6 min read

Are you prepared for the transformative journey to Extended Planning and Analysis (xP&A)?

Jen Howard Hogg

Sr. Director, Analyst Relations & Corporate Comms

Before moving to Extended Planning and Analysis (xP&A) for improved decision-making, Finance leaders need to take these key steps.

Historically, business performance was managed solely by the Office of Finance with occasional input from various departments and some support from IT. Given its need to plan for and explain how the business meets targets, how it performed against targets, and why it missed targets, the finance function is naturally positioned to help drive and contribute leadership to collaborative enterprise-wide planning efforts.

However, the traditional financial planning and analysis (FP&A) approaches and technology of yesterday don’t optimize the finance function’s ability to answer critical questions and make pivotal decisions in real-time. Nor do they provide visibility into every line of business to help forecast accurately. Rather, they keep finance, operations, and workforce leaders siloed from each other and limit their ability to take a holistic approach to planning needed to successfully orchestrate business performance.

As such, the FP&A market is evolving into Extended Planning & Analysis (xP&A), which Gartner describes as “the next generation extension of financial planning and analysis (FP&A) solutions and is a vendor response to the challenges faced by enterprises seeking to exploit new digital business models and navigate current and future economic uncertainties.”*

At Anaplan, we call it Connected Planning for Finance.

Connected Planning for Finance, or xP&A, extends traditional solutions focused solely on finance into other enterprise domains such as workforce, sales, supply chain, and marketing. While orchestrated by finance, xP&A helps organizations to improve decision-making, by connecting financial and operational plans in real-time. It enables functional leaders to access information from a single source of truth, collaborate on plans to meet targets, and improve shared ownership and accountability without the need for piecing disparate solutions together.

As a finance leader, if you’re ready to transform your traditional FP&A process to xP&A, there are a few things to consider first.

Step 1: Create organizational enthusiasm and subsequently, adoption

Setting the right foundation before embarking on your xP&A journey is crucial for success. Start your process with the following:

Executive buy-in

This is a very important step. Without advocacy from the most important decision-makers in the company, there won’t be enough cooperation and alignment to make the xP&A platform work for the business. The CEO and CFO, in particular, must feel sure xP&A will not only upgrade internal planning and collaboration, but there will be a measurable impact on the bottom line. An upheaval of current processes needs a payoff, and it is vital to demonstrate areas of potential revenue growth and reduced operational cost. Their buy-in will encourage adherence from every business unit, better ensuring adoption and thus, more accurate data and planning.

Additionally, the most successful projects start with executive-level communication. When there is a formal announcement from leaders outlining a clear strategy including goals, value proposition, and requested company support, the expectations are clear and direct from the beginning.

Vision aligned to strategy

Every organization aims to hit big strategic targets, like improving margins by 4% over four years or growing revenue by 5% in three years. To do that, the company needs to rally around the concept and connect the dots. Create a journey to your ultimate goal but understand how to break the journey down into steps or phases, knowing that addressing immediate needs will create quick wins and build champions.

Once everyone is aware of the vision, break down the strategic path into stages to allow for quick wins, opportunities for buy-in, and creating advocates to share success stories around the positive transformation occurring within their departments, metrics, or reporting.

Step 2: Review activities to complete

Let’s say your leadership team understands the possibilities that xP&A affords the company. You’re ready to take the next steps, which will take a little more effort:

Analyze processes

Research your processes, evaluate handoffs between different analysts and functions, understand bottlenecks or issues currently causing inefficiencies and errors, and determine data sources. Identify silos in your planning processes, both financial and operational, and develop an ROI picture of improvement to support the business case. Perhaps marketing and sales processes are inadequately communicating changes in merchandising strategy. They’ve increased a discount halfway through the promotional period once the original offer proved insufficiently appealing. Maybe sales incentives or commissions shifted. If their process of making on-the-fly changes doesn’t incorporate communication between departments, other units are left in the dark. An increased discount or enhanced sales commission could mean increased demand beyond projections. This can disrupt supply, customer satisfaction, and, ultimately, revenue. Having a picture of every process end-to-end allows you to establish the big picture, understand starting points, share advantages for the business, and engage process owners.

Gauge culture

Does the business welcome or resist change? This is an important question to answer honestly, because if you move forward without consensus and a pledge from all necessary stakeholders to adopt the journey earnestly, xP&A won’t provide its full benefit. Understand who your champions are, who your more reticent participants are, and determine methods to drive adoption. Pair a champion with a less enthused participant, host office hours, and provide regular communication about the journey, sharing wins along the way as well as plans to address missteps or hiccups.

Roadmap

Know your goals and your path to reaching them. Create touchpoints for evaluating KPIs and sort them by importance, risk, and positive change in ROI. Once you’re sure the roadmap includes all the planning characteristics required of your business, again seek executive buy-in to solidify the plan. With everyone on the same page about goals and the strategy by which you plan to reach them, every stakeholder has something to gain. Each business unit sees their role in the company’s success, and the data and forecasting moves in real time to keep departments motivated to improve, grow, and exceed goals.

Step 3: Make the decision

Once you complete all the necessary preparations to confirm that your business is ready for xP&A, it’s time to evaluate vendors.

Evaluate technology

Seek a platform best matching their capabilities to your roadmap and goals. For instance, Anaplan’s Connected Planning solution provides users with the ability to do advanced forecasting, modeling, and analysis shareable across the organization. Contained within a single platform, there is no need to switch between applications or apply different modeling for various use cases. Instead, Anaplan is a full package, housing all the data and modeling capabilities available to create a single source of truth for everyone.

This provides every business unit, from supply chain and workforce planning to marketing, IT, and finance, with the ability to make agile decisions based on real-time data, using both internal and external sources, rather than relying on historical data alone.

Conclusion

If you’re serious about improving your FP&A processes to be more thorough, accessible, and successful, your organization is a good candidate to evolve to xP&A. You’ll break down siloes, collaborate freely and effectively, and position your business to respond to every event affecting your supply chain, operations, and financial health.

*Gartner Market Guide for Cloud, Extended Planning and Analysis Solutions, Robert Anderson, Greg Leiter, 29th July 2021.
Gartner does not endorse any vendor, product or service depicted in its research publications and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner’s Research & Advisory organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.

Discover more in Gartner’s Market guide for cloud, extended planning and analysis solutions.

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