xP&A – The evolution of Budgeting, Planning & Forecasting

Sep 23, 2021

xP&A is the evolution of Financial Planning & Analysis (FP&A) – Extended Planning & Analysis (xP&A). No longer does financial planning just sit with finance, it spans the entire organisation to deliver integrated, automated, streamlined, and accurate business planning, reporting and cross-department insight. In this article, we delve further into what xP&A involves and why you should be taking steps towards adoption.

Why does planning and analysis need to evolve?

If nothing else, COVID taught us that businesses need to be more reactive to sudden changes in the sociological, political and economic landscapes.

Parallel to these demands, digital transformation is happening at a rate, faster than ever, and the reasons why, are clear.

Organisations of all shapes and sizes need to embrace this digital change to survive, let alone thrive, constantly needing to evolve planning and analysis processes.

Providing plans that cover the whole organisation is key. A joined-up solution means organisations can be ready for the unexpected and leads to an increase in the visibility of information across the board.

So, in a lot of cases, clearly something more complex than FP&A is required. This is where xP&A comes in. Planning and Analysis for businesses who want to maximise growth potential in our ever-changing world.

Often, departments in organisations plan in disparate ways leading to disjointed targets and objectives, and multiple versions of the truth. When departmental plans are combined into an enterprise plan, this leads to potentially poor-quality decision making. Amazingly, agreement on the turnover figure is often the most difficult cross-departmental challenge in many organisations.

What is xP&A?

xP&A is a planning method that stems from FP&A. It extends the planning processes across the entire business including:

  • Workforce & HR Planning
  • Sales Planning
  • Operational Planning – including Supply Chain, Production & Capacity…
  • … as well as traditional budgetary control

xP&A offers a unique opportunity to businesses who can now:

  • Break down silos between finance and other departments
  • Extend the power of FP&A outside the finance function
  • Change the role of finance from owner to manager of planning processes
  • Use a common tool to develop real-time cross discipline collaborative planning
  • Align plans with strategy

Why should you move towards an xP&A approach?

By embracing xP&A, organisations can experience a number of benefits and improvements compared to the traditional FP&A process:

  1. Real Time Visibility – An integrated view of plans and performance as it happens;
  2. A Single Version of the Truth – Everyone is working with the same set of numbers and the same information;
  3. Collaborative & Confident decision making – Make decisions as a collective, not as individual departments;
  4. Continuous Planning – Changing conditions can be catered for e.g. easily adapting production volumes due to a change in sales forecasts;
  5. Improved Business Results – With plans being in sync across departments, the business is well aligned and working towards the same goals;
  6. Create more inclusive business plans – All departments align to an agreed objective;
  7. Improve governance and reduce risk – Features such as workflow, audit trail and consistent process result in faster processes and best practice.

Breaking Down Barriers

Extended Planning & Analysis is a unique opportunity to bring together formerly disjointed departments into a cohesive group working to common objectives with a common business planning process and a common financial objective.

The Market

With the advancement in both the software & technology and the control of data, businesses are now at a stage to extend the planning to the wider business to help accelerate business performance.

The world’s leading advisory firms are strongly advising clients to consider xP&A to join up plans across the whole of the organisation.  This vastly reduces the risk of poor business decisions.

Recently Gartner said in their Market Guide “xP&A seeks to provide better informed and timely decision making to meet tactical and strategic objectives.”

XP&A checklist

So where do you start on the journey to better planning?

Here are a few formative questions from HAYNE Solutions:

  1. Are you using a flexible and scalable platform that uses a highly connected and highly participative planning core capable of handling high data volumes? (by the way if you answered ‘Excel’ to this question please give us a ring!)
  2. Can you pull in external data such as market prices or weather data in order to continuously adapt and react to dynamics?
  3. Are you using managed workflows to deliver best practice and prompt reporting?
  4. Can you use AI and predictive analytics to augment the human intelligence you get from your solution? Are you now seeing hidden insights, an improved and tighter planning cycle?
  5. Do you have an easy-to-use solution you can roll out for cross-business adoption?
What next?

Talk to us about xP&A or Financial Planning and Analysis, and how you can take steps towards adoption.

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