SAP Thought Leadership Paper | PUBLIC

Extended Planning and Analysis

Extend the Power of Financial Planning

and Analysis
An Enterprise-Wide Approach

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Extend the Power of Financial Planning and Analysis

Are you planning to fail? Of course not.

But failure to connect planning processes
leads to failure to achieve company goals.
Siloed planning processes often conflict
and contradict each other, leading to
unprofitable decisions and results. It is
imperative that people and plans align
across your business functions.

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Extend the Power of Financial Planning and Analysis

Connecting Planning Processes Across the

Enterprise

Extended planning and analysis (xP&A) is the This concept is not new. Expanding FP&A beyond
linking of multiple planning processes and capa- finance has been a common practice for several
bilities into a connected, enterprise-wide planning years. Moreover, extended planning and analysis
approach. By connecting financial planning and has been referred to by many names, such as
analysis to different business dimensions, xP&A connected planning, integrated planning, collab-
can provide a seamless and superior end-to-end orative enterprise planning, and company-wide
planning experience for your business. As the planning. At SAP, we have adopted the term xP&A
name suggests, xP&A goes beyond the boundaries to describe the extension of FP&A to other planning
of traditional financial planning and analysis systems and functions.
(FP&A). Here, the “x” is not a variable that stands
for any one department, such as sales, supply
chain, or HR. Rather, xP&A denotes the connecting
of siloed planning activities as well as plans
between finance and every other department.
This planning approach bridges the traditional
barriers between finance and operations and
connects strategic, financial, and operational plans.

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Extend the Power of Financial Planning and Analysis
EXTENDED PLANNING AND THE END OF
DISCONNECTED SILOS
Finance, sales, marketing, HR, procurement, and
supply chain organizations all contribute to the
bottom line – and they all create their own opera-
tional plans. For example:
• The finance group monetizes strategic plans and
plans for investments, liquidity, and profitability.
• The sales team creates plans to develop markets
and meet their targets.
• Marketing creates plans for campaigns, promo-
tions, and product launches.
• HR builds plans to meet future workforce
requirements.
• The procurement department plans what to
buy, from what source, and when.
• Supply chain teams create balanced demand-
and-supply plans for production and procure-
ment teams to execute.
Traditionally, organizations create all these plans
in silos, in separate planning tools and stand-alone
spreadsheets, without insight into how they may
impact one another. For example, if the sales
organization exceeds its targets, will the production
team be ready? Will the right staff be in place?
Can suppliers deliver the new demand? Is the
company growing profitably?
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Imagine now a constrained operational plan that
fails to meet the initially set strategic and finan-
cial targets. If that constrained plan cannot be
rectified, you need to share this information with
affected parts of the organization. The sales group
needs to know which customers are at risk of not
receiving what they ordered. The finance team
may need to update management guidance. This
guidance can fuel holistic decisions on potentially
needed investments, accepted revenue loss, or
perhaps an entirely different direction.
Linking plans to identify the potential impacts
within different departments while retaining the
efficiency of specialized planning processes is at
the core of xP&A. It allows your business to react
quickly when something unexpected occurs.
When one aspect of a plan changes, the other
processes are informed and can more quickly
adapt – and the ship can stay on course.
Extended planning and analysis doesn’t just link
financial and operational plans; it also reveals the
financial implications of operational plans. The
extension of FP&A to other planning processes
drives alignment of operational business activities
to your financial and strategic goals and objectives.
This helps your CFO, finance teams, P&L owners,
and operational leaders forecast, monitor, and
evaluate plans holistically – and excel in their
roles as strategic advisors to the business.
Extend the Power of Financial Planning and Analysis

As a connected, cooperative process, xP&A helps

you improve visibility and become much more
agile and adaptable. When your company experi-
ences the inevitable disruptions to its plans, you
need to make reactive operational decisions from
two equally valid perspectives: what you can do
and what you should do. Proactive decisions have
the same implications and considerations. Con-
necting these planning processes allows you to
address both perspectives and make balanced,
informed, and financially responsible decisions.
This has never been more important than right
now, when continuous change is the new normal
and the ability to pivot quickly isn’t just a “nice to
have” but a necessity.

KEY BENEFITS OF XP&A

Extended planning and analysis gives your orga-
nization the power to work as one well-oiled
machine. Major benefits include:
• Cross-functional visibility: Business leaders
require visibility across different planning
functions to understand the business as a
whole. xP&A connects planning activities
from strategy to operations.
• Enterprise-wide business alignment: With
xP&A, you synchronize strategic, financial, and
operational plans, ensuring the entire business
is in alignment and working toward a shared
vision of success. xP&A clarifies how one
department’s activities impact another’s.
• Greater agility: Course-correct on the fly.
Continuous planning, where plans are continually
updated based on changing conditions and
events, is central to xP&A. Tight business activity
alignment also helps you rapidly seize new
opportunities, spot and mitigate risks, and
identify ways to cut costs and inefficiencies.

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Extend the Power of Financial Planning and Analysis

SAP® SOLUTIONS AND XP&A SAP envisions making accessibility to enterprise-

For decades, SAP solutions have provided deeply wide data increasingly seamless using the business
functional planning capabilities that focus on data fabric architecture, as shown in the figure.
specialized planning activities from the top floor The business data fabric is designed to leverage
to the shop floor. If you desire a functionally rich technologies such as artificial intelligence and
preconfigured solution for financial planning, we machine learning, among others, to harmonize
have one. If you desire the same for supply chain, data across all data estates to empower the
we have one. If you need commercial planning or finance team to make data-driven decisions.
shop-floor planning or labor planning solutions,
we have them and more. Over the past few years,
SAP teams have been quietly but successfully
connecting these solutions – in effect, adopting
the xP&A concept before the name was created.
Our vision for xP&A is to continue to connect
solutions and share data where appropriate, to
streamline integration, and to drive the planning
process horizontally and vertically across silos.

Figure: Extended Planning and Analysis Process

Extended planning and analysis (xP&A) Business execution

Planning
processes Plan retraction
Capabilities Accelerators for execution
Sales and Design to Lead to
Strategy marketing cash
operate
Collaborate Model

Proven industry
practices
Finance Record to
report
Visualize Analyze

Modular content
Live analytics,
packages (master) data
Plan and
forecast
Predict
Supply
sync
Workforce Hire to Source to
chain retire pay

SAP Business Technology Platform:

Data orchestration, governance, automation, and extensions

Business data fabric integration enabled by SAP Business Technology Platform

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Extend the Power of Financial Planning and Analysis

LEARN MORE
Business is by nature variable, unpredictable, complex, and
ambiguous. This has always been the case and will always be
the case. Extended planning and analysis helps you steer
your business through those turbulent waters. SAP solutions
can help you on this journey.

For more information, visit us online.

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Studio SAP l 87570enUS (23/04)
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