What is XP&A?
First, a short introduction to XP&A: it stands for eXtended Planning & Analysis, meaning the planning & analysis is not only used in finance (the F in FP&A), but in any (X) relevant organizational area that produces business plans, including area’s like sales, marketing, production and HR. Other related terms are Integrated Business Planning (IBP) or even Sales & Operations Planning (S&OP). In this blog, we will use the term XP&A.
In our view, XP&A can add great value to the planning processes. Also, we think there are multiple angles to look at XP&A without using all the (sometimes confusing) terms. First of all, we think it adds value to do the planning not only from the finance team, but with multiple teams in your organization. Also, the planning should be done together in order to you the knowledge, experience and strengths of all those people and teams.
Furthermore, as also stated in the Board Schema, we support the thought to combine multiple planning processes into one integrated process and environment. In other words, budgeting, (strategic) planning, (driver based) forecasting and scenario modeling all-in-one to make the best use of all data and information available without moving data between all kinds of systems and databases.
The top 5 reasons why
With that, one of the goals is to eliminate the traditional barriers between finance and other areas to better connect strategic, financial, and operational plans. By synchronizing plans across the organization, XP&A helps businesses to benefit from greater transparency, alignment, and accountability for the actions taken by each department – with everything tying back to the financial implications of undertaking them. This works to add more agility which, given the complexity and pressure of the modern market, is necessary when change can occur at an incredible rate.
1. The right people are planning the right things
Create a single view of financial and operational activity without the labour-intensive work required to try and piece everything together. With XP&A all details can be planned by the respective department and the outcomes come together in reports and dashboards combining the data to relevant KPI’s.
Also, make sure the right people are planning the right things, together! So, sales people can share insights around customers, financials can validate that towards finance figures and production can use it to enhance their plans as well.
2. Easier identification of opportunities (and threats…)
Unified, accurate data makes it easier to spot cost-saving or growth opportunities, especially when using scenario modelling techniques to simulate the outcome of changes. With all business drivers planned, it is possible to create new scenario’s by copying an existing scenario to a new one and adjust the business drivers.
3. Complete business alignment (and collaboration)
By implementing XP&A it is possible to get alignment between strategic, financial and operational goals. Strategic goals cascade down into operational activities to drive them and ensure all departments achieve the same purpose.
The transparency created by the unified dataset identifies how one team’s activities impact another, encouraging collaborative working and ensuring full accountability of results.
4. Increase the speed and frequency
With a template based approach and different models per person / department, you can increase both the speed and the frequency of planning because there is less maintenance in the models and more structure. Also, changes can be made easy and data can be copied to new versions or scenario’s.
5. Automate time-consuming manual processes
And, last but not least, by automating processes and the use of templates, a lot of time consuming work is removed and there will be less errors in the planning processes.
Which benefits will you get from XP&A?
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