Beyond the finance domain: xP&A for truly collaborative corporate planning
Just as the pandemic subsides, businesses are battling a new set of challenges in a shape of fast-rising inflation and recruitment shortages brought about by the ‘Great Resignation’, according to Mark Jenkins, CFO at MHR International
Finance teams are under immense pressure to accurately crunch the numbers and pinch pennies during these demanding times, whilst continuing to not only ensure a steady cash flow, but also uninterrupted operations across the whole organisation.
However, all too often financial departments work in silos, making plans to drive future decisions without much collaboration with other areas of the business. As other functions are taking actions too that affect the organisation’s financial posture, such isolated and disconnected financial planning must end if businesses are to achieve greater performance and agility.
A more unified picture
Whilst navigating economic uncertainty, it is no longer enough to create a financial plan in isolation from the strategic decision-making happening in other corners of the business. Therefore, traditional financial planning and analysis (FP&A) capabilities aren’t able to support more integrated, cross-business initiatives which are paramount in today’s competitive and challenging climate. An extension of legacy FP&A practices and tools is therefore needed to connect the dots from various operational plans and forecasts and allow financial teams to make a greater impact across the whole business.
Not connecting the activities and plans of other areas negatively contributes to the bottom line, where the responsibility ultimately then falls to the finance team. Other business units will have their own financial responsibility. Marketing teams will be running a series of planned campaigns; HR departments must have plans in place to control remuneration and headcount; sales teams need to meet targets and forecasts to predict increased production capacity; while production has to control inventory and manage supply chains and work closely with the sales team to deliver the product volumes that customers need. This just shows how all business areas are more or less intertwined, yet their plans often aren’t.
Trying to collate all this data from multiple sources leads to inaccuracy, duplication and time-wasting. Here’s where extended planning and analysis (xP&A) can be invaluable to provide more clarity which aims to integrate the output of each team and how this affects the bigger business picture. As the name suggests, xP&A offers more than the traditional approach of FP&A. The word ‘extended’ itself implies that crucial cross-departmental collaboration where everyone continually monitors performance, plans, forecasts and conducts advanced analytics via a single platform, connecting strategic, operational, and financial aspects in real-time.
With xP&A, silos can finally be broken down so whenever the sales team exceeds their targets, production will always be ready, and HR can gain a more accurate picture of the extra staffing needs.
Setting every team up for success
It is not just finance teams that stand to benefit. Organisations that implement xP&A can take advantage of unified data models and analytical methodologies that will produce a truly cohesive operational business plan. A plan that offers complete cross-departmental performance transparency, greater visibility, and a well-rounded financial picture that guides the success of the wider organisation.
To bridge the current silos and ensure valuable insights reach all teams, the right xP&A solution is needed. A solution that holds all the data required for planning processes in one place and offers more accurate insights through for example predictive learning and machine learning capabilities, eliminating the labour-intensive work of trying to piece everything together.
MHR’s One Portfolio of services is one option for businesses looking to break down silos. The suite of innovative, easy to adopt software solutions provides a single source of data across HR, payroll and finance. Regardless of legacy systems, the integrated platform provides businesses with the opportunity to build a data strategy that supports broader strategic goals.
The system allows businesses to automatically collect, analyse and extrapolate cross-functional data which can be used for scenario-analysis to garner where changes can be made and efficiencies achieved.
Using the software, businesses will be provided with a 360-degree strategic view which can support forward-looking planning and help businesses remain competitive in today’s landscape.
With unified financial plans and datasets, businesses can encourage collaborative working and full accountability of the results, ensuring every department holds financial understanding, actively contributes to continuous planning, forecasting and monitoring, and ultimately works towards the same goals.
Reshaping the finance function
With xP&A, finance teams can position themselves as a strategic partner for the entire business with the ability to influence positive changes that will result in greater efficiencies. By collaborating more closely with other departments, they can transform from spreadsheet presenters in the boardroom to valuable experts that drive key operational decisions.
This evolution of the finance function is not only desired by financial leaders but most importantly needed to align business and finance strategy for continuous growth and successfully navigating disruption. Thanks to advancements in digital technologies, finance teams can be the enablers of greater organisational performance as they implement xP&A for timelier insight and improved corporate decision-making. They can expand their skillsets and redefine themselves as collective digital stewards, driving value, improving efficiency, and setting the future direction of the business.