Shaping a Modern Public Sector FP&A Operating Model that Helps Drive UK PLC Value
Shaping a Modern Public Sector FP&A Operating Model that Helps Drive Value and Reduces the Taxpayer's Burden
Financial Planning & Analysis (FP&A) is undergoing a transformative evolution in the public sector. With rising fiscal pressures, demand volatility, and a growing need for transparency, modern public bodies must reinvent how they plan, forecast, and steward public funds.
This article explores a future-facing FP&A Target Operating Model (TOM) for large public sector organisations—designed to deliver better outcomes while reducing the burden on taxpayers.
Why FP&A Transformation Matters in the Public Sector
Public sector finance leaders face increasing demands to do more with less, manage long-term public service outcomes, and withstand political and economic shocks.
A modern FP&A function enables this by:
Aligning resources with citizen outcomes
Supporting agile scenario planning in response to fiscal changes
Improving data transparency and accountability
Leveraging automation and AI to reduce overhead
Core Components of a Modern Public Sector FP&A Operating Model
People
Finance Business Partners: Embedded across departments to align operational plans with financial strategy. Define opportunities to refine the overarching Finance and period end operating models.
Central FP&A Team: Drives coherence across the organisation, owns the planning calendar, and consolidates reports.
Data & Analytics Specialists: Unlock insights, support forecasting, and collaborate with IT.
Controls & Governance Leads: Uphold compliance with public sector standards.
AI/Automation Champions: Accelerate adoption of intelligent tools.
Finance Leadership: Sets the strategic direction and ensures alignment with central government (e.g., HM Treasury).
A fractional enterprise architect is required to link the disparate finance org structure to the tech application and data layers essential to gaining a holistic real time FP&A view.
Process Strategic Planning: Long-term financial plans mapped to national outcomes.
Budgeting: Annual cycles with devolved and ring-fenced fund integration.
Rolling Forecasts: Regular updates with built-in sensitivity analysis.
Performance Management: KPI tracking linked to service delivery.
Cost Allocation: Transparent funding traceability.
Change Control: Clear governance around reforecasting and reprioritisation.
Controls
FP&A governance boards, budget control policies, compliance mechanisms, risk linkage, and segregation of duties.
Strong cultural controls based on public accountability.
Data
Common data models, governed master data, reconciliations, open data compliance.
Data is treated as a strategic asset, enabling policy-aligned planning.
Distributed data silos identified and linked to form a finance data fabric with access to disparate data and archived historical data
AI & Advanced Analytics
Predictive modelling, scenario simulation, variance detection, AI assistants.
AI augments—not replaces—human decision-making.
Leveraging Agentic plug and play AI to accelerate targeted FP&A outcomes and data swts.
Technology
Sovereign Cloud-first ERP and planning systems (e.g., SAP S/4HANA PCE or Public , Oracle Fusion, Anaplan,Workday) based upon a composable busienss suite joining the dots model.
BI tools (Azure Data Fabric, Power BI, Tableau), automation (Power Automate, UiPath), AI/ML platforms (Azure ML).
Secure, modular, and GDS/NCSC-compliant platforms.
Public Sector FP&A Trends to Watch
Native AI Forecasting: Use of ML and generative AI to project demand, costs, and policy outcomes.
Outcome-Based Budgeting: Tying funding to measurable service results.
Decentralised Planning Models: Empowering frontline services with real-time financial data.
Carbon Accounting and ESG Integration: Including sustainability impacts in planning.
Open Book Forecasting: Increased collaboration across departments and agencies.
Zero-Based Budgeting Revivals: Especially in austerity phases.
How FP&A Can Help Public Bodies Navigate Uncertainty
FP&A teams are not just number crunchers—they are strategic navigators. In today’s perma-crisis climate, FP&A functions help the public sector anticipate, mitigate, and stay ahead of financial, operational, and reputational shocks by:
Anticipating Political Pitfalls: By scenario planning around policy changes, election cycles, and regulatory shifts.
Avoiding Budget Overruns: Through real-time tracking and AI-based anomaly detection.
Mitigating Public Criticism: With proactive, transparent reporting and predictive KPIs tied to citizen impact.
Preventing Inefficiencies: Through AI-driven workflow automation and cost optimisation models.
Staying Ahead of Programme Failure: By integrating planning with risk, change, and project governance.
The era of Digital Finance Kaizen
The days of costly, highly intrusive busienss transformation programmes should finally be coming to an end. AI and Sovereign cloud should enable CFOs and S151 officers to leverage their existing tech assets and investments to facilitate the pace of change that the organisation can sustain and consume.
Its always important when looking at FP&A innovation to consider the starting point and level of change that can be anticipated, a reality check is often required as 80% of finance transformation programmes fail to deliver the expected outcomes. See below a high level maturity assessment.
Clearly the more manual the process, the greater the change.
Defining / Refining your existing FP&A model is not just about systems and processes. It's about shifting public sector finance from stewardship to strategic enablement
Author: Alisdair Bach, SAP S/4HANA Programme Director & FP&A Transformation Leader in the Public Sector
If you’re considering a reboot of your FP&A function or finance operating model, I’d love to help you explore the options.
No sales pitch. Just practical advice over a coffee and a chat.
Alisdair
alisdairbach@dragonerp.co.uk
