What is xFP&A? Going Beyond Financial Planning and Analysis

Extended financial planning and analysis, or xFP&A, is an all-encompassing approach that puts the finance team at the center of a company’s performance management efforts.

xFP&A, sometimes also called xP&A, goes beyond the basic budgeting, forecasting, and analysis of FP&A. It expands finance’s capabilities to manage all important data and planning processes for the company in a centralized, organized system. While you could try to create a system for xFP&A using a patchwork of software programs, it may be too convoluted to achieve your goal of making nimble decisions that drive the success of the company.

All-in-one solutions that enable effective xFP&A can:

• Free up time previously spent on manual spreadsheets and workflows.
• Automatically pull and consolidate data from across your organization.
• Streamline budgets and forecasts with automated workflows and scenario planning.
• Automate financial and operational reporting processes.
• Offer planning tools to outperform competitors and react to market trends.
• Increase capacity to make critical financial decisions that drive revenue.

Maximizing Value-Added Activities

CFOs and finance professionals’ jobs have evolved into more expansive, proactive, and advisory roles across many industries. In fact, in 2020, McKinsey & Company found that more than half of finance leaders were already spending time on value-added activities such as financial planning and analysis—an increase of 19 percent over the previous decade. The McKinsey article where these findings were published was updated in 2024, and the authors doubled down on the relevance of their earlier message.

“As we fast approach the midpoint in that decade, several trends impacting finance professionals have emerged—not least the arrival of generative AI—highlighting a need for reskilling and upskilling finance professionals to be able to respond to the fast-moving macroeconomic context,” the authors wrote. “It is more important than ever for organizations to achieve a renewed focus on ensuring high quality data, reinvestments in finance staff capability building, and developing more fluid working models to capture the promise of technologies such as GenAI that have occurred since the article was first published.”

Authors Ankur Agrawal, Steven Eklund, Josh Waite, and Ed Woodcock said finance departments need to be able to provide clearer, faster, and richer insights to be effective. This means access to up-to-date data, performance metrics, and holistic views of macroeconomic influences to quickly and appropriately assess and act in the company’s best interest.

Extending Capabilities Beyond FP&A

At the beginning of the decade, Gartner predicted a move from FP&A toward more comprehensive planning and analysis capabilities. 

“By 2024, 70% of new financial planning and analysis projects will become extended planning and analysis (xP&A) projects, extending their scope beyond the finance domain into other areas of enterprise planning and analysis,” the firm wrote in its Strategic Roadmap for Cloud Financial Planning and Analysis Solutions.

In a 2024 analysis, Gartner’s first action step for finance leaders is to evolve the scope and organization-wide design of FP&A to “maximize business impact,” according to the Leadership Vision for Heads of Financial Planning & Analysis. In short: Implement xFP&A. Gartner highlights six benefits of centralizing the planning and analysis process with the finance team:

1. Cost
2. Capacity
3. Quality 
4. Accountability
5. Standardization
6. Digital enablement

The next step Gartner recommends is adopting artificial intelligence and machine learning for planning and forecasting processes. xFP&A naturally takes advantage of these quickly evolving technologies to unlock more insights for teams taking a comprehensive role in critical decision-making.

Moving to xFP&A

The McKinsey report asserts, “Finance departments need a clearly defined master data-management strategy to guide the collection, storage, and interrogation of the rising volume of data needed to perform the types of analytics the business requires.” But what does moving to an xFP&A system look like?

For example, a nonprofit organization might be struggling to update its operations to take a more strategic approach to goals, better track grant spending, and respond nimbly to unexpected external forces. You’re the finance director, and you’re using financial management software and spreadsheets to create annual budgets in Excel. Each arm of the organization tracks spending differently, making it difficult to accurately report current financial standings to the board of directors—much less predict how to maximize revenue in support of the nonprofit’s mission.

Introducing xFP&A can create radical change for this nonprofit. The finance director becomes the central organizer for all data affecting the nonprofit’s performance. With a single software solution to enable xFP&A, you can consolidate data from across all sources and arms of the organization. Integrating the data in a single warehouse lets you drill down and step back to see how the nonprofit best accomplishes its achievements. You set and manage custom key performance indicators aligned with your mission and funding goals.

Pinpoint your organization’s strengths to present to possible funding sources. Reporting and forecasting tools help you appeal to donors and grantmakers. With insights on financials, funds, grants, membership activity, donations, organizational benchmarks, and other key aspects of operation, you shift the organization to a data mindset to control costs and achieve goals.

Optimize Your xFP&A Processes Today

Solver makes extended financial reporting and analysis simple with its connected performance management solution. Contact us to speak with an expert about optimizing your xFP&A process with our globally popular software solutions. Submit an inquiry or request a product demo today.