The role of financial planning and analysis (FP&A) professionals will only become more critical next year. The external environment is only projected to become more uncertain, with greater financial volatility and a tougher competitive market, disrupted by new technologies, new business models and the digitization of the economy. That means FP&A will have to up the ante on talent, technology, big-data analytics, forecasting and more. To assess what’s in store for the profession next year, AFP asked its FP&A Advisory Council, a group of 36 leading FP&A professionals and experts from all over the world, what they see as the major challenges for the profession in the coming year.

Challenge # 1: Improve forecasting

Against this background of increased volatility and a quick-shifting business environment, the challenge of improving the forecasting process is top of mind for CFOs and FP&A teams. It’s also the subject of an AFP FP&A Guide, What’s Driver-Based Modeling and how does it Work?

“Going into 2016, increasing our forecasting agility is a key driver of the work of the corporate FP&A department at Welltower,” said Tom Russell, director of corporate FP&A for Welltower. “Our business is moving at an ever-increasing pace, with more challenging acquisitions along the dimensions of size, geography, and complexity, especially with multiple joint venture partners on a single transaction. The ability to incorporate all of those moving pieces to produce a real-time forecast of the company’s performance creates challenges, as well as opportunities, for our forecasting efforts.”

Not long ago, the catch-phrase for many finance functions was ‘under-promise, over-deliver’, and as long as your department came in above its promises, everyone was happy, noted Emma Martin, the CFO of Ogilvy in Singapore. “These days, that phrase has changed to “no surprises”, i.e., the ability for us to accurately forecast our monthly results has become increasingly important,” she said. “And as organizations manage balanced portfolios across multiple markets, where economic and political changes can quickly and seriously impact a region’s results, knowing your numbers to a greater degree of accuracy is now a key expectation. That means finance needs not only to forecast well, but the data available to constantly track against that forecast and flex the elements as the year goes on.”

According to Igor Panivko, finance director at Konica Minolta Ukraine and Russia, while highly precise forecasting has always been a cornerstone of FP&A activity, in recent times, the overall digitalization of already available analytics tools may enable FP&A to produce accurate and trustful results as never before. “Leveraging all the benefits of predictive analytics models is a challenge for corporate finance as it quite often struggles with quality issues regarding plans and forecasts,” he said. “Learning and using predictive techniques means fundamentally understanding independent factors impacting a company’s targets. Implementing predictive models on the key operational metrics, building drivers directly impacting financial results and making the business trust the forecasted results would be the biggest contribution of the FP&A team to business decision-making.”

Challenge # 2: Create a better partnership with the business

Next year, as FP&A continues to strive towards a more strategic role, it will also have to enhance its approach to working in collaboration with business leadership. “The other thing I see in the space of FP&A is the issue of the art of partnership versus the analytics,” said Michael Tzupek, vice president of systems finance at Providence Health & Services. “The latter is easier to do, teach and test, whereas the art of partnership is a social skill that we in the finance space don’t invest enough in resources and training to really help train our people. I think it’s the unspoken challenge when it comes to FP&A.”

Added Martin: “That change in our profession means that we no longer just need traditional finance guys, we need business partners—people who are curious about what the numbers are telling us and want to learn to communicate with them in an engaging way. It’s an interesting time to be in our business.”

Challenge # 3: Find the right talent

According to Rachel Yau, head of finance ASEAN at Boston Scientific, good FP&A professionals are very limited in the market. “As the demand for these professionals increases, companies are snatching talents from one other instead of developing in-house,” she said. “In Singapore for example, a good FP&A professional on average is approached by headhunter on a weekly basis. This may result in relatively shorter tenure, and overpaid FP&A, which may not be commensurate with their experience.”

And it’s not just other companies’ FP&A teams that are competing for the same talent. According to Panivko, there is a growing competition to FP&A from business line analytical teams who work in their own silos but have quite advanced skills in database querying, statistics, data mining and other similar fields which would beautifully crown any FP&A professional and unfortunately are rarely seen among them. “It’s a challenge and necessity for a company’s finance executives to develop analytical talents and keep them not just technically minded but business-aware and strategy-minded professionals,” he said.

A longer version of this article will appear in an upcoming edition of AFP Exchange.