xp&a extended planning and analysis

Budgeting, Planning & Forecasting

- 2 min read

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

Large organizations are quickly realizing that to remain competitive in today’s turbulent markets they must drive a serious digital transformation effort. In the field of business planning and analysis, achieving this requires the reliance on disparate spreadsheetsstandalone systems, and disconnected point-to-point solutions to be replaced once and for all with a much more coherent, standardized, integrated approach. This step change represents what is termed in a recent Gartner research note as Extended Planning & Analysis (xP&A) and here we explore exactly what that entails.  

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 area of the organization which produces business plans, including sales, marketing, and HRGartner predicts that by 2024, 70% of all new financial planning and analysis 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 areas of the business which 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 of these operational plans has typically been conceived in isolation of the others, without real insight into the impact it may have on the business overall – e.g. a rise in sales actually 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

With xP&A this problem is overcomeWhen the standardized principles of FP&A are applied to other departments, financial and operational data is brought together to generate collaborative sales, demand, procurement, HR and IT planning with a common goalThis is 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 brings far-reaching benefits for both management teams and employees:  

  • Complete performance transparency  the busting of 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 – the unified, accurate data makes it easier to spot cost-saving or growth opportunities – especially if scenario modeling techniques are used to simulate the outcome of changes 
  • Full business alignment – strategic goals can be cascaded down into the operational activities which will drive themensuring all departments work towards the same goal 
  • Collaboration and accountability – the transparency created by the unified dataset makes it clear how one team’s activities impact another, encouraging collaborative working and ensuring full accountability for results 
  • Empowerment of business partnering – Leaders are given 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 one of unification, giving the organization the tools and access to data it needs to become more efficient and effective across all departments. 

What to look for in an xP&A software solution  

standalone FP&A solution will not meet the needs of those wanting to implement xP&A. The planning requirements of each department vary greatly and the rigid approach of prebuilt software designed for finance simply doesn’t fit.  

To realize xP&A effectively, organizations need a unified platform which offers the flexibility to adapt to different needs while preserving data accuracy and process control. As Gartner identifies, this requirement is pushing 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 on which 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 Integrated Business Analysis, 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.