Financial Planning and Analysis (FP&A)
Financial planning and analysis is a term that describes the processes of financial planning, modelling, testing and reporting an organisation's finances. The work is usually done through software that helps finance departments add efficiency and control to budgeting and planning processes.
It is the responsibility of controllers to advise and guide managers in the use of financial information to enable them to make better strategic decisions. FP&A processes and solutions support that responsibility.
Financial planning and analysis according to Gartner
According to Gartner, FP&A can be viewed as four types of activities:
- Budgeting and forecasting, which Gartner sees as the first step in strategic planning.
- Integrated financial planning.
- Management by objectives.
- Monitoring and analysis.
Financial planning and analysis tool
The purpose of a Financial Planning and Analysis tool is to enhance the finance department's ability to link business strategy to economic reality on a performance basis. In system terms, FP&A can be seen as the financial application part of a Corporate Performance Management system.
CFOs in need of financial applications today usually look for SaaS solutions to reduce application support costs, increase application flexibility and quickly create time to value. Cloud services are usually easier to use and are therefore more popular. The vast majority of new FP&A solutions are cloud-based.
According to Gartner, there has been a permanent shift in the market for FP&A solutions. The shift from on-premises to cloud-based solutions is final. On-premise installations are only requested in special cases.
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