What Is XP&A?

Extended Planning and Analysis (xP&A) busts through the traditional boundaries of Financial Planning & Analysis (FP&A). It breaks down the silos, or isolated systems and processes, that exist between the financials of an organization and its other departments. The result is that strategies and initiatives can be developed, connected, and synchronized across an organization instead of compartmentalizing.

Why XP&A Is Needed for Enterprise

It has been estimated that by 2024, most FP&A practices will morph into xP&A practices. This is because xP&A leverages the best aspects of FP&A— advanced analytics, continuous planning, forecasting, and performance monitoring. It also extends those aspects beyond any perceived or actual boundaries to encompass all departments of an enterprise or organization.

Over time, individual departments in an organization become isolated because of the systems and processes unique to their department. This creates “silos,” making it challenging to integrate the operational-level plans of each department with the higher-level plans and strategies developed by management and the financial department.

Comprehensive planning effectively abolishes such silos and contributes to the bottom line of your business or organization.

How to Implement XP&A

To properly implement xP&A, an organization first needs strong systems and processes. Unified, extendable platforms assist in breaking down silos and integrating all departments. Then, an organization can:

1. Create a Strategy

As with FP&A, finance will likely lead the extension of planning across the organization, so they’ll need to develop a strategy for coordinating and integrating data, management, systems, and processes. Organizations will need to establish at this point how they will deploy their xP&A strategy.

2. Adjust the Infrastructure and/or Architecture

Depending on how isolated various systems and departments have become, you may need to rethink how data is accessed, analyzed, stored, and shared. This will likely be determined in part by the platform you choose and your organization’s goals and business requirements.

3. Make Decisions Regarding Data and Metrics

First, decide the data and data governance critical to each department, considering both operational performance and financial goals. This will determine which metrics you need to incorporate into the xP&A project.

4. Make an Investment in Change Management

The implementation of xP&A requires change at every level of an organization. Extensive training and monitoring may be involved, so companies face the decision of whether to invest in existing staff members or outsource change management. In reality, it is often a hybrid of the two that ends up being the right solution.

As you implement this modern approach, you will likely continue to learn and adapt, especially considering the benefits.

Benefits of XP&A

There are numerous benefits to the transition from traditional FP&A to xP&A.

  • Implementing xP&A offers organizations greater agility since eliminating silos makes adaptation across departments more efficient. Strategic financial and operational strategies and objectives will connect in real-time, enabling agile decision-making and transformation.
  • Cross-Functionality. The unified platform required for xP&A means that cross-department functionality will improve and likely help your organization reach its business goals more quickly. Data is consistent and tailored for approved users, resulting in high-level planning that connects and integrates easily with mid-level and operational planning.
  • The choice of various means of deployment, such as on the cloud, on-premises, or hybrid, and standard and advanced business practices like AI, automation, and machine learning, make xP&A a flexible approach to business strategy.
  • Up-to-date information, reporting, and alerts made more visible via customizable dashboards and visual KPIs and analytics make for improved communication and decision-making.

Reaping the Benefits

XP&A provides agile, flexible, and highly visible solutions compared to traditional FP&A. Experts at eCapital are standing by, ready to help you take advantage of how xP&A can propel your organization into the future.

Attend the next eCapital Roundtable to see how other organizations put xP&A into action.