7 Steps in Moving to xP&A According to FP&A Trends
In the ever-changing business world, being adaptable is crucial for survival. Extended Planning and Analysis (xP&A) is a new way of thinking that goes beyond traditional Financial Planning and Analysis (FP&A). It changes how organizations plan and allocate resources, with FP&A leading various planning efforts. While the benefits of xP&A are clear, the shift happens over time. According to the 2022 FP&A Trends Survey, only 16% of organizations fully adopted xP&A, while 27% have started, and 22% are thinking about it.
According to FP&A Trends if you’re thinking about implementing xP&A, this is where you should start:
1. Crafting the xP&A Vision Document
At the beginning of the xP&A journey is the creation of an xP&A vision document. This document explains the core of xP&A, why it matters, and the many advantages it offers. It's meant for both senior and operational management and should bring together ideas from different areas. The FP&A team, in a great position for this, takes on the task to ensure it covers strategic, financial, and operational aspects thoroughly.
2. Mapping Planning Content and Process
It's really important to grasp how things are currently planned. Organizations need to break down what's in their current plans and how they're made. Are these plans about strategy, money, or operations? Do they include everything they need? Just using the chart of accounts (C.O.A.) for financial plans isn't enough, since plans involve more than what the C.O.A. can measure. It's also crucial to consider how products and services change over time to use resources well.
3. Transitioning to Intelligent Driver-Based Models
Intelligent driver-based models are central to xP&A. They shift from relying on intuition to using predictive and prescriptive tech like AI and ML. These tools quickly find hidden factors and trends, leading to accurate predictions and smart choices.
4. Embracing Scenario Planning
Since the future is uncertain, it's important to use scenario planning. xP&A encourages thinking about different possible futures, so organizations can prepare for various situations. With fast scenarios and plans in place, organizations can quickly react to unexpected events.
5. Evaluating and Implementing Technology
Technology is crucial for xP&A's success. Basic tools like spreadsheets aren't enough. Modern FP&A platforms use automation, AI, and ML to speed up work, remove unnecessary tasks, and help with smart choices. The right tech package supports combined planning, automation, AI and ML use, scenario analysis, and adapting to different future possibilities.
6. Upskilling FP&A: Building a Dream Team
A strong FP&A team is really important. Having experts with different skills makes a powerful group. This team includes architects, analysts, data scientists, storytellers, and influencers. Each person adds something valuable, making sure planning and decisions cover everything.
7. Seizing Opportunities for Change
Starting the xP&A journey means grabbing easy successes. This includes making reports simpler with automation, asking users for input to find problems, trying self-service tools, using AI and ML for better predictions, and teaching the FP&A team about AI and ML.
Extended Planning and Analysis isn't just a trendy word; it's a plan for how organizations grow. In these uncertain times, xP&A helps organizations become stronger and more flexible. While it's not a quick change, the benefits are worth it. Following the steps mentioned earlier helps organizations move toward xP&A success, changing how they plan, use resources, and succeed in a changing business world.
For information on how Finicast can help you move towards xP&A contact us today.