Technology can transform a tried-and-true classic into an advanced tool to meet the demands of a digital, data-driven world.
Take the wristwatch, for example. A century and a half of reliable, convenient time-telling has morphed into the smartwatch—a “watch computer” with ever-increasing functionality that rivals the smartphone in providing real-time information to help wearers navigate their 21st-century lives.
FP&A has undergone its own transformation as GovCons seek profitability and growth in a fast-paced federal marketplace increasingly influenced by global economic and geopolitical shifts.
Beyond Financial Reporting to Advanced Strategic Insights
FP&A has been a reliable business mainstay for collecting data that tracks financial performance and supports a firm’s analytical, budgeting, and planning activities. FP&A teams analyzed historical financial data, compared it with current performance, and identified trends and areas for improvement. Key performance indicators (KPIs) and other analytical tools assessed a company’s financial status against established goals so leadership could decide the best resource allocation for projects, business units, and investment opportunities.
Recent technological advances have allowed FP&A to bust the boundaries and evolve past traditional financial reporting functions with their static spreadsheets and manual calculations. A more extensive treasure trove of collected information can now be put to work, providing real-time, data-driven insights that can help you identify profit-making opportunities and develop strategic plans that pivot with dynamic market realities.
Outsourcing FP&A for a Tactical Technology Advantage
Advanced FP&A is rich and complex. Small and medium-sized GovCons may lack the in-house resources and experience to implement data capabilities fully. These firms can still harness all the benefits of advanced FP&A by outsourcing it to skilled experts. This option frees in-house leadership to focus on applying data insights to decision-making across the enterprise and gain powerful competitive advantages.
The Top 5 Benefits of Skilled FP&A
1. Access to the latest FP&A technologies.
Keeping up-to-the-minute with FP&A advances can be daunting for a small-to-medium-sized GovCon. Outsourcing allows your firm to avoid the resource drain of constant system upgrades so you spend your energy using those valuable new insights to profitable use:
- Cloud-based FP&A collects and integrates data more efficiently from a wide variety of data sources and business systems, both from within your firm (e.g., enterprise resource planning, data warehouses) and without (e.g., demographics, market trends, and economic data). Team members can access, share, and analyze financial, operational, and external data in one place.
- Machine learning (ML), artificial intelligence (AI), and robotic process automation (RPA) produce more accurate forecasts in less time and at lower cost. Automated analysis, modeling, and forecasting features allow your team to go right to work interpreting results and developing strategies.
2. More collaboration across your enterprise.
FP&A combines internal and external information in a standardized format. These cloud-based reports and data visualizations help break down organizational silos to promote collaboration across departments, including finance, operations, sales, and human resources (HR). You can literally put your entire organization on the same page to view how operations align with company goals.
3. Less speculation and more planning for “what-if” scenarios.
FP&A allows your leadership to run numerous what-if scenarios to assess how variables such as costs, revenue, price changes, taxes, expansion into new markets, hiring, and employee compensation will affect cash flow and profitability. An FP&A system can conduct continuous planning and forecast monitoring so you can quickly consider options and remain resilient in the face of market or business shifts.
4. Continuous performance monitoring and budgeting.
Make your static annual (or even quarterly) budget process a thing of the past. Create a rolling budget updated with the continuous forecasts mentioned above to adjust your spending to keep pace with roiling market conditions.
5. Insights to improve operations across the company.
Investigate how data-based insights might benefit all your business units. For example, make FP&A a partner with HR to integrate data on the capabilities and costs of your workforce so you can hire the best employees to fulfill strategic objectives. Access customer demand data to guide the development of the most profitable products and services. Use FP&A forecasts to set realistic sales goals and align marketing plans with company strategy.
Whether handled in-house or outsourced to experts, FP&A can provide data insights that help your GovCon adjust to market churn and turn volatility into profitable opportunities. Feel free to contact CAVU’s GovCon financial experts to discuss the strategic benefits of FP&A for your company.