xp&a extended planning and analysis

Budgeting, Planning & Forecasting

- 2 min read

xP&A: Moving FP&A Principles Outside the Finance Domain

Large organizations have quickly realized that they must drive a serious digital transformation effort to remain competitive in today’s turbulent markets. In business planning and analysis, achieving this requires replacing the reliance on disparate spreadsheets, standalone systems, and disconnected point-to-point solutions with a more coherent, standardized, and integrated approach. This step-change represents, as termed in a recent Gartner research note, as Extended Planning & Analysis (xP&A).

What is Extended Planning & Analysis? 

Gartner defines xP&A as “the extension of Financial Planning & Analysis (FP&A) principles beyond the finance department.” This extension could be into any organizational area that produces business plans, including sales, marketing, and HR. Gartner predicts that by 2024, 70% of all new FP&A projects will have an extended scope beyond the finance department. 

Why is an xP&A approach becoming increasingly common? 

The FP&A process provides finance teams with a structured approach to financial budgeting, planning, forecasting, and reporting, enabling them to inform the strategic decisions made by senior management and assess their financial impact. The challenge is that FP&A only offers a financial perspective, ignoring the activities and plans of other business areas that all contribute to the bottom line.  

The sales team will have planned forecasts and targets, marketing will have a series of planned campaigns, HR will have plans for remuneration and headcount, and production will have schedules, planned material, resources, and capacity. Each operational plan is typically conceived in isolation of the others, lacking real insight into the impact on the business. For example, a rise in sales requires increased production capacity, which needs additional headcount and machinery. 

Trying to manually collate data from different spreadsheets and systems to pull together an overall business plan is a time-consuming and near-impossible task, especially given the ever-evolving nature of planned activities. As a result, it rarely happens, leaving management teams without clarity over the relationship between the output of each team or the overall business picture. 

IBP disconnected silos

xP&A overcomes this problem. When applying standardized principles of FP&A to other departments, financial and operational data comes together to generate collaborative sales, demand, procurement, HR, and IT planning with a common goal – an approach often referred to as Integrated Business Planning

integrated business plan flowchart

The benefits of xP&A 

The standardization, automation, and integration of planning activities business-wide bring far-reaching benefits for both management teams and employees:  

  • Complete performance transparency: Busting data silos creates a single view of financial and operational activity without the labor-intensive work previously required to try and piece everything together.
  • Easier identification of opportunities: Unified, accurate data makes it easier to spot cost-saving or growth opportunities, especially when using scenario modeling techniques to simulate the outcome of changes.
  • Complete business alignment: Strategic goals cascade down into operational activities to drive them and ensure all departments work towards the same goal.
  • Collaboration and accountability: The transparency created by the unified dataset identifies how one team’s activities impact another, encouraging collaborative working and ensuring full accountability of results 
  • Empowerment of business partnering: Leaders have the tools they need to quickly identify opportunities for improvements in efficiency and output, enabling them to act as strategic advisors for the business.

The overall result of xP&A is unification. The organization has the tools and access to data it needs to be more efficient and effective across all departments.

What to look for in an xP&A software solution  

A standalone FP&A solution does not meet the requirements of implementing xP&A. The planning requirements of each department vary greatly, and the rigid approach of prebuilt software designed for finance does not fit.  

To realize xP&A effectively, organizations need a unified platform that offers the flexibility to adapt to different needs while preserving data accuracy and process control. As Gartner highlights, this requirement pushes organizations to use fewer vendors in favor of solutions offering multiple capabilities. The unified Board Decision-Making Platform is one such offering, offering a standard foundation of data from all departments to base all reporting, planning, and forecasting activities. 

Learn more about how to extend the principles of FP&A across the business in this on-demand webinar covering IBP, planning, and forecasting across the enterprise. 

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Extending FP&A principles in action

Watch this on-demand webinar to learn how Integrated Business Planning enables the achievement of an xP&A approach.