In defining the evolution of FP&A in our survey, Defining the Evolution of FP&A: Benchmarks, Challenges & Opportunities, several industry-specific trends became evident. We compared these industry results with survey averages to understand how FP&A evolution is affected by industry.
In terms of FP&A analytical maturity, the Technology and Financial Services industry has a relatively higher concentration (23%) of leading or advanced FP&A evolution, compared with the overall average of 17%.
Similarly, companies in the Insurance industry are leading the way in regard to advanced cloud-based solutions. 33% of organizations in this industry have implemented advanced analytics software, which is consistent with industry-specific legislative requirements. As a result, 33% of Insurance companies find it somewhat easy to perform scenario analysis compared to the overall average of 9%.
In contrast, the Utilities industry lags behind Insurance, Technology and Financial Services in terms of FP&A analytics maturity. Utilities have the lowest adoption rates of predictive (14%) and prescriptive (14%) analytics among all the industries represented in our survey.
When we examined the spectrum of FP&A evolution, we found that data analytics also play a key role in financial maturity. Often, this process requires a number of activities such as data collection, data validation, insight generation, and driving actions. However, many of these activities are low-value and do not influence strategic decision-making.
This is evident in the Pharmaceutical/Chemical and Healthcare industries where they are the most challenged relative to data access. Each of these industries also has a relatively high percentage of companies with data overload – 29% for Pharmaceutical/Chemical and 19% for Healthcare. Because of this data overload, thirty-five percent (35%) of Pharmaceutical/Chemical companies find it very difficult to perform scenario analysis, compared with the overall average of 21%.
In terms of justifying the value of FP&A within their organizations, 56% of Financial Services companies and 28% of Manufacturing companies find it hard to justify the ROI against shorter-term Sales & Marketing investments versus an overall average of 38%. Similarly, only 50% of Healthcare company respondents indicated that their CFOs understand the strategic value of FP&A.
In contrast to the lack of support for FP&A in the Manufacturing industry, thirty-two percent (32%) of Technology company respondents strongly agree that FP&A delivers high strategic value compared to the overall average of 19%.
To continue to support the evolution of FP&A in their respective industries, seventy-four percent (74%) of Manufacturing companies identified forecasting, planning, and budgeting as an area requiring additional investment to increase the strategic value delivered by FP&A, versus the overall average of 59%. Also, fifty-nine percent (59%) of Financial Services companies identified management reporting as an area requiring additional investment to increase the strategic value delivered by FP&A, versus the overall average of 41%.
To further understand FP&A evolution in your industry, watch the webinar.