Effective Extended Planning and Analysis (XP&A) is essential to ensure the success of any organization. However, achieving this goal is not always simple. Organizations often face several challenges that hinder their planning process, including systems integration, data quality, limited resources, communication, and external factors. In this article, we will explore these top five challenges and their impact on the XP&A process.
- Systems Integration: One of the most significant challenges organizations face is integrating multiple ERP systems and bridging the gap with a planning system. Merging actuals with budgets and forecast data supplies a baseline for more accurate yearly plans and LRPs. To overcome this challenge, companies need to invest in an integrated system that can consolidate financial data across different platforms.
- Data Quality: The XP&A process requires accurate and timely data. Companies must have systems and data quality vetting processes in place to collect, organize, clean, and analyze financial data to ensure that it is reliable. Without quality data, the XP&A process becomes challenging, leading to inaccurate forecasts and decisions.
- Limited Resources: Companies may have limited resources available to dedicate themselves to XP&A. This can make it difficult to gather and analyze data, develop strategies, and implement financial plans effectively. However, organizations can overcome this challenge by investing in XP&A software and automation tools to streamline the process.
- Communication: XP&A involves multiple stakeholders, including executives, department heads, and investors. Effective communication and collaboration are essential to ensure that everyone is on the same page and working towards the same goals. Lack of communication can lead to misunderstandings, missed opportunities, and even financial losses.
- External Factors: Companies must also consider external factors that can impact their XP&A, such as changes in the regulatory environment, shifts in consumer behavior, and new technological developments. Economic conditions and industry trends can change rapidly, making it difficult to predict future performance with accuracy. To mitigate this risk, organizations need to be agile and adaptable, continually monitoring and analyzing external factors that could impact their XP&A process.
XP&A is a complex and challenging process that requires careful analysis, strategic thinking, and effective communication to ensure success. Organizations that invest in the right systems, data quality, and communication strategies can overcome these challenges and achieve their financial objectives.
Does your company need help either implementing the right systems or solving internal business challenges around XP&A? If so, contact a Breakaway representative today!
Breakaway Technologies was founded in 1998 with the simple goal of making it easier for finance and accounting teams to report, plan and forecast.