Everything Planning xP&A Accelerator: Improve Performance in 7 Steps xP&A refers to extended planning and analysis—the implementation of financial planning and analysis (FP&A) across an entire business. This approach unites a company’s disparate divisions through a single and centralized FP&A platform, providing a “single source of truth” for company performance. In effect, each division can develop effective business plans and strategies because of access to its counterparts’ real-time financial data and insights. In addition, company management has a 360° perspective of all divisions in a single consolidated view, which is always up-to-date and reflects the true performance of the organization as a whole. Now if all this information sounds familiar, it’s because FP&A has been moving in this direction for years. Although Gartner coined the term xP&A in a 2020 research report, this approach to FP&A has been around for decades—albeit with different names. You may have heard of integrated business planning, connected planning, connected finance and company-wide planning. Regardless of what we call it, Gartner predicts that 70% of new FP&A projects will be xP&A projects by 2024. How is xP&A different from FP&A? It’s not like companies have to select one or the other approach – this is not an apples-to-apples comparison. xP&A can be thought of as a more specific and improved version of FP&A. With FP&A we have the activities and processes that organizations go through to manage and report on their performance. xP&A, on the other hand, is FP&A but with an emphasis on how the activities and processes are managed, which includes the extended organization as part of the process. But is it worth making the transition to true xP&A? We’ll explain why we think it is, and how Kepion can make the shift as painless as possible. Some Challenges in FP&A Traditionally finance teams offer a solid methodology for financial planning and reporting for their organization. Planning for senior management oftentimes involves a once-a-year budgeting process, when management updates their revenue, expense and operational projections for the following year. Finance provides departments with their budget numbers from the previous year, departments perform their analysis in spreadsheets or other tools, and everyone submits their budget to finance. Often this is an arduous and manual exercise, and this one-time process is many times not updated throughout the year, providing little to no benefit once the budgets are approved and published. Because of the difficulties in developing and then consolidating and reconciling annual budgets, it can become incredibly difficult for some companies to perform adjustments or to create different versions of their budgets. In addition, developing and maintaining periodic forecasts, which incorporate the latest actuals from finance, are also difficult to maintain. Furthermore, performing what-if analysis by changing drivers and assumptions, while possible, can be too difficult and time-consuming to perform with much frequency. Many organizations have issues with isolated or siloed departments as well. Teams must strategize and execute their plans without a concrete, data-driven picture of how their actions will impact other departments and the whole business. It can be a herculean task for finance to manually combine data across departments and create a complete business plan. These finance teams spend a large percentage of their time consolidating and validating data, instead of performing more value-add, strategic activities. The bottom line supersedes all else. But how you reach that dollar amount—the business decisions, activities, and plans made throughout the company—cannot be driven by finance alone. A combined effort is essential, involving all departments on a single planning platform and with a consolidated view of the business. Why Should You Shift to xP&A? xP&A integrates a company’s departments on the same platform and process for their planning, reporting and financial analysis. Everyone across the enterprise uploads their data and insights to one centralized hub. This means any relevant party has access to the data necessary for their plan, with finance accessing each department’s real-time metrics and analysis from a single and shared source of truth. Planning data is automatically consolidated, and once-isolated divisions now know exactly how they can proactively support one another and contribute to the bottom line. To illustrate, let’s say a sportswear business has a surprise hit with one of their new shoe releases. The sales team reports their data on the company’s shared planning platform. The supply chain team, in turn, might draft a plan to boost manufacturing for just the popular shoe in order to capitalize on the demand. HR would need to drive hiring to accommodate the manufacturing push. Each team uses the same set of figures to best plan and effectively contribute to the success of the company, cutting time and cost expenditures. xP&A promotes synergy and agility, enabling businesses to preemptively adjust to ever-shifting markets on the fly. 7 Steps to Transition to xP&A Smoothly evolving to xP&A takes its own careful consideration and planning. We have identified seven key steps to ensure a successful, business-wide transition. 1. Get leadership buy-in A business that needs xP&A likely isn’t a one-person show. Your C-suite and department heads must believe in the benefits of xP&A for the transition to even begin. We recommend you develop a formal proposal, outlining the benefits of xP&A. In addition to the initial support and buy-in, ensure leadership is provided with updates and can intervene if and when there are conflicts or roadblocks in the transition. 2. Devise an xP&A strategy With the input of leadership, Finance should come up with a strategy to efficiently adopt xP&A and coordinate real-time, collaborative planning post-transition. Strategy should include the plan, process, team, data and change management requirements, along with what is ultimately the intended result of the initiative. 3. Restructure data and architecture Ironically, organizations often aren’t organized. Since all functions with an operational business plan will be contributing to the platform, it can quickly become chaotic. Companies must make sure their data architecture establishes solid standards for all their data systems before they interact. xP&A initiatives are often the catalyst to widespread data management efforts, due to uncovering data mismatches, manual steps, incongruous systems, data anomalies and errors. 4. Identify key data and metrics Finance can collaborate with other divisions to identify the essential metrics to incorporate into xP&A. You might even offload some metrics that have proven to be superfluous. Departments within the same company often require different data to evaluate and optimize their own performance. In addition, there may be drivers of performance that have never been tracked or reported on in the past. 5. Embrace change Transitioning to xP&A will be a huge change for everyone involved in the business— including Sales, HR, IT, etc. While thorough preparation can mitigate some of the growing pains, strong communication and support throughout the company will facilitate a smooth transition. Changing management efforts, such as incorporating steering committees, newsletters, documentation, launch parties and departmental training sessions have been known to support metrics that consider an initiative a success. 6. Take a trial-and-error approach No business is going to perfect its xP&A process from day one. As companies scale to xP&A and learn more about what works for them, best practices will emerge and will improve over time. Benefits can be realized quickly, upon even the most insignificant of changes. Changes should also be implemented in an iterative fashion, giving your organization the ability to provide feedback and tweak processes and data as you go. 7. Upgrade to an xP&A solution Your existing budgeting and forecasting software might not be able to support or get the most out of xP&A. While you may be able to leverage existing systems, it is common to require a more integrated and intuitive xP&A software solution, that has the flexibility to handle traditional finance operations and planning along with all other areas in the business. Make the Transition Seamlessly with Kepion Kepion offers our own xP&A planning solution. Kepion was established with an approach to integrated business planning in mind, to provide companies of any size, across all industries, with a platform that provides the ultimate flexibility in planning and financial reporting and in line with how companies manage their business. While all companies manage their plans differently, we generally see the xP&A process made up of four focused plans: Workforce Planning (HR Planning)Capital Asset Planning (Capex)Expense Planning (Opex)Revenue Planning A single instance of Kepion supports plans across an entire business, offering flexibility, stability, and scalability to accommodate your needs at any given time. Our platform makes the transition to xP&A as seamless as possible by providing the following features: Single platform for all departments Real-time single source of truthSelf-service modeling and management of the platform by your organizationRobust and scalable platform that can support multi-department, global organizations Flexible infrastructure that supports your technology integrationsBuilt-in workflow automation to support your full xP&A process One of our most important differentiators is the flexibility and scalability of our solution. As your business changes and grows, we have the unique ability to evolve your planning solution throughout this change. We recognize that a one-size-fits-all approach likely leads to a suboptimal fit for most. That’s why we maintain strong partnerships with our clients to ensure each one has the best xP&A tools for their requirements. Request your demo today and learn how companies are moving to an xP&A organization. Discover how you can begin the journey to a company-wide process for managing and reporting on the collective performance of your organization.