Through a combination of data-driven technology and process, FP&A has made planning an art form. In doing so, it's become a key role in modern business, putting a strong system in place for budgeting, forecasting and reporting.
But planning--as well as the modeling, reporting and analysis involved in it--is part of every area of business, not just finance, and by 2024, Gartner predicts 70% of Financial Planning and Analysis projects will extend past the finance team. To meet those needs, a new model is emerging that embraces the same system used in FP&A and moves it into other areas of enterprise planning and analysis.
Extended Planning and Analysis (xP&A) takes the power of FP&A and integrates it throughout your organization. The "x"--for "extended"--is the X factor, promising to potentially break down organizational silos and integrate planning processes and data business-wide. By using the same tools as FP&A, it can increase scale, collaboration and automation across the business.
Gartner expects xP&A to become mainstream by 2022. And it may be exactly what your business needs as you embrace the new normal ahead.
With that in mind, consider:
What is xP&A?
Organizations are increasingly viewing planning as similar across disciplines--which means the same data, technology and processes can be employed for functions such as supply chain planning, merchandise planning, operational planning and technology planning as are used for financial planning. When fully integrated across the organization, xP&A breaks down the traditional silos between enterprise financial and operational planning processes and creates a cross-departmental framework that makes planning collaborative and hand-offs transparent, providing more business value.
By doing so, xP&A--and planning in all its forms--becomes a business-wide behavior and process that lets you best align your resources to your organization's strategic and operational goals. This creates a transparent and holistic view of your near-term health--from customer pipeline opportunities and people decisions to accounts receivable and related cash implications.
Combining all of these unique aspects of the business can help guide your entire organization forward.
xP&A vs. FP&A
What makes xP&A and FP&A different?
FP&A teams analyze operational and financial data and align business processes and strategies. You look at historical and real-time data to forecast what comes next and plan accordingly. But while the data you draw on might come from across the organization, including both financial and non-financial sources, you're generally planning with a financial or strategic lens.
So while FP&A has influenced the entire finance function, xP&A can empower other functions across the organization in the same way. As you constantly try to connect the dots and get to insights faster to enable your best decision making, xP&A is the natural evolution of planning. And as natural dot connectors, your FP&A team is perfectly placed to lead the charge.
xP&A uses many of the same processes and tools you use as an FP&A professional in order to build automation and planning across the entire business, pulling from a single source of truth. In doing so, it increases transparency while reducing the planning workload in departments company-wide--introducing data-driven decision making that goes beyond finance to open up new insights and fresh opportunities to thrive as a business.
And since everything together affects an organization's revenue goals and projections, xP&A also offers you--as a finance professional--a fuller view into today and tomorrow. Something that has far-reaching benefits in the years ahead.
5 Ways xP&A Can Help You Navigate the New Normal
By applying FP&A principles, widespread xP&A that's integrated across the business can prepare your organization for change, enhancing its agility and setting you up for success. Here are five reasons why:
- xP&A can help build full business alignment. By combining data, processes and technology, xP&A lets you optimize your decision making at every point, in real time. This means you're optimizing your insights, decisions and actions as well, all with the goal of building a better business.
- xP&A can give finance full visibility organization-wide. By extending the processes your finance team uses every day, xP&A--when fully integrated business-wide--gives you a better view into the entire organization, including the risks, resources and assets that define it. This lets you strategize accordingly and build a plan with the entire organization in mind.
- xP&A sets businesses up for change. Organizations today know that business and market changes are always around the corner. To stay on top of them, you need all of the information you can get, so you can stay agile and adjust your plan accordingly to continue to meet change head on and thrive. Wherever you deploy xP&A practices within your organization, it enables you to be ready for change.
- xP&A helps identify new growth opportunities. With a single view of the entire business and the data to support it, organizations can take the processes your FP&A team already uses to better identify opportunities for expansion or cost savings, This helps you optimize the business as a whole and move it forward intelligently at every step.
- xP&A can build better cross-departmental collaboration. By shutting down the data silos, fully integrated xP&A can empower you to eradicate the communication silos too. This means all of your teams can work together towards the same goals and with the same roadmap to get there.
All of which is exactly what's needed as your organization begins to explore what's next for the market and your own business objectives. By increasing transparency and building a more holistic view, xP&A lets you get more out of your data and helps build a stronger, more unified business.
Find out how Vena can help you master integrated business planning.
