Over the past two decades, applications and integration have evolved to the point where traditional boundaries between departmental silos are blurring. With that trend, there has been a corresponding increase in demand for reporting capabilities that transcend organizational boundaries.
Gartner recently noted an emerging trend in reporting, coining it “Extended Planning and Analysis,” or “xP&A.” Briefly defined, xP&A is the extension of Financial Planning & Analysis (FP&A) principles and practices to encompass other departments within an organization.
With a renewed focus on agility brought about by the COVID-19 pandemic, xP&A has moved to center stage for many organizations as they strive to gain clarity and make better informed decisions. Although xP&A has received increased attention as a result of COVID-19, it will become even more important in the coming years as a key driver of business agility and success, regardless of external market forces.
Let’s drill down on some of the key benefits of shifting to an xP&A approach:
1. xP&A Provides a Holistic View of Your Organization
Traditionally, finance has been responsible for managing a well-defined set of metrics, usually associated with core financials like general ledger, accounts payable, and accounts receivable, while extending to logistical operations when necessary.
When input is needed from multiple departments, information is first gathered from multiple departmental systems. Data are then combined and analyzed (often in Excel spreadsheets), where copy/paste mistakes can introduce errors into the process. Differences in taxonomy and timing can create inaccuracies that further distort the resulting analysis. To put it simply, building cross-departmental reports is often a tedious and error-prone process.
In the real world, every business decision should be understood in the context of its overall impact on organizational health and profitability. Unfortunately, the built-in reporting tools that come with most software are limited to a specific business domain such as ERP, CRM, or operations. xP&A leverages reporting and analysis tools that more easily lend themselves to cross-functional use, thereby providing a more complete and accurate view of the organization.
2. xP&A Fosters Agility
When the coronavirus pandemic hit, businesses across every industry struggled to assess their options and adjust to the new reality. For most, that process needed to happen fast. Unfortunately, many businesses were poorly positioned to rapidly assess the situation.
When organizations begin with a cross-functional view of business intelligence, they are better positioned to understand what’s happening on the ground and assess the potential impact of decisions quickly.
That assessment process inevitably starts with gathering all the relevant information from department heads. Only after all of those data are collated and harmonized can actionable insight be developed from it.
xP&A takes a proactive approach to this problem by establishing an integrated view of the business as a baseline for all decision-making. When a crisis hits, the pieces are already in place to quickly assess the situation, evaluate options, and move forward rapidly with a solution.
3. xP&A Provides a Single Source of Truth
Many organizations struggle with conflicting information from multiple systems. This issue has become more pronounced as the size and complexity of IT systems has increased and as the volume and variety of available data has skyrocketed.
Conflicting versions of the truth are a drag on management productivity. Instead of focusing on meaningful business decisions, leaders must spend their time trying to make sense of contradictory information. xP&A increases accuracy by proactively harmonizing data from disparate sources and eliminating the cumbersome and error-prone copy/paste process of consolidating data.
The result is a single source of truth. When business leaders from across all departments are on the same page, less time is spent arguing about the numbers, and valuable management attention can be focused instead on the concrete actions that will improve business outcomes.
4. xP&A Fosters Collaboration and Accountability
Because xP&A supports a cross-functional view of the business and a single source of truth, business leaders can align department heads around key performance indicators that support the success of the business as a whole, rather than focusing on incentives that enable successful departmental silos.
Departmental silos frequently foster a culture of finger-pointing. Reporting silos tend to exacerbate this problem because they allow departmental heads to engage in debates about the numbers, rather than focusing on the actions necessary to produce better business outcomes.
When department heads have visibility to organizational KPIs and can understand how they directly impact those metrics, accountability is clear.
5. xP&A Enables Scale
Businesses are striving to deal with higher volumes of data than ever before. Moreover, those data are coming from more diverse sources than in the past. As marketing has moved further into the digital realm, for example, the scope and granularity of CRM data has increased dramatically. Audiences can be micro-targeted based on an array of different demographic and behavioral factors. Businesses are able to measure the responses to campaign activities in mere hours rather than days or weeks, provided that they have the right reporting mechanisms in place.
This trend is not limited to digital marketing, though. In supply chain management, IoT devices are bringing real-time intelligence to bear on planning and execution processes. In manufacturing, machine metrics are providing visibility to efficiency and utilization rates. Dedicated expense management software lends itself more easily to analysis than the systems that preceded it.
Effective planning tools create real business value from all of that information.
Making xP&A a Reality in Your Organization
Rolling out an effective xP&A initiative requires planning and foresight. The disruptions brought on by the coronavirus pandemic has served as a wake-up call for organizations across every sector of the economy. The crisis has underscored the need for accurate real-time reports to drive rapid, well-informed decisions.
With xP&A solutions from insightsoftware, your business can increase organizational agility and achieve rapid benefits to the bottom line. Tidemark, insightsoftware’s flagship xP&A solution, provides a unified, continuous planning platform built on a secure and scalable cloud architecture.
To see how insightsoftware solutions can help you increase agility and reap rapid benefits, request a free demo.