Careful planning and analysis form the foundation for a successful organization. In a fast-changing world where data is generated at every turn, it is crucial that organizations understand how to derive the most knowledge (value) they can from their data to ensure long-term success. This can be as simple as a monthly sales report to know how much product your business sold in the previous month, or more complex, such as a 12-month forecast to guide allocations in the budget for the next fiscal year.
In this post, we will focus on a term very well known in finance: Financial Planning & Analysis, or FP&A. How has it changed in the Digital Age? Is it possible to expand FP&A outside of finance? How are advancements in technology supporting the expanded, more strategic role of finance? And finally, what is xP&A?
How to make use of all that data
Modern analysis tools such as ERPs (Enterprise Resource Planning) and CRM (Customer Relationship Management) systems generate data – as well as all sorts of other platforms and applications used by your organization’s marketing team or purchasing department, for example. This includes data with and without a direct connection to finance. The benefits are not always apparent at first glance. The volume of data is simply too large and therefore very difficult to manageable without utilizing advancements in technology. As a result, new job titles and terminology have emerged in recent years such as Data Scientist and “Big Data.” Many organizations believe that in order to capitalize on all of the data they have, they must hire a team of data scientists to make sense of it all. With new technologies available today, it is possible to generate added value from your data without needing to hire an entire team of specialists.
From FP&A to xP&A
As we mentioned before, Financial Planning & Analysis (FP&A) is a pillar in the foundation of finance. Although many controllers and finance teams still rely on spreadsheets as their key planning tool, modern platform solutions are increasingly used to help organizations automate, integrate and transform™ their planning and reporting processes.
New possibilities through larger data volumes and automated processing also allow more precise planning, control and adjustment of more than just the finance side of the business. The tools that are used for this are not strictly limited to one single type of data, which allows you to use them to improve insights for other business functions. This is where FP&A makes the leap to xP&A.
The “x” in xP&A is not an unknown, but stands for X-tended planning capabilities, which offers a large, mostly untapped potential for organizations of all sizes and industries. Sales, procurement, HR, marketing and many other areas where data is generated that all too often lies idle can also benefit from improved data-supported insights to drive better decisions.
Automate, integrate, transform
Integrated planning means the consolidation of planning processes across an organization to a single solution. It is also a key component in the strategy of automate, integrate, transform. Integrated planning makes linking planning and actuals effortless. Not many realize that this is possible with financial data as well as with non-financial data, as described above with xP&A. In each function of the business where data is generated, the potential opportunities to optimize value creation become available.
An emerging trend
An integrated solution offering modern technologies thus becomes a powerful tool for the planning, analysis, forecasting and monitoring of both financial and nonfinancial data in organizations of all sizes and industries. While it is still considered a relatively new concept, expect to see more of xP&A as businesses look to glean more value from their data.
Look for most posts from us on this emerging trend in FP&A and see for yourself what a modern solution can do for your organization.