Combine xP&A and Financial Signaling to create Intelligent Finance
By now, most finance teams have been exposed to the trending concept of Extended Planning and Analysis (xP&A). This is the strategy of extending planning and analysis tools and processes into other areas of the business beyond finance. xP&A also requires a unified planning process, normally driven by a consolidated platform, that allows each business area to conduct its own operational and financial analysis while the enterprise data remains connected and consolidated.
OneStream Software has taken the concept one step further by introducing the idea of Intelligent xP&A or Intelligent Finance. In a recent article they compare traditional FP&A to xP&A:
Traditional Financial Planning and Analysis (FP&A) teams must find opportunities to elevate toward an eXtended Planning and Analysis (xP&A) framework. And FP&A can do so by finding unique ways to enable sales, supply chains, and HR groups with financial signals and operational insights to drive continuous collaboration and performance.
OneStream describes Intelligent xP&A as including financial signaling:
"To remain competitive in a cut-throat, volatile market, businesses must continually track and assess results – and take action! Finance teams can, for instance, make strategic decisions based on changes in supply and demand, labor shortages, high spot procurement rates, demand trends, economic factors, and any other factors that impact the business."
"And with financial signaling, Finance teams can finally harness the vast amounts of daily and weekly transactional and operational data from across the organization. By deciphering the hidden signals with large volumes of data, FP&A teams can help guide operational leaders to take action midstream to impact the financials – all before month-end."
There are two components at work here. The first is the core concept of xP&A which requires participation from business users in the planning and analysis process. While this step may be classified as xP&A it does not cover the full distance suggested by OneStream. The missing second piece is to layer on Financial Signaling. This converts a static process into a real-time dynamic loop. New data is more frequently incorporated into the analysis using shorter timeframes, such as weekly. This data is constantly modifying the analysis and business decision-makers are encouraged to stay alert to these modifications to support more timely decisions.
To evaluate a unified planning and accounting platform like OneStream to deploy an Intelligent Finance model, speak to the consulting team at RVNA Technologies. RVNA is an experienced professional services organization focused on advising clients on FP&A Software selection.