Embrace the human element and worry less about AI.
Financial planning and analysis (FP&A) is a crucial group within a company’s business function. This team is responsible for forecasting key financial indicators, such as revenue, profit and cash flow. In addition, it tracks and analyzes a company’s performance as it strives to achieve its financial goals. Yet some feel this function won’t be needed in the future.
A recent Harvard Business Review webinar on Agility and the Future of Finance predicted that artificial intelligence (AI) will soon relieve FP&A of many of its current duties, such as managing and analysing databases. In fact, if I’m not mistaken, the speaker said that the FP&A workforce of the future would be much diminished because of it. I’ll leave you to imagine the chatroom fallout from the FP&A executives within the webinar audience!
However, I think their concerns may be premature – if not entirely unfounded. There is plenty of opportunity for FP&A to prove its worth in the ‘agile’ world of AI and digital disruption.
In business, terms such as ‘agile leadership’, ‘agile organizations’, and ‘agile workforce’ have become commonplace. If you are a financial professional, you will most likely have heard the term ‘agile finance’.
Without trying to provide a complete definition of ‘agile’, I can safely say that this term is generally associated with flexibility, innovation and speed. In my view, these traits have always been an important part of a successful enterprise. But the rapid changes in technology and growing intensity of global competition have made them so important that they deserve to be put under the umbrella of a single word.
We hear people say that agile workers are those who not only adjust quickly to change, but are themselves change agents. One of the ways that they can instigate change is through innovation.
So what of our friends in FP&A? How can they work faster and be more innovative? Here’s one example.
We all know that bricks-and-mortar retail is suffering because of online shopping. Let’s imagine that you work in FP&A for one of the major high-street chains.
One of your core roles is using historical data on the financial performance by such categories as store, city, state, province, country and product-mix to forecast sales, profit and cash-flow for the next year, quarter or month. The degree of speed and granularity of reporting will depend on the needs of senior management and your IT set-up.
Could AI or ‘machine learning’ augment or replace this type of FP&A work? I think we all know the answer.
But suppose these companies finally see the light that traditional retail must adapt to changes in retail shopping by opening pop-up stores that not only introduce new or highly curated products to trendy shoppers, but also give them Instagram photo-ops?
Can these traditional retail giants get into the pop-up store business in a fast and profitable way? Who would the C-level executives turn to for the business-case on this idea? Is this job a natural fit for FP&A? I think so.
So, worry less about robots and AI, and embrace the human element. To help make a good business decision, we need some real people with financial skills, business acumen and a sense of what’s cool and awesome in the world.
Understanding trends and responding to what’s coming is the future of FP&A.
Phil Young PhD is an MBA professor and corporate education consultant and instructor.
An adapted version of this article appeared on the Dialogue Review website.