Data-driven financial planning is essential to every enterprise. However, making informed decisions is more challenging than it needs to be when you’re dealing with disparate reports and spreadsheets that are outdated and inaccurate the moment you start reviewing them.
Effective financial forecasting demands a holistic view of business operations. Yet, a series of ineffective reports will fail to demonstrate how enterprise data relates from one business unit to the next. Without holistic real-time data, you also miss out on opportunities that demand quick decisions.
Getting a bird’s eye view of your business operations plays a substantial role in financial planning, but most FP&A tools don’t incorporate all the information you need in ways that are easy to understand. That’s where extended planning and analysis (or xP&A) fills the gap.
But what is xP&A, and how does it benefit your enterprise? Here’s what you need to know.
What is Extended Planning and Analysis (xP&A)?
xP&A is an enterprise planning strategy coined by Gartner that enables financial planning with real-time data from across the organization.
This strategy employs a single integrated platform like Power BI to aggregate and analyze data from different sources, rather than only looking at financial data when making enterprise-wide financial decisions. xP&A extends beyond FP&A by incorporating all data into one platform for simple reporting and analysis.
Before, FP&A was focused on what happened in the past to plan for the future. This meant unanticipated business shifts in operations, HR, marketing, or any other department could quickly make quarterly or yearly projections obsolete. Even if gathering data from different business units is a routine practice, it’s unnecessarily challenging to comprehend data manually collected through different reports.
Now, the evolution of FP&A calls for a wider scope of the business and a single source of truth for data. Organizations are gathering cohesive data from every business unit that has the power to strengthen enterprise financial goals and decisions. But, if your enterprise uses different best-of-breed (BoB) tools to track that data and there’s no standard for reporting, you may not see all the data you need for informed financial planning and analysis.
That’s why the secret to xP&A success is an integrated, collaborative platform. This platform-centric strategy helps you collate data, combine domain-specific planning tools, and run reports that feature the most relevant queries. All the information you need is right at your fingertips and updated in real-time.
Why xP&A is Important
Being able to make fast informed decisions is crucial to enterprise success. However, most organizations aren’t as agile as they need to be to recognize and capture opportunities. In fact, only 3% of businesses have an aligned and integrated solution to analyze strategic, operations, and financial data.
Traditionally, executives ask for the reports they need for forecasting and budgeting meetings from leaders across business units. But, according to the Urban Institute’s Director of FP&A Colt Meraw, “Without the right KPIs, you can ultimately make decisions that aren’t based on information that’s relevant to those decisions.”
In many cases, non-finance leaders may not understand what data is important for FP&A and don’t even realize the valuable information hidden in their data. When executives make decisions based on reports pulled days or weeks before, they frequently miss key trends on the horizon.
Here’s where an enterprise-wide BI platform like Power BI and an xP&A strategy make a big difference for your enterprise.
Gain Real-Time Data and Accessibility
With real-time data integrated into one platform, updated reports can be run and rerun to give financial executives a better view of what’s happening in the business right now. From these platforms, anyone with the right permissions is able to quickly and easily run queries for analysis, without relying on IT every time they need updated data.
Improve Productivity and Decision-Making
xP&A improves productivity by significantly shortening the lead time for reporting. When real-time data from across the organization is pulled into a report with a simple query, decision-makers see the entire picture and make choices based on the most relevant data from every business unit. Automated workflows simplify processes and make planning less time-intensive, too.
Increase Collaboration and Information-Sharing
Process workflows make financial planning and analysis a more collaborative experience. As more organizations shift to remote work permanently, coordinating in-person planning meetings for important decisions may become more challenging. An xP&A platform simplifies remote collaboration and communication to help your teams stay on the same page and share data throughout the organization.
Ultimately, xP&A exemplifies the three pillars of FP&A (people, process, technology) and makes decision-making more user-friendly and simple for your teams. Leveraging powerful technology that unites departmental data tools fosters a better enterprise culture and less labor-intensive analysis for every team, not just your finance and accounting departments.
How Collectiv Helps Your Enterprise Grow with xP&A
Shifting from a finance-centric FP&A strategy to a more inclusive xP&A strategy doesn’t happen overnight, whether or not you already have a comprehensive data platform in place. In many instances, gaining buy-in to adopt xP&A principles involves a detailed roadmap to achieve full participation across the organization.
Adding new technology or expanding the use of existing technology is difficult without the right support. Enterprise-wide adoption is critical to leverage the power of extended planning and analysis. Otherwise, even if your data management improves, your enterprise culture might suffer.
People need to be empowered and inspired to move to an integrated platform, collaborate across business units, and readily share data. While Power BI enables improved planning and analysis, xP&A only works when data integrity is an inherent part of your strategy.
With Collectiv’s FP&A Visioning Program, your organization gradually evolves into a successful xP&A strategy. As your FP&A vision expands, financial forecasting and budgeting become even more crucial to your strategic goals and overall success.
Our experts help you develop a comprehensive vision for effective financial planning, forecasting, and budgeting. Then, we empower your team with impactful strategies to help your organization grow. Learn about our FP&A Visioning Program to see how Collectiv’s innovative FP&A support expands your success.