Financial Health Takes Priority Over Strategic Planning

Financial Health Takes Priority Over Strategic Planning

April’s Insights Newsletter is all about the bottom line. Organizations are critically evaluating their financial stability in the wake of the banking crisis and continued Fed rate hikes.

Catalant typically sees a spike in finance projects early in the calendar year — project data from the last few years shows an average increase of 29% from February to March. With this context, we took a deeper dive into the data and observed an interesting trend: Companies prioritize financial work over long-term strategic work during times of crisis.

In volatile times, financial health takes priority over strategic planning.

We have historically seen a strong positive correlation between strategic planning & transformation projects and finance projects. However, there are three notable periods of time in the past three years where the two categories diverged and finance projects spiked while strategic planning projects dropped:

1. In March and May 2020, the COVID-19 pandemic caused widespread lockdowns, reductions-in-force, and stock market volatility.

2. In November 2020, the U.S. presidential and congressional election results held the country in an extended period of uncertainty.

3. And now, in March 2023, multiple bank collapses are driving similar behavior — financial projects are beginning to increase in volume while at the same time, strategic projects are dropping to a much lower volume than the months prior.

The common thread in these instances is extreme market uncertainty. In volatile times, finance projects are a major focus for organizations as operational efficiency and spend are top of mind. Meanwhile, longer-term strategic work moves to the back burner.

The Work: FP&A, Process Improvement, and Cost Assessment

What it means for your organization:

No one knows how long the current market uncertainty will last— but now is the time to invest in FP&A. Make sure your plan and operations are efficient and resilient enough to maintain long-term health.

Like the last example above, an experienced, external perspective can streamline processes and uncover hidden opportunities to improve productivity or reduce costs.

Craving more insights?

Watch our recent webinar, Transforming Your Business For the Future, to hear a more in-depth discussion of what we’re seeing in the market.

*Data is based upon projects posted on the Catalant platform, and shows posting volume by project category or subcategory as a percentage of total project volume. While we have used reasonable efforts to ensure the accuracy of the data used in this newsletter, data should be read as indicative of magnitude rather than exact figures.

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