FP&A teams are buzzing with enthusiasm, as Gartner predicts that by 2024, 70% of all new FP&A initiatives will have an extended reach outside the Finance department. Along with the bold prediction for the future of FP&A, Gartner has also reinforced what many FP&A executives already know. The role of finance in delivering granular, driver-based operational strategies is becoming increasingly important in terms of driving performance.
We’re therefore in the era of eXtended planning and analysis (XP&A).
- The “lines” between operational and financial planning no longer exist
- Going forward, Finance teams will now be expected to serve as strategic business partners and help drive plans for Merchandising, Sales and Marketing, and Operations.
- Finance must intelligently align these granular plans with the broader consolidated financial plans – and do it seamlessly and at scale
Many FP&A teams are naturally thrilled with Gartner’s third-party affirmation of the relevance of operational planning as the notion of XP&A takes off. However, many Finance professionals are unsure how XP&A differs from integrated business planning.
Integrated Business Planning (IBP) Defined
Many finance professionals are using IBP as a management framework to create organizational strategy and optimize operational strategies as their roles increase. IBP enables Sales, Operations, Marketing, and HR to match external elements like as competition and economic changes with financial goals and comprehensive operational plans.
IBP enables a continuous cycle for reviewing and analyzing financial outcomes and comparing actual outcomes to comprehensive operational plans throughout the whole business through such alignment. As a result of this approach, the company is able to identify risks/opportunities and build action plans.
The Challenges of Today’s Business Planning
To succeed in today’s economy, smart businesses must master complexity in order to execute across several lines of business, each of which necessitates distinct global go-to-market and operational strategies. When it comes to aligning consolidated company or business-unit financial goals with specific operational plans, businesses without IBP encounter various obstacles.
Here are a few of the challenges:
- Difficulty aligning key executives and stakeholders
- Lack of business agility
- Siloed decision-making
- Negative impact on business performance
The Rise of eXtended Planning & Analysis
The IBP focuses on providing a management framework for Intelligent Finance organizations to drive performance. Consider XP&A, on the other hand, as the technological enabler for executing IBP at scale and with precision.
Leveraging XP&A to Inspire Intelligent Finance
XP&A’s “Finance out” approach validates the significance of Intelligent Finance for CFOs and Finance teams seeking a seat at the strategy table. Because XP&A requires Finance teams to make large-scale technology decisions that cover a variety of capabilities – such as people planning, sales planning, and reporting – without accumulating technical debt from disparate technologies.
Intelligent XP&A: Unifying Finance & Operations with Control
Now is the perfect opportunity for Finance teams to conquer the complexities of their “connected finance” procedures for organizations just starting their XP&A journey. To move away from decision-making in silos. And to react quickly and effectively to the rapid speed of change in their environment.
Conquering Complexity to Lead at Speed
With the rise of XP&A, Finance teams now have a perfect opportunity to conquer the complexities of their internal systems and processes, allowing them to focus on driving business strategy and performance. Nonetheless, process automation is not a new notion, despite its importance.
XP&A, on the other hand, puts Finance in charge of inspiring a digitally ready, data-driven, and performance-focused culture across the whole company, allowing truly integrated business planning to become a reality. To provide lines of business groups AND Finance the operational relevance and flexibility they need. To provide the organization with the controls and governance it needs to scale. To continue the never-ending process of releasing the Finance team’s actual worth and potential to drive performance and inspire a new standard for corporate performance management.
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