In the two decades since QueBIT was founded, we have often been puzzled by the slow pace of change in enterprise planning and performance management. As recently as 2019 we attended a CFO symposium, only to be surprised at how the case study presentations around revenue and expense planning, headcount and capital planning, and variance and profitability analysis were little different from spreadsheet-centric presentations we had seen ten years before, and how few finance organizations had embraced technology to support data extraction, data governance and modeling their businesses.
This history of moving slowly only serves to accentuate the significance of the changes we have seen in the last two years. It was in this recent timeframe that the analyst firm Gartner introduced the term Extended Planning & Analysis, or xP&A, to describe a growing new trend towards integrated business planning, often driven by the Office of Finance. Integrated business planning (IBP) has been around as a concept for years, but its potential was hitherto only realized by companies that were aware of what was possible. Without a movement to educate and raise awareness broadly, the numbers remained small.
What’s different now is that xP&A is becoming mainstream, driven by (1) the cost and (perceived) ease of Cloud-based subscription solutions, (2) the challenges of managing “more data coming at you faster”, and (3) the need for greater agility to deal with uncertainty caused by a range of factors including accelerating digitalization of business, and unplanned-for happenings such as pandemics. Furthermore, new software vendors have entered the “Planning” / “Corporate Performance Management” arena and they are helping to educate the business world about the opportunities that come with embracing technology, as well as the dangers of being left too far behind.
As we look back on 2021, QueBIT will remember it as the year xP&A came into its own. All the major planning software platform vendors have embraced xP&A, as have organizations like the Association for Financial Professionals (AFP), publications like CFO Magazine, and others. There has been an uptick in client requests for “xP&A briefings” to be presented to cross-functional executive teams. The conversations are no longer just about technology (though finding the right technology fit is important), but increasingly they are about designing seamless inter-connections between systems and business processes. The hottest topics we are seeing right now are finance-driven initiatives around integrating financial planning with supply chain and procurement planning processes such as demand and supply planning, and inventory optimization. As consultants who are passionate about both business and technology, this is an exciting time.
In 2022 we predict that the forward-march of xP&A will continue:
- Companies that have under-utilized their technology investments, or that are still reliant on spreadsheets for reporting and analysis, will come to the realization that putting in more (and more) hours will no longer be enough to compete against working-smarter with good technology support.
- Companies that have taken their first steps along a path to xP&A by embracing technology to support (say) their Financial Planning & Analysis (FP&A) or Demand Planning processes will start to explore ways of getting more value from their investment in buying and learning the new technology. For example, suppose you now have a system for revenue & expense planning: what about integrating your balance sheet & cash forecasting? Or suppose you now have a predictive model for Demand Forecasting: what about integrating your Procurement Planning?
- Companies that are mature users of technology for planning continuously look for suitable opportunities to deploy it. Some companies establish internal teams to develop and maintain these applications, which can help build a vibrant community of users, administrators and developers who work together to reduce time spent on manual data collection and report building, so that the business can focus more on analysis and making better decisions. But even these companies have room to grow in xP&A terms, as many of these teams serve a single function, most often Finance. The opportunity here is the holy grail of xP&A, which is to breach the silos that naturally appear in a business, and inch towards true real-time cross-functional planning and analysis. This is especially challenging because it involves much more than just deploying a technology. True xP&A cannot be achieved without a willingness to reexamine organizational structures and business processes.
Regardless of where you are in your xP&A journey, please remember that QueBIT is here to support you. Whether you are looking for a full-blown solution delivery team, or some high-level roadmap planning, technology selection and solution architecture advice, we have the expertise and experience to help.
While none of us knows what 2022 will bring, I guarantee it will include some surprises. While it is easy to be dismissive of the planning process (“Everyone has a plan until they get punched in the face?”), when you have the RIGHT technology in place, you can be ready with a selection of plans A, B and C to meet each possible reality, and in the event none of them suffices, you have the ability to plug in a new plan and see its consequences quickly and easily.
With this, QueBIT wishes you all the best in 2022. To all our customers – thank you for your business and support. To all our business partners – thank you for your partnership and collaboration. To all our followers – thank you for being part of our community.
Happy New Year!
FOOTNOTE: The following blog posts were referenced above:
- Stop CPM, Start xP&A! (Justin Croft)
- Why Finance should push for Improved Supply Chain Planning (Justin Croft)
- Connecting Supply Chain Decisions to Financial KPIs (Deepak Kumar)