The future of planning and analysis solutions
By Michael McGeein
Originally published by IBM, April 28, 2021
We live in an era of digital transformation where disruption is always at the door — especially as it relates to optimizing the power of data to inspire informed decision-making. To not just survive, but thrive, you need to evolve your planning and analysis solutions and future proof your investments in the process. Successful planning, budgeting and forecasting requires accurate data, a single source of truth, collaboration across the entire organization and the flexibility to adjust plans and forecasts quickly. It sounds simple, but in most organizations, business unit planning is a lengthy, manual and siloed process.
So how do you get started? In today’s market, planning and analysis isn’t just about streamlining planning and forecasting and driving profitability in the Office of Finance. Creating plans that provide an enterprise-wide impact is the new normal. It’s no longer just about financial planning and analysis (FP&A); now, it also includes the expansion into Extended Planning and Analysis (xP&A). And at IBM, we’ve actually been doing it for years. Let’s dive deeper.
What exactly is ‘xP&A’?
Gartner recently identified Extended Planning and Analysis (xP&A), as an emerging trend. While the term is new, the concept is not. Simply put, the ‘x’ represents an extension of FP&A principles beyond finance and into other areas of the business, such as supply chain, marketing, workforce, sales, and IT. xP&A is the future of enterprise planning – capable of transforming both financial and operational planning and improving your bottom line by integrating data, plans, forecasts and business units on a single planning platform.
xP&A mirrors the modern way we do business — it elevates the critical value of collaboration, cuts through data silos to extract key metrics and insights, and ensures that strategic decisions are driven by a holistic approach. It allows all users to access a centralized, governed database that acts as a single source of truth and can integrate data from diverse data sources such as ERPs, CRMs, and HRMs. In essence, xP&A breaks down the traditional silos between business unit planning, creating a cross-departmental framework that acts to streamline planning and create transparency, collaboration and alignment across the organization.
For example, xP&A allows demand planners to use sales and marketing data, instead of just supply data, to better understand demand shifts, fluctuations, and patterns, ultimately creating more accurate demand plans. As a result, inventory teams can then adapt accordingly to stock adequate levels without worrying about stock-outs or excess inventory. Using one integrated planning solution allows demand and production plans to automatically update revenue and expense plans, providing business leaders a more accurate picture of the financial health of the organization.
At IBM, we have been helping clients to execute on xP&A for years; and, we’ve called this ‘continuous integrated planning.’ This approach allows business unit decision-makers to participate in a planning process that is continuous, automated and can be measured and adjusted at the speed of the business. It’s rooted in leveraging real-time connectivity, agility and data-driven insights to streamline decision-making and drive higher performance across the enterprise. Continuous integrated planning or xP&A allows people in one part of the organization to see how their decisions affect other parts of the organization and when this happens, activities are better coordinated and drive improved results.
How XP&A is evolving the role of finance
We know that FP&A professionals play a key role in modernizing and transforming the Office of Finance; however, their FP&A strategies will now need to encompass the integration of financial management and operational planning activities. Traditionally, Finance has been the steward of enterprise and performance data. In recent years, forward-looking FP&A teams have started to transform digitally by automating planning processes, creating cross-functional collaboration and incorporating predictive, machine learning (ML) and artificial intelligence (AI) into their planning processes. xP&A extends the automation, cross-functional collaboration and advanced analytical capabilities to operational or departmental planners; who are likely using Microsoft Excel spreadsheets or outdated siloed planning solutions.
xP&A empowers Finance to be more of a strategic partner to the organization. xP&A provides a framework that enables a holistic view of the organization, from performance to assets, resources to risks, and beyond. It lets you strategize and build strategic plans with a view of the whole organization in mind, enabling you to identify new growth opportunities and optimize spending.
In the immediate term, Finance professionals should identify and address gaps in data management between finance and other lines of business, then prioritize areas where they can use predictive analytics to drive new levels of productivity. The key to success will be how finance teams can automate performance management, KPIs and business intelligence to drive stronger business value through improved business decision-making.
Your xP&A checklist
In today’s market, planning and analysis is no longer just about financial planning. It’s about creating true enterprise-wide impact. And with the right xP&A solution, it is easier than ever to get started. Your xP&A solution should:
- Be a flexible and scalable platform that supports a highly connected and highly participative planning process, especially for data volumes that are massive in scale.
- Provide managed and governed workflows that can be driven though applications and guided tasks.
- Pull in exogenous data such as weather data, quickly, allowing you the opportunity to continuously adapt and react to dynamics in the marketplace.
- Use AI, predictive and prescriptive analytics to augment human intelligence, allowing organizations to plan more easily, unearth hidden insights, improve on-going planning cycles with feedback and increase confidence in decision making.
- Offer flexible deployment so you can select the deployment option that best fits your needs without having to compromise on functionality.
- Be easy to use to accelerate user adoption.
IBM Planning Analytics with Watson has set the xP&A standard. It is an AI-powered planning solution that automates, streamlines and integrates planning across every part of your organization. It helps companies see where they’re headed and strategize the best way to get there with constraint-driven scenario planning. With IBM Planning Analytics with Watson, you can uncover deep insights using robust analysis and reporting tools without having to export data to a separate tool. It’s integrated with world class reporting and dashboards to communicate plans and related external data for a complete picture, creating a truly data-driven planning process. And with built-in predictive capabilities, you can put the power of algorithmic forecasting into the hands of users, even those without data science skills, for more accurate, consistent, and timely forecasts.
The truth about plans is they always change — an undeniable reality that businesses across the globe are facing today. A dynamic, xP&A solution, like IBM Planning Analytics with Watson helps you break down silos and create the most flexible plans possible. And it does more than just plan – it analyzes data, reveals trends, and allows real-time iteration for continuous planning.
Gartner, Innovation Insight for Extended Planning and Analysis (xP&A), Robert Anderson, John Van Decker, Tim Payne, Melissa Hilbert, David Pidsley, 28 October 2020