, followed by the action and review that an
effective finance business partner can deliver.
n Finance must be collaborative and support
FIGURE 5.1: Attributes of an effective planning and performance system innovation – rapid changes in organisational models
and objectives are the order of the day. Flexibility is
key and the planning and performance cycles need
to reflect this, recognising that performance is a team
Agile and timely Scenario based Predictive
activity not an individual one. Growth will come from
innovation and creativity.
The paradigm is between evolving and remaining relevant

with ‘a seat at the table’, or retaining the traditional
Collaborative
Planning and Performance approach and increasingly losing relevance. It is a choice
and supporting Data driven
Management should be: that finance must make now.
innovation
Driven by
Integrated and Technology
effective business
multi-capital enabled
partnering
50
PLANNING AND PERFORMANCE MANAGEMENT PARADIGM | GLOSSARY
Glossary
Adaptive planning An iterative process framework for organising a myriad of information flows, analyses, issues
and opinions that coalesce into strategic decisions.
Analysis An assessment of the viability, stability, and profitability of an organisation, sub-organisation
or project. It is performed through the production of reports using ratios and other techniques,
that make use of information taken from financial systems and other sources.
Forecast An estimate of future financial outcomes for a company or project, usually applied in budgeting,
capital budgeting and / or valuation, typically covering a longer term than a plan.
Foresight Foresight (also called strategic foresight) is an approach that aims at making sense of the future,
understanding drivers of change that are outside one’s control, and preparing for what may
lead to success or failure in the future.
Nowcasting An approach to monitoring economic conditions in real-time. It makes financial market trading
more efficient because economic dynamics drive corporate profits, financial flows and policy
decisions, and account for a large part of asset price fluctuations. The main technology behind
nowcasting is the dynamic factor model, which condenses the information of numerous
correlated ‘hard’ and ‘soft’ data series into a small number of ‘latent’ factors.
Planning A comprehensive evaluation of an organisation’s current and future financial state using current
known variables (profit and loss and balance sheet items) to predict future income, asset values
and withdrawal plans.
Scenario modelling A process of adjusting one or more variables to simulate possible events or scenarios and
predict the various feasible results or outcomes.
xP&A A planning approach that takes the best FP&A capabilities – such as continuous planning,
forecasting, advanced analytics, and performance monitoring – and extends them across
the organisation.
51
PLANNING AND PERFORMANCE MANAGEMENT PARADIGM | APPENDIX – SURVEY DEMOGRAPHICS
Appendix – Survey demographics

The survey that formed part of the research activities for this report received 2,884 responses from ACCA and CA ANZ members worldwide, together with PwC clients and contacts. An analysis
of these responses is given in the following graphs.
General assumptions
n For the purpose of consistency, most of the analysis used globally aggregated data, which included input from the entire survey population.
n The survey was conducted online in July 2022.
Analysis of responses
FIGURE A1: Responses by region (n = 2,884) FIGURE A2: Responses by sector (n = 2,884) FIGURE A3: Responses by entity size (n = 2,840)
n Asia-Pacific, 38% 3% 4%
n Big Four accounting firm, 4% n 0 – 9 employees, 9%
4% 2% n Corporate sector – small/medium 12% 9%
4% n Western Europe, 24% 10% n 10 – 49 employees, 14%
sized, 23%
5% n Africa, 17% n Corporate sector – large, 19% n 50 – 249 employees, 23%
23% n Financial services – small/medium 14%
n South Asia, 7% n 250 – 999 employees,
7% 7% sized, 7%
38% n Middle East, 5% 19%
n Financial services – large, 6%
n CEE, 4% n Mid-tier accounting firm, 6%
n 1,000 – 9,999 employees,
21% 21%
n Caribbean, 4% n Small or medium-sized practice
12% (SMP), 12% n 10,000+ employees, 12%
17%
n North America, 2% n Not-for-profit, 7%
n Other international accounting
firm, 1% 23%
19%
6% n Public sector, 10%
n Not currently working/career
6% 19%
24% 7% break/retired, 1%
n Other, 3%
FIGURE A4: Responses by respondent (n = 2,884) FIGURE A5: Responses by role (n = 1,854)
n Principally in business n Internal Auditor / Financial

(such as working in a 13% compliance, 13%
20% finance, accounting, n Financial Accountant, 11%
or internal audit team 27% n Finance / Operation Manager, 8%
or providing finance 11% n Chief Financial Officer (CFO), 7%
services across the n Audit Manager, 7%
organisation), 80% n Financial Controller / Head of
Compliance, 6%
n Principally in public or
8% n Head of Finance / Director, 6%
other practice (such as 3%
an accountancy firm n Audit Senior Manager, 4%
4%
and undertaking audit, n Consultant, 4%
attestation, advisory 4% 7% n Management Accountant, 4%
80% and / or tax), 20% 4% n External Auditor, 3%
7%
6% 6% n Other, 27%
52
PLANNING AND PERFORMANCE MANAGEMENT PARADIGM | ACKNOWLEDGEMENTS
Acknowledgements
The contributions of the following individuals in the development of this research are noted with thanks.
Santosh Abbimane, DTDC, India Lucian Francis, World Vision Australia, Australia
Gaurau Aggarwal, PwC, India Jan-Louis Fouche, ABSA, South Africa
Nnenna Anyanwu, Brandstad Consulting, UK Colin Gilchrist, ACCA, UK
Fazal Bacchus, Demerara Distillers Limited & Subsideries, Barry Gill, Director, UK
Guyana
Jason Gorel, Covalon Technologies Ltd., Canada
Prasenna Balachandran, Laugfs PLC, Sri Lanka
Sun Guangwu, China Shipping Commercial Real Estate
Tim Barber, University of Hull, UK Co., Ltd, mainland China
James Best, All Dimensions Consulting, UK Zhou Guodong, Chongqing Shale Gas Exploration and
Development Co., Ltd., mainland China
Vishal Bhavsar, Shared Health Manitoba, Canada
Zhang Guoping, Guangxi Investment Group, mainland
Hawaby Binti Sultan Muhamad, Webe Digital, Malaysia
China
Orla Carolan, GT, Republic of Ireland
Shawn Gurcharran, Guyana Bank for Trade and Industry
Kelly Chan, Yuanbo Consulting Co., Ltd., mainland China Limited, Guyana
Russell Colbourne, CFO Centre, Australia Faye Hardy, The Caribbean Catastrophe Risk Insurance,
Barbados
Oliver Colling, Morely Colling Associates, UK
Mu Hassan, PwC, US
Andy Cristin, Pareto Financial Direction Ltd, UK
Richard Hooper, healthAlliance, New Zealand
Ren Dandan, an A-share listed investment company,
mainland China Robert Hoy, William Morris London, UK
Stephen Dowling, eTM, Australia Elchin Ibadov, SOCAR Turkey Refinery and Petrochemicals
Business Unit, Turkey
Stuart Eadie, Vodafone, UK
Dave Ireland, B&Q, UK
Kelvin Lee Ee-Meng, Fairprice, Singapore
Ankush Jain, Dabur, India
Joshua El Bidawi, Williams Towers Watson, UK
Derek Johnstone, Consultant, Canada
Andrew Eslby-Smith, Amtico, UK
Kevin Jones, SA Power Networks, Australia
Alex Falcon Huerta, Soaring Falcon, UK
Robert van der Klauw, Munich Re, UAE
Thomas Finn, Logiwa WMS, US
53
PLANNING AND PERFORMANCE MANAGEMENT PARADIGM | ACKNOWLEDGEMENTS
Valentyna Korshuk, Greenlight Consulting, Canada Chinna Pardhasaradhi, Waycool, India ACCA, CA ANZ and PwC would also like to thank all
those who kindly completed the survey.
SV Krishnan, Redington, India Ronnie Patton, University of Ulster, UK
Neil Krull, TMF Group, South Africa Sajindu Perera, MAS Holdings, Sri Lanka
Sanjay Kumar, PepsiCo Global Concentrate Solutions, Jehan Perinpanayagam, Infomate Pvt Limited, Sri Lanka Authors
Republic of Ireland
Jennifer Phillips, PwC, US Brian Furness, global head of finance consulting, PwC
Om Brajesh Kumar, Jindal Steel and Power, India
Donovin Pombo, TMF Group, South Africa Charlotte Evett, General Manager New Zealand
Peter Kurtz, PwC, Australia Regions, Chartered Accountants Australia and
Melanie Profitt, Farncombe Estate, UK New Zealand
Subash Kutticad, Temenos, India
Dev Ramnarine, Thrudheim Advisory Services, US Clive Webb, Head of Business Management, ACCA
Charlie Kwint, PwC, South Africa
Ramkumar Ramaswamy, Jindal Steel and Power, India Gavin Hildreth, Senior Manager, PwC
Budi Legowo, PT Pertamina Bina Medika IHC, Indonesia
Jamie Rehan, Bank of Ireland, Republic of Ireland Suresh Sood, Data Scientist, Chartered Accountants
Lilac Lui, PwC, Australia
Sean Richter, PwC, US Australia and New Zealand
Elena Lokchina, architectsAlliance, Canada
Dilshan Rodrigo, Hatton National Bank PLC, Sri Lanka
Dattaguru Mahabal, Guru Animation Studio, Canada
David Rogers, Standard Chartered Bank, Singapore
Susan McCloy, Partner, PartnerRe Life Reinsurance
Company of Canada, Canada Alistair Roman, consulting CFO, UK
Keith Moore, Emrys Business Advisors, UK Senuri Senayake, PwC, Sri Lanka
Helen Morgan, character.com, UK Andrew Sharkey, Mission Australia, Australia
Imran Moten, Gadoon Textile Mills Limited, Pakistan Brendan Sheehan, White Squires, Australia
Gloria Mugavazi, Standard Bank Group, South Africa Lesley Smith, High Force Research Ltd, UK
Marty Murray, Protiviti, Canada Yvonne Soglo, National Treasury of South Africa,
South Africa
Shelly Natalia, Unilever Indonesia, Indonesia
Muhammad Saqib Taibani, Dubai Airports, UAE
Andrea Naylor, Namos Solutions, UK
Zhong Tianxin, Legend Strategy International Holdings
Brendon Nelson, National Insurance Board Trinidad and
Group Company Limited, mainland China
Tobago, Trinidad and Tobago
Daryl Wang, PwC, Singapore
Chen Nengyi, Richemont Group, mainland China
Brad Wikston, Blue Giant Equipment Corp., Canada
Ian Ng, AMMEGA, mainland China
Pete Williams, Pengiun Random House, UK
Loan Nguyen Thi Phuong, ACFC, Vietnam
Liu Xiaokai, Mengniu UHT Milk Unit, mainland China
Chris O’Shea, GT, Republic of Ireland
Anand Kumar Pandey, GE, Republic of Ireland Jiang Xing, Kohler Group, mainland China
Zia Paton, PwC, Trinidad and Tobago
54
PLANNING AND PERFORMANCE MANAGEMENT PARADIGM | REFERENCES
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IN ASSOCIATION WITH

Copyright © November 2022 by the Association of Chartered Certified Accountants (ACCA),

Helen Brand OBE Ainslie van Onselen Brian Furness

Executive summary 6 3. A broader view of performance 31

example through adopting a stakeholder-capitalism

Financial Perceived by stakeholders as adding

Overview of global survey results

Key actions summary

‘The reality has changed and those old ways

1. Planning and 1.1 An assessment of planning and

performance today ascribed to Benjamin Franklin (although there is no

Planning2 and performance have long been key activities

There is a sense, however, from the roundtable participants

Yet 2020 and 2021 might be seen as an exceptional period,

An experienced consultant based in the UK commented 35%

No longer will the finance-focused approach serve.

Being able to look to the future also requires flexible and

only 37% completing it in one to three months (Figure 1.4), 0%

IN CONTRAST TO THE ANNUAL 30%

PLANNING PROCESSES, THE

are not done

1.5 Disjointed planning processes

Many roundtable participants would be likely to recognise

A financial sector FP&A lead reflected upon their experiences

hand-off processes, even from a functional point of view.

Figure 1.6 indicates a mixed picture. with 34% suggesting

1.6 Perfect is the enemy of ‘good enough’

budgeting process. The question has to be: is the investment 50%

1.7 Planning and performance challenges

The challenges faced by smaller organisations are likely to

So, what should I do?

‘The cycle hasn’t changed, but the importance

2. Drivers for change 2.1 Economic challenges

A variety of macro- and microeconomic factors have the

geopolitical position, the situation has changed, and

Managing in challenging times – lessons from Sri Lanka

2.3 Faster response in an agile world

aspects of any business. Agility in forecasting and budgeting

factors such as inflation and employment levels. More 17%

2.4 Customer-centricity 2.5 Data and systems Data

3 The concept of cost-to-serve is explained in ACCA/IMA/CIPS 2022.

an opportunity for using AI and ML but a concern about 90%

their traditional planning processes. 60%

4 The concept of availability bias is discussed in Bannerjee and Nunan (2019).

xP&A implementation case study

At the same time, such a centre must collaborate with

Enabling planning and performance

‘We have got to look for the right performance

Building ESG into the planning process

FIGURE 3.3: Evolution of stakeholder capitalism

Shareholder Capitalism Sustainability Stakeholder Capitalism

Shareholder centricity Sustainability = value Stakeholder centricity

Customer demand FIGURE 3.5: Integrated business planning maturity model

Sales and Operations • Strong link to risk management

• Predictive analytics utilised to organisational purpose

• Financial focus to • Focus on value and purpose performance management

Data and technology

3.6 Stakeholder expectations

4. Role of finance in broader

‘I think the key to key to any planning in the future

1. Planning and 1.1 An assessment of planning and

2. Drivers for change 2.1 Economic challenges

Sales and Operations • Strong link to risk management

• Predictive analytics utilised to organisational purpose

• Financial focus to • Focus on value and purpose performance management

4. Role of finance in broader