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Innovate FP&A with driver-based planning

Learn how leading companies are using a detailed framework of business drivers to improve the speed and accuracy of budgets and forecasts.

KPMG Intelligent Forecasting

Business today is moving at warp speed, with new risks and opportunities seemingly emerging by the day. But is your financial planning and analysis (FP&A) team keeping up?

For many companies today, the answer is a solid “not yet,” as top-heavy forecasting drills and laborious bottoms-up budgeting often mean it can take months to even identify all those incoming risks and opportunities—let alone map out a strategic response. Getting a competitive edge today is increasingly reliant on getting the FP&A team to move faster. And that’s why a number of leading companies are starting to innovate their traditional FP&A functions with a dynamic new approach called driver-based planning, as we outline in a comprehensive new KPMG report, “Driver-based planning: Elevating FP&A.”

With driver-based planning, cross-functional experts develop a multilevel framework of the company’s essential, data-driven business drivers, and that framework is then embedded directly into the enterprise performance management (EPM) and reporting systems. Over time, this enhanced driver-based framework can steadily improve the speed and accuracy of the forecasting process while liberating the finance team from labor-intensive rearview mirror tasks (an all-night data roll-up, anyone?) so that they can spend more time on identifying new value-generating opportunities for the business.

The business imperative now is to transform the finance team from that task-based operating unit to a capability-enabled enterprise partner—elevating staff to focus on delivering larger, value-generating financial insights and companywide contributions.

From the KPMG report, "Driver-based planning: Elevating FP&A."

The “driver tree” framework

Conceptually, the idea of identifying key business drivers and using them to plan your business … well, you’re doing that today, right?

The sales team emails their weekly spreadsheet, the operations data is in the cloud, and the relevant inputs from HR are in a secure silo. And somewhere in there are all of the key levers to your business—in no particular order, of course. Now you just need a lot of people and a lot of time to collect and sort the data, assess its value and impact, prioritize it, reconcile any discrepancies, and update the budgets and forecasts. See you in a few months!

Instead, advanced driver-based planning fully innovates that still-too-common FP&A scenario by creating a single framework of the company’s key inputs that sits within the EPM—a single source of truth for all reporting, planning, and forecasting. Crucially, this enhanced, unified framework connects finance with the essential drivers from across the company—operations, sales and marketing, HR, and more—using agreed-to inputs and values that are vetted by cross-functional teams.

Here’s a closer look at three key attributes of an advanced driver-based framework:


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Multilevel: Driver frameworks vary by industry, but a typical framework starts with a few top-level targets (for example, revenue and cost of goods) that then branch down to additional levels of underlying inputs. So, the framework gets increasingly more detailed as you go down each level—looking much like an inverted “driver tree” with multiple branches. Most frameworks will cascade three, four, or even five levels deep, and a single topline target might ultimately include more than 50 inputs across several branches. 


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Data-driven: Driver frameworks can include both quantitative and qualitative data, and the value of each input is given a specific weighting. Qualitative data—for example, product differentiation or commitment to innovation—is measured by assigning each input an “impact indicator,” based on an adjustable high-to-low assessment scale. And since the appropriate data inputs have been clearly defined from the start, the driver framework eliminates the need to manually “true up” data due to disparate sourcing issues. 


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Highly automated: Because the driver-based framework is designed to sit within the EPM alongside all relevant enterprise planning systems, it can significantly improve the speed and accuracy of budget and forecasting processes by automating many of the highly manual legacy FP&A tasks that have historically been a drag on turnaround times. For example, changes in any key area are immediately reflected in the driver framework and can quickly be pulled into the forecasting model for rapid updates and scenario-planning.

How to get started

Successfully adding innovation to FP&A doesn’t happen overnight. Executing on the driver-based model requires thoughtful planning, realistic goals and timelines, and plenty of attention to change management.

Our KPMG teams have been working with leading companies over the past few years to help them build and implement driver-based frameworks and establish leading practices for their companies. Here are some of the key steps we have identified:


Align: All relevant stakeholders across the organization align on the initial driver framework’s inputs, hierarchy, values, and data sources.


Test: Start with a small number of use-cases that prove out specific branches, rather than trying to deploy the whole framework at once. This helps the driver model demonstrate initial value and establish buy-in.


Deploy: The driver framework is usually embedded within the EPM system, which enables direct connectivity with the forecasting platform, reporting systems, and all required data sources.


Optimize: Review drivers on at least a quarterly basis, and continue to improve accuracy by adding new drivers and fine-tuning the quantified impact of each input.


Train: Ensure all required staff are trained on the new processes, with a focus on upskilling that realigns the finance team around new responsibilities and opportunities.

Most companies can get started on driver-based planning with existing company historical data. Over time, companies can add additional internal data while also testing the value of external data—for example, foot traffic near stores or weather data that might affect supply chains. These additional drivers are very often the minutiae, three or four levels deep in a driver framework, that deliver increased accuracy and tangible additional value.

A framework for change

Leading-edge technologies like predictive modeling, AI and machine learning, and enhanced data and automation are no longer exciting “new” tools. They are proven commodities that are delivering significant competitive advantages to the companies that understand their potential to transform and elevate their business teams and operations.

Driver-based planning gives the FP&A team a roadmap for that transformation by automating a wide range of time-consuming legacy tasks, streamlining data management, and improving the speed and accuracy of essential company forecasts. And, in the process, moving the finance team from chief taskmaster to a true value-generating business partner.

Explore more insights and opportunities around innovation:

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Enabling next gen driver-based planning

Move your finance team from task-master to value-generating partner. Learn how to elevate financial planning & analysis.

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The future of business planning and analysis

Broaden the scope of traditional financial planning and analysis (FP&A) to business planning and analysis (BP&A).

Driver acceleration ahead - Insurance Industry Spotlight
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Driver acceleration ahead - Insurance Industry Spotlight

Hear from KPMG professionals on how you can explore and use business drivers to potentially improve results.

Read more August 29, 2022

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Meet our team

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Brett Benner
Partner, Finance Transformation, KPMG US

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