The Connected Planning journey: From siloed planning to transformative xP&A

The practice of financial planning and analysis (FP&A) has long been at the heart of organizational decision-making; however, its evolution reflects the changing landscape of business itself. In today's modern era of interconnected software systems, advanced scenario modeling, and real-time access to data, siloed planning approaches simply won’t do. In response to this, Gartner has identified an emerging trend for the future of financial planning. The rise of what they call “extended planning and analysis (xP&A)” — a nod to what we at Anaplan have called “Connected Planning” since 2017.

Let’s take a trip down memory lane and explore the history of planning through the lens of technological developments to better understand how the market has arrived at xP&A.

“To improve accuracy of planning models, enterprises need to integrate their financial planning with other planning activities to avoid siloed processes. Partnerships between the finance team and business stakeholders must expand to collaborative planning that involves more types of users with different skill sets, which leads to increased governance and workflow management.” — Gartner*

*Gartner® Market Guide for Cloud Extended Planning and Analysis Solutions, 16 January 2024, David Penny, Robert Anderson, Greg Leiter

Early days: budgeting in silos

According to the Chartered Institute of Management Accountants, budgeting began as a corporate process in earnest in the 1920s for managing income, expenses and thus cash flows. Traditional FP&A was a solitary exercise performed by the finance department, and operational activities were almost left out of these financial forecasts.

Budgeting was an annual ritual that was a laborious process of creating static spreadsheets in isolation. One can only imagine how difficult it would have been to accurately account for a budget before the advent of technology. The modern spreadsheet’s precursor was a ledger book with neatly divided rows and columns, but things changed enormously in the 1970s and 1980s when consumers and businesses began to widely adopt computers.

The 1990s: ERP era 

Enterprise resource planning (ERP) software dawned in the 1990s, and various business functions started to integrate. Although this improved data accessibility, planning remained largely finance-centric and operational data resided in separate ERP modules, prohibiting users from obtaining holistic analysis and cross-functional collaboration. 

While ERP systems have their advantages, they also have their limitations. Fundamentally ERP systems are designed to hold vast amounts of data that span the complexities of each business function. For a transactional database to be effective, it must be firmly structured and somewhat rigid to hold business-critical data together appropriately, and with the ability to report on those transactions. By nature, this contrasts with what a planning process needs: flexibility, responsiveness, multiple versions, and a freedom to model along with strong visual outputs.

The 2000s: data democratization 

At the turn of the century, the arrival of smartphones and tablets was the tipping point that led to the “big data” explosion. Additionally, the introduction of business intelligence (BI) tools allowed non-financial users to finally access and analyze these vast amounts of data.  

This in turn led to self-service planning whereby different departments and functions could create their own forecasts and reports. And although this newfound visibility into reporting past performance has its benefits, it doesn’t account for and serve the forward-looking planning needs. As such, there still exists inconsistencies and continued disconnection between actual results and planning.   

The rise of cloud: connection emerges  

Cloud-based FP&A software platforms brought about data accessibility and scalability offering agility, flexibility, and real-time insights. It also removed the limitations of on-premises software. But planning challenges persisted with data still scattered across disparate cloud platforms.  

Enter xP&A: a maturing approach to enterprise planning 

In early 2021, Gartner conducted its Extended Planning and Analysis Maturity Research Circle Survey¹. The primary objective was to test Gartner’s hypothesis that through 2024 a majority of enterprises would integrate or align FP&A with at least one other operational planning area and to identify the top areas of consideration.  

The results spoke for themselves. According to the research, “survey respondents overwhelmingly (96%) agreed with Gartner that their organization would adopt a planning strategy integrating or connecting FP&A to one or more operational planning applications by 2024.” 

The 2024 xP&A market guide: Gartner perspectives

As we enter the year 2024, this trend’s momentum shows no signs of slowing down. According to the latest Gartner xP&A strategic planning assumption, “by 2025, more than 60% of planning solution initiatives will be driven by xP&A requirements.” 

In fact, the 2024 market guide goes on to further state, “Economic disruption, uncertainty, and fast-changing market conditions increase the need for continuous planning. Many organizations strive to have an integrated enterprise planning environment; however, many still use numerous disparate planning solutions and/or spreadsheets. The need for different types of nonfinancial planning is expanding, not just to more business functions such as operations, sales, supply chain, marketing, and IT, but also for capturing and planning initiatives such as environmental, social, and corporate governance (ESG) for regulatory planning. ”

“By 2025, more than 60% of planning solution initiatives will be
driven by xP&A requirements.” — Gartner

Why should you consider xP&A? According to Gartner, “xP&A seeks to provide better-informed and timely tactical and strategic decision making by consolidating qualitative, scalable enterprise planning applications and source data within a single vendor platform, wherever possible.” Also, Gartner FP&A Leaders’ Priorities for 2023 found that “76% of FP&A leaders will integrate financial planning with other enterprise planning¹. This is one of the top priorities for FP&A leaders and is of similar importance to planning and sequencing finance transformation activities.”

The market guide also notes, “As a common planning solution becomes adopted for different functions, the role of CFO is developing. Their role is evolving from being the decision-maker for their own finance solution to being a strategic advisor for other operational solutions, given that operating planning rolls up to financial forecasts.” McKinsey agrees.

“Today’s CFO is a key colleague across businesses and functions, and is the CEO’s
strategic partner in maximizing value creation.” — McKinsey

Having conducted a biannual survey on the pulse of CFOs for over a decade, this McKinsey article² states that the CFO role is no longer just leading the finance function — it’s changing rapidly. It finds that “today’s CFO is a key colleague across businesses and functions and is the CEO’s strategic partner in maximizing value creation... CFOs are responsible for building credibility for the strategic direction of the company.”  

To create more value and to help steer the organization, the CFO needs a holistic view of the enterprise’s current financial position and an accurate forecast of where it’s going. This is achievable by connecting the enterprise’s strategic, financial, and operational planning on one platform for real-time insights and cross-functional collaboration to support quick, substantiated decisions.   

xP&A or Connected Planning: your planning vision of tomorrow is within reach today 

There is a viable path out of the pain and disconnectedness of spreadsheets. More and more companies are looking to modernize planning, reporting, and analysis approaches through a combination of best-practice processes, cross-functional data integration, and automation, enabling faster, more informed decisions. You now have options among vendors, like Anaplan, to help create more value and greater results for your enterprise.

We’re proud to be named a Representative Vendor once again in the 2024 Gartner Market Guide for Cloud xP&A, an increasingly important space. And we’re ready to help you elevate and connect your financial and operational planning with our xP&A, or Connected Planning, platform and empower you to achieve more success.

Learn more about xP&A by reading the full complimentary Gartner market guide.
Download your copy

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¹ Future of Finance Extends FP&A to Include Operational Planning, Jan 9, 2023, Gartner
² What are the roles and responsibilities of a CFO?, Nov 29, 2023, McKinsey & Company

Special thanks to hiring, M&A, payroll, and compliance expert, Peter Dixon. for his contributions to this post. To learn more about the history of extended planning and analysis, check out his full article on LinkedIn.   

Gartner, Market Guide for Cloud Extended Planning and Analysis Solutions, 16 January 2024, David Penny, Robert Anderson, Greg Leiter. Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner’s research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.  

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