020 Strategic Roadmap for Cloud Financial Planning and

Analysis Solutions
Published 21 February 2020 - ID G00394428 - 34 min read
By Analysts Robert Anderson, John Van Decker

Financial planning and analysis plays a key role in modernizing and transforming the office of
finance. New levels of integration, extension, intelligence and automation will require application
leaders in finance to expand their vision and revisit strategic roadmaps.

Overview
Key Findings
The office of finance is uniquely positioned to drive continuous companywide financial planning and
analysis (FP&A) initiatives. Finance’s connection to all other business domains means that these
initiatives will be capable of driving higher quality decisions and outcomes.

Solutions blending core financial management and FP&A will soon provide new levels of agility and
transformational value. Enterprises seeking a unified platform strategy will be increasingly attracted
to these solutions.

Embedded artificial intelligence (AI) and robotic process automation (RPA) in FP&A solutions will
increasingly offer new levels of accessibility, engagement and automation. While these technologies
will underpin transformation efforts, few finance organizations are prepared to capitalize on them.

Recommendations
As finance applications continue to evolve, application leaders responsible for finance applications
should:

Extend FP&A by executing an xP&A strategy that enables finance to lead and coordinate broader,
companywide continuous planning and performance management initiatives.

Enhance planning agility by utilizing the evolution of FP&A as a real-time “lens” into core financial
management. Overcome barriers to flexible and agile real-time access between them.

Embrace AI and RPA as transformative digital technologies. These technologies are capable of
harnessing advanced levels of FP&A process automation and intelligence, allowing organizations to
exploit rapid change and achieve improved business outcomes.

Strategic Planning Assumptions

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.

By 2024, 50% of new financial planning and analysis implementations, upgrades and replacements
will be sourced from core financials vendors, due to superior integration and product bundling.
By 2024, 80% of new artificial intelligence projects in the finance domain will be deployed using out-of-
the-box functionality.

Analysis
Financial planning and analysis solutions support the office of finance’s efforts to manage financial
planning, budgeting, modeling and performance reporting. They capitalize on capabilities that
enhance finance’s ability to manage performance by linking corporate strategy and execution.

Many organizations continue to struggle with spreadsheets — or cling to on-premises FP&A solutions.
However, almost all migrations and new FP&A deployments have shifted to the cloud. These solutions
offer faster time to value and are easier to design, implement, use and maintain. These solutions can
be managed by the cloud service provider. They are less dependent on IT and they can be
administered and configured by end-users. Cloud FP&A solutions also enable broader adoption by
offering extensive self-service analytics. These analytics help finance users address modern demands
and requirements — such as rolling forecasts and driver-based planning. Finally, these solutions
deliver the application flexibility and collaborative capabilities needed to tighten financial performance
feedback loops and support wider adoption in domains beyond finance. On-premises options still
exist, but all vendors have made end-of-life announcements or have eliminated them entirely from
their sales offerings.

Cloud FP&A solutions are currently expanding their ability to extend financial planning processes
across the organization to a broader range of business applications and domains. These may include
specialized modules or models for areas such as sales, human resources and supply chain
operational planning. In time, this will require a more robust definition of FP&A — capable of
highlighting its focus on supporting the entire organization beyond its traditional scope.

In 2020, Gartner will address this broader definition of financial planning and performance
management using the term “extended planning and analysis (xP&A).” xP&A will continue to evolve
and has the potential to deliver exponential value creation in support of performance goals that span
the entire enterprise. To deliver on the promise of xP&A, users will have to embrace a new vision for
FP&A. Vendors supporting these users will be required to continue to increase the depth, flexibility
and application life cycle management capabilities of their solutions.

By 2024, Gartner expects FP&A to evolve to encompass xP&A, a strategy where the “x” denotes
breaking down traditional silos between enterprise financial and operational planning processes in
order to deliver new levels of transformative business value. The “x” represents consistent and
continuous planning that extends beyond the finance domain into other areas of enterprise planning
and analysis.

We expect the market for FP&A and xP&A applications to grow and change dramatically over the next
five years, increasing in its importance to CFOs. As the velocity of digital business increases (along
with the amount of data associated with managing it) the importance of these solutions will increase
dramatically. The future state of the FP&A market will become significantly more competitive as the
cumulative technology impact of integrated financial management applications supporting
companywide financial and operational planning processes becomes evident. Cloud core financial
management solutions will also evolve into suites offering rich, integrated FP&A. These new
capabilities will be bolstered by emerging digital technologies, such as AI and RPA. This will enable
increased levels of automation and intelligence, and better business outcomes.
Taken together, our eventual future state places FP&A front and center in modernization efforts. This
will lead to nothing less than the transformation of the office of finance. The office of finance will
assume a leading role in driving the realization of more agile, accurate and continuous companywide
planning. In doing so, the finance organization has the opportunity to become true business partners
with the rest of the enterprise. Gartner can provide significant insight as finance organizations seek to
move beyond traditional financial planning use cases and embrace the possibilities of the future.

Figure 1. Strategic Roadmap Overview for Cloud Financial Planning and Analysis Solutions

Future State
xP&A Launches a New Era of Continuous Enterprise Financial and Operational Planning
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.
Increasingly, digital business initiatives — such as establishing digital sales channels — will require
more collaborative, agile, continuous and consistent FP&A and enterprise performance reporting
processes. These processes will need to be capable of using data from a variety of sources outside
the office of finance. Given its connection to all other business domains, the office of finance is
uniquely positioned to guide and support new digital business models that require greater FP&A
accuracy and more-actionable insight. Traditional online-analytical-processing-only tools have typically
precluded most enterprises from handling extremely large datasets and the management complexity
associated with them. However, new vendor platform architectures continue to evolve and are quickly
creating opportunities where none previously existed.

FP&A efforts using disconnected metrics and processes have impeded a broader approach to
performance management. However, the advent of xP&A will enable financial plans to be increasingly
informed with operational data. Organizations will be able to augment financial plans with relevant
nonfinancial information. Modern FP&A solutions with new in-memory capabilities that utilize hybrid,
multidimensional or relational databases will be capable of managing and analyzing the increasingly
large datasets and sources needed for xP&A. xP&A as a strategy will improve the accuracy of the
financial plan and the strategic value of operational plans. xP&A will allow organizations to
synchronize related planning efforts and expand overall financial plan participation (see Figure 2).
More-granular, driver-based modeling efforts (ideally incorporated into these integrated planning
processes) will help enterprises to do a better job anticipating outcomes given existing assumptions.

Figure 2. xP&A Enables Consistent and Continuous Planning Extending Beyond the Office of Finance

Bolstered by these technological advances, FP&A vendors evolving toward xP&A will rapidly increase
the accessibility and flexibility of current data integration and data management functions. These
vendors will enhance their FP&A solutions with new “smart” data discovery tools that are able to
“attract” more data from other solutions, to be used as needed. New capabilities will enable financial
and operational planning to be conducted in a more collaborative, continuous and consistent manner.
New benefits will include the ability to:

Continuously and consistently plan by linking slower financial planning and reporting cycles to more
frequent operational ones.

Capitalize on collaborative processes between finance and operational plans and reporting found in
other departments. This will be done through linked models and context-sensitive social computing
features.

Derive richer, more accessible insight from larger datasets as predictive and other advanced
analytic capabilities become increasingly available to business users.

By adding relevant nonfinancial data to finance — and being available to others outside of finance —
traditional FP&A financial reports will provide a more comprehensive performance picture. As FP&A
shifts to xP&A, it will:

Extend the traditional boundaries.

Close longstanding performance management gaps.

Provide richer narratives offering actionable insight.

Capitalizing on xP&A will require a single platform capable of integrating financial management
applications while linking them to operational and external data sources. Vendors that offer this sort of
platform will be best positioned to usher in a new era of unified, continuous, companywide financial
and operational planning.

Financial Management Suite Vendors Increasingly Challenge Best-of-Breed FP&A Vendors

By 2024, 50% of new financial planning and analysis implementations, upgrades and replacements
will be sourced from core financials vendors, due to superior integration and product bundling.

Currently, more than 50% of Gartner FP&A inquiries have their core financials vendors on their
shortlist of potential vendor candidates. Ultimately, however, a much smaller percentage has chosen
to deploy both of them together. We believe that this is about to change. The integration level between
FP&A and core financials in the cloud has increased over the past two years. More than 40% of
customers surveyed in the 2019 Cloud Core Financial Management Solutions Magic Quadrant
Customer Reference Survey are now considering an integrated or combined approach — using a
single vendor for financial management and FP&A. We expect that percentage to continue to rise over
the next 3 years to more than 50%. The new generation of cloud-based financial solutions —
particularly those leveraging in-memory computing — is rapidly breaking down the barriers between
FP&A and transaction-processing applications.

Vendors offering suites that integrate native FP&A and core financials applications (in addition to the
financial close) will soon begin disrupting traditional third-party best-of-breed (BOB) FP&A solution
usage patterns (see “Prepare Now for the Future of Financial Planning and Analysis and Financial
Close”). Suite-based applications consume data from a single source and share the same metadata
and master data. This means that overall companywide financial reporting and governance is
substantially enhanced. In effect, FP&A, is able to becomes a direct real-time lens into core financials,
improving overall solution agility.

As a consequence, new benefits will include the ability to:

Use FP&A holistically in between and during closing periods.

 Drill down into accounting transaction detail from summary tables without having to send data
across multiple cloud platforms.

Support xP&A strategy by simplifying data management and minimizing the data replication
required to link and align financial and operational planning.

The evolution of core financial management and FP&A into a single suite will be transformational —
blurring the boundaries between both. The derived benefits go beyond merely supporting transactional
processes. They result in better insights and business outcomes.

Despite heightened competition between suite providers and BOB specialists, postmodern
approaches using BOB FP&A vendors will continue to be viable. Specialist providers will not be sitting
still. They will continue to improve their own integration capabilities while building out robust platforms
supporting richer, more voluminous levels of transactional data. While financial management suite
vendors are positioned to gain increased momentum, BOB specialist providers will remain relevant —
particularly supporting enterprises with a heterogenous landscape consisting of a range of different
ERP and core financial management solutions.

Digital Technology Drives Dramatic Increase in Automation and Intelligence

By 2024, 80% of new artificial intelligence projects in the finance domain will be deployed using out-of-
the-box functionality.

By 2024, Gartner expects finance staff using FP&A solutions to take advantage of digital technologies
such as AI and RPA to further automate their processes and augment decision making. Embedded AI
will be used to improve predictive and prescriptive financial forecasting and planning processes. In the
2019 Cloud Financial Planning and Analysis Magic Quadrant Customer Reference Survey, 35% of
respondents stated they expected to utilize some form of AI by the end of 2020 in order to improve
their business — 43% would also leverage RPA.

As organizations digitalize more of their business the amount of high-quality, real-time data available
to optimize AI-driven financial and operational business models is expected to dramatically increase.
Capabilities underpinned by AI and machine learning (ML) will be used to analyze actual data from a
range of sources (such as internal systems, third-party customer and economic data, social media and
Internet-of-Things-enabled devices). They will also be used to compare data to plans and recommend
actions to achieve unmet targets (see “Impacts of Artificial Intelligence on Financial Management
Applications”). Mathematically derived “AI scenarios” that detect relationships in highly diverse
datasets will become increasingly possible. These scenarios will be used to highlight and eliminate
current biases and other decision-making flaws underlying existing aggregated and driver-based
methods.

FP&A solutions will also include additional automation capabilities that use RPA. Unlike AI, RPA is not
“trained” and does not “learn.” Instead, RPA automates strings of basic time-consuming, repetitive and
error-prone tasks that are typically performed manually. Because RPA tools can work across multiple
applications, we expect vendors to increasingly use RPA to automate complex FP&A workstreams
(see “When and How to Use Robotic Process Automation in Finance and Accounting”). By reducing
the time spent on manual data entry and other repetitive tasks, finance staff will be able focus on
delivering higher quality plans and analysis using AI tools.

New benefits will include the ability to:

Drive greater levels of FP&A user accessibility by implementing chatbots, virtual assistants,
gestures and voice control to improve alerts, narratives and process efficiency.
 Probabilistically predict, as well as prescribe recommended actions to optimize financial and
business outcomes across highly diverse datasets.

Highlight current biases and other decision-making flaws underlying existing aggregated and driver-
based methods.

Reduce the costs, error rates and turnaround time of routine data-intensive FP&A operations.

All of the notable vendors in this market have started to include some form of AI and RPA in their
offerings (see “Magic Quadrant for Cloud Financial Planning and Analysis Solutions”). Gartner expects
these vendors to deliver use cases at a rapidly increasing rate. In order to harness these capabilities
and achieve the potential of the future state, application leaders in finance will need to:

Assess their preparedness.

Extend analytics capabilities.

Position finance as a key stakeholder in broader enterprise initiatives.

Current State
FP&A Is Primarily Focused on the Office of Finance
With few exceptions, the potential of FP&A solutions with respect to integrated financial planning (IFP)
and xP&A remains largely untapped. This is despite the new capabilities introduced by cloud FP&A
solutions.

Integrated financial planning links operational disciplines back to the financial plan through data
extracts. Extended planning and analysis (xP&A) takes it a step further by using the same financial
planning and analysis solution for planning across multiple disciplines.

Cloud FP&A has undoubtedly led to improved process consistency and user empowerment —
including faster adoption of driver-based planning and an increased cadence of forecasting and
planning activities. However, many solutions remain underutilized or lack the agility to adequately
respond to the demands of modern business.

The broader vision of xP&A is to create an organization where all functions have the potential to be
engaged in some form of planning aligned to common goals based on a single version of the truth.
Unfortunately, the ability to use cloud FP&A beyond the boundaries of the finance organization in a
manner encompassing this broader vision still remains elusive for most organizations.

Instead, the primary use of FP&A remains centered on the office of finance. This is despite the
incredible potential of FP&A and the office of finance to coordinate planning efforts and break down
siloed, domain-specific performance management barriers across the enterprise. Arguably, each
domain has a financial component the office of finance could support.

Because of this, organizational performance continues to be hampered by:

Siloed and disconnected financial planning and performance reporting processes.

 Disconnected, domain-specific applications and spreadsheets supporting specialized performance
management needs.

Efforts to broaden the reach of FP&A into operational business units remain stifled by a combination
of vendor capability and user constraints. Many organizations remain fixated on maintaining existing
financial planning processes. This means that they either fail to recognize this opportunity or lack the
resources to explore the feasibility of engaging and aligning operational planning efforts. This has
often led to misaligned or “one off” performance management processes, as opposed to well-
coordinated companywide planning efforts. FP&A remains static, periodic and disconnected from
operational plans, rather than continuous and integrated. Forecasting exercises update historical
information with actual results while ignoring opportunities to use leading indicators from other internal
systems and external data sources.

Postmodern Sourcing Strategies Dominate FP&A Selection

For the past 15 years, the FP&A competitive market advantage has gone to third-party, best-of-breed
vendors. This is because the solutions available from core financial management and ERP vendors
haven’t been uniformly strong. In fact, organizations selecting on-premises FP&A from core financials
vendors — hoping for the benefits of tight integration — often found these solutions severely lacking.
More often than not this integration equated to loosely coupled monthly flat-file loads from one solution
to the other. As a result of this, most organizations took a postmodern BOB approach when selecting
their cloud FP&A solution. Yet even as BOB cloud FP&A solutions have expanded capabilities
supporting hybrid environments, questions persist. There is a notable trend arising out of Gartner end-
user inquiries on core financial management where the vendor also offers an FP&A solution. These
inquiries continue to include client-led discussions asking when the vendor will address past failings
and combine both applications into a single-stack.

FP&A users continue to seek a single-vendor financial applications stack solution because BOB
solutions may:

Introduce latency in FP&A and performance reporting processes due to the need for periodic data
extraction, transformation and load efforts.

Extract data at the summary level leading to aggregate — as opposed to detailed — transaction-
level analysis.

This can increase the risk of having multiple “versions of the truth” and a less optimal FP&A
environment. Cycle times, while adequate for making projections, may be unable to deliver the
required levels of transaction detail. Instead, finance users want to move beyond the current state to
solutions capable of providing live, dynamic, accurate and fully integrated performance insights.

Digital Technologies (Such as AI/ML and RPA) Are Immature and Underutilized
The 2019 Cloud Financial Planning and Analysis Magic Quadrant Customer Reference Survey
revealed that less than 30% of organizations surveyed identified AI/ML and RPA as financial
management application priorities. While embedded digital technologies (such as AI and RPA) are
being introduced by cloud FP&A vendors in areas like predictive analytics, few organizations have
taken advantage of them. Most organizations continue to be unprepared and struggle to find a starting
point for using these technologies in FP&A. Often these organizations lack the data, skills and
understanding needed to move forward. Currently, financial forecasting and planning processes
remain manually intensive on one hand, and suffer from inherent human biases on the other.

It is extremely rare to find organizations that are using AI-driven modelling insights in budget, planning
and forecasting activities — despite the range of potential use cases that exist across financial
planning and forecasting. Areas of financial analytics that could benefit from AI technologies include
cash-flow forecasting, revenue forecasting, cost and expense planning and balance-sheet planning.
However, most users remain mostly unaware of these opportunities. Likewise, while cloud FP&A
solutions increasingly incorporate RPA, huge opportunities remain to further automate the ever-
increasing amount of manual “swivel chair” work that is still required. Users are still awaiting the
introduction of advanced automation that is tailored to finance staff (as opposed to IT) and capable of
simplifying their tedious, data-intensive manual workstreams.

Reasons that organizations have found it challenging to implement AI/ML and RPA include:

The difficulty associated with funding and sourcing qualified resources to build, test and maintain
solutions that incorporate them.

Data management, reporting and other tasks remain fragmented activities requiring skilled manual
activity.

Few organizations care to purchase AI- and RPA-specific BOB solutions as the basis for their FP&A
strategy. They expect FP&A vendors to make them more accessible by prepackaging, embedding and
delivering simpler and more configurable capabilities that use these digital technologies. As vendors
rapidly accelerate the introduction of embedded capabilities, users in the office of finance will have to
be trained in data literacy and advanced analytical skills in order to take advantage of the benefits and
value that these technologies provide.

Gap Analysis and Interdependencies

The current FP&A market has shifted from mature on-premises offerings to cloud solutions. However,
challenges remain:

Cloud FP&A solutions are not being utilized to their full potential. These solutions should be the
glue that links operational areas (such as sales and HR) back to financial and enterprise
performance targets. Underutilization results in suboptimal plans and business outcomes.

Seamless integration between FP&A and core financials (and financial close) is lacking and
remains siloed, requiring extraction that introduces latency. This constrains the ability of finance
organizations to be agile and consistently mirror business reality.

Users are either unaware or unprepared to capitalize on newly introduced capabilities based on
digital technologies such as AI/ML and RPA. These technologies could help them transform and
modernize the office of finance.

It is imperative that finance organizations look past the need to address existing FP&A headaches.
They must move their focus beyond improving existing processes or simply addressing performance
reporting pain points. Existing processes are often based on the capabilities of solutions that were
available at the time the processes were established. Application leaders in finance should let the
needs of the business — not its existing processes — dictate their future strategy and how initiatives
are conducted.

To address the gap between the current and future (optimal) state of FP&A, finance organizations
must plan to:

Extend nonoperational, finance-centric FP&A efforts in support of xP&A. Ramp up the finance
organization’s ability to coordinate and assist with broader enterprise performance management
initiatives.
 Enhance agility by embracing FP&A as a lens into core financial management, using integration to
overcome barriers to flexible and real-time access.

Embrace AI and RPA to harness advanced levels of intelligence and process automation, and
address rapid business change.

Vendors will capitalize on technology advances to improve their ability to support these objectives.
Finance organizations must be prepared to embrace them, or risk being overtaken by competitors.

Migration Plan
Figure 3 shows Gartner’s recommended roadmap for finance application leaders in finance. The
roadmap is split into three stages: short term, midterm and long term.

Figure 3. Strategic Roadmap Timeline for Cloud Financial Planning and Analysis
Higher Priority
Update FP&A Strategy to Include Integration of Both Core Financial Management and Operational Planning
Activities
Shifting into 2020, cloud FP&A solutions have started offering greater application flexibility and more
extensive self-service analytics that are capable of supporting wider adoption beyond the office of
finance. Finance organizations must move beyond the use of FP&A solutions to tactically improve
processes — as opposed to delivering strategic value. FP&A application strategy needs to be revisited
and updated. This will provide a basis for preparing the organization to achieve full ROI on their
investment and future-state benefits. While this will require IT involvement, going forward, it will be the
primary responsibility of the office of finance. The finance organization’s first priority should be to
reevaluate its competences and reimagine FP&A processes within the context of the new possibilities
enabled by enhanced technologies such as AI and RPA. This starts with a thorough examination of
current pain points in the context of the future FP&A solution capabilities that may address them.
Prioritize FP&A integration with core financials and the ability to encompass planning across
operational business functions. This will allow you to embrace xP&A as a strategy. Be sure to use
application cost, integration benefits and prospective business value as inputs for accelerating
transformational outcomes.

Application leaders should consider:

Evaluating the cause-and-effect relationship between operational and financial metrics. Focus on
performance measures with the most financial relevance.

Capitalizing on the capabilities of modern application platforms to provide more real-time analytics
and insightful analysis based on extended financial and operational datasets.

Embracing mobile and social computing advancements to facilitate collaboration and coordinate
domain-specific operational performance management initiatives that are currently siloed.

Determining whether the benefits of having FP&A on the same platform as the core financial
system makes sense — accounting for process, data/metadata integration, security and end-user
experience improvements.

The key to revisiting the strategy is to work with stakeholders within the office of finance, as well as
those outside of it. Identify domain-specific operational performance management applications and
processes that can be improved by breaking down the silos that exist between them. Look for areas
where financial plans can be informed with additional operational data and vice versa. If your
organization has just migrated to cloud FP&A, ensure that more than just initial planning and
budgeting phases are accounted for in your plans. Ensure that subsequent phases are also included
— such as a phase for implementing advanced reporting and modeling efforts capable of extending
planning beyond finance. Some FP&A solutions may not offer the in-depth domain capability, flexibility,
performance, ease of use or collaboration features required to achieve future state objectives.
Organizations may have to consider alternative options and vendors.

From a reporting perspective, the challenge is clear. Finance organizations must do a better job as an
information source for helping to run the business. As the cloud becomes the norm for business
applications, integration points between them will continue to blur. Finance organizations must take full
advantage of this opportunity, tightening the link between FP&A and core financials and extending
planning initiatives to others outside of finance through xP&A. When FP&A strategy accounts for these
shifts — building them into future objectives — the office of finance will be better positioned to steer
the broader enterprise toward improved business outcomes.
Prepare for Adoption of AI/ML and RPA and Prioritize Areas Where They Can Drive New Levels of
Productivity and Efficiency
AI/ML and RPA capabilities are increasingly coming within the reach of FP&A users. Together they will
drive significant changes in how users interact with FP&A solutions. These capabilities will allow for
augmenting decision making and will improve process automation within the finance organization.
Application leaders in finance should immediately begin exploring possible use cases for these
technologies. They must prepare for the skill sets and migration of duties necessary to achieve the full
benefits. Despite higher expectations associated with the evolution of financial analytics, most finance
users remain unfamiliar with AI/ML and RPA capabilities.

Application leaders should consider:

Becoming familiar with AI/ML and RPA and how these technologies can be applied within the
enterprise.

Prioritizing areas where AI/ML and RPA can address shortcomings; reduce cost; eliminate tedious,
error-prone manual effort; improve controls and uncover new insights.

Ascertaining and addressing their organizational readiness levels, ensuring that they are prepared
to adopt AI/ML and RPA.

As most AI/ML and RPA capabilities will be delivered through embedded FP&A offerings, application
leaders should prepare their organization to adopt them within eight months of release. Be sure not to
overlook areas where RPA might generate quick wins by itself. These quick wins may act as a
precursor to implementing AI. Try to identify areas where using both together might address a major
process deficiency. Once AI/ML and RPA use cases have been identified and prioritized, and requisite
skills have been addressed, the finance organization will be better prepared to gain full value from
their investments.

Analyze Vendor Roadmaps to Ensure Alignment and the Ability to Deliver on Future-State Objectives
Wherever possible, the finance organization should avoid SaaS contracts for FP&A that extend
beyond a three-year lock-in. Instead, use renewal periods to examine the incumbent solution’s ability
to address current and future needs. Ensure alignment between your future-state objectives and
product roadmaps.

Application leaders should ask the following questions:

Will the vendor’s platform architecture support future requirements for xP&A, including expanded
data volumes and integration of a range of data sources?

Do vendor roadmaps provide options that include more holistic and integrative solutions with core
financial management?

Are your AI and RPA priorities aligned with your FP&A vendor’s current and planned capabilities?

Check to see if your current FP&A vendor is capitalizing on new capabilities to speed up continuous
processing and to improve cross-departmental collaboration. Do not hesitate to evaluate new
solutions for FP&A when existing vendors are unable to provide the functionality and flexibility needed
to support a more integrated process that embraces cross-functional business users. When evaluating
core financial management vendors and FP&A capabilities, be sure that they provide flexible, real-
time (or near-real-time) two-way data and metadata management features. Ensure that these features
are equivalent to or better than what specialty FP&A vendors are able to provide. Vendors capable of
meeting this standard will become increasingly attractive and — in many cases — justify shifting to a
single-vendor financial management suite. Be mindful that while a combined ERP/FP&A approach can
reduce integration complexity, levels of integration will vary. Vendor claims should be vetted by
conducting thorough testing and extensive customer reference evaluation prior to adoption.

Medium Priority
Address Gaps in Analytics, Data Management, and Partnerships Between Finance and Lines of Business
Digital business requires more collaborative, continuous and consistent FP&A and performance
reporting processes that are able to use data provided by other sources outside the office of finance.
FP&A efforts that use disconnected metrics and processes impede the organization’s ability to take a
broader approach to performance management. Finance organizations should first review and update
their FP&A strategy to reflect the need for integration with operational planning activities. When this is
done, they should address gaps in analytics, data management and partnerships between finance
and lines of business. They should begin to build more collaborative planning processes.

Application leaders should consider:

Using a single integrated planning approach to bring together relevant datasets from operational
and financial planning apps.

Relating slower financial planning and reporting cycles to more frequent operational cycles in order
to enable continuous and consistent planning.

Collaboratively modeling and analyzing the impact of alternative business decisions across finance
and operations.

Exploiting capabilities to drill down and across financial and operational data. This will allow
application leaders to discover underlying causes and produce actionable recommendations.

Application leaders in finance should focus on delineating the cause-and-effect relationship between
operational and financial metrics. Corporate analytics platforms may complement — and somewhat
overlap — modern FP&A solutions. Ensure working teams include representatives from IT and any
associated business intelligence (BI) and analytics staff — as well as the frontline operational
management that you wish to engage with. This will ensure agreed-upon standards related to data
management and security are upheld and incorporated into planned initiatives. Be sure to also identify
relevant organizationwide BI and analytics initiatives that financial analytics superusers could
participate in. This will allow them to grow their practical skills and improve relationships with analytics
and operational planning associates across the enterprise.

As you gain success breaking down these performance management silos, maintain an inclusive,
dynamic approach. This approach should:

Link critical components.

Link in appropriate levels of operational data.

Expand participation to make integrated processes more collaborative, continuous and consistent.

Address Latency Between FP&A and Core Financial Management

Nearly all integrations between core financial and FP&A solutions require the passing of data from
core financial and operational systems. This forms a baseline for planning and brings actual results
into the solution. That said, this method rarely uses master data and table-level integration, resulting in
potential inconsistencies between FP&A and core financials results. Wherever possible application
leaders in finance should take advantage of vendor and platform capabilities to minimize or eliminate
periodic extracts from core financial management that equate to latency.

Application leaders should consider:

Seeking real-time access to detailed transactional data and the ability to support integrated drill-
down capabilities.

Assessing core financial suite vendors’ ability to deliver the highest levels of integration between
FP&A and core financial processes.

By taking advantage of this approach, latency between core financial management and FP&A
applications will be minimized and planning agility maximized. An important side benefit to this is the
ability to close the books more rapidly because the waiting time for data transfer is eliminated. FP&A
can then be used holistically to access financial management transactional detail in real-time. This will
result in quicker, more consistent and accurate financial analysis and plans produced whenever
required. It will also improve financial agility. Some BOB vendors have introduced a limited level of drill
down to core financials. However, core financial vendors offering integrated FP&A features are rapidly
developing the ability to address this objective and may be in the best position to exploit the
opportunity.

Implement Vendor-Delivered AI/ML and RPA as Determined by Organizational Pain Points and Priorities
By 2024, 80% of new artificial intelligence projects in the finance domain will be deployed using out-of-
the-box functionality.

Application leaders in finance should begin deploying prioritized AI and RPA investments according to
their potential business benefits, vendor release plans and organizational readiness. As AI methods
(such as ML) become embedded in the FP&A solution, expect planning and reporting processes to
regularly include data from a range of internal and external systems. This will help application leaders
to better evaluate performance and prescribe courses of action.

Application leaders should consider:

Using AI to strengthen decision making by testing and dispelling assumptions, and eliminating bias.
AI can also be used as a basis for defending decisions.

Focusing on embedded ML components with self-learning capabilities able to detect and remedy
errors.

Using AI correlation capabilities to detect relationships in highly diverse datasets and to identify
positive and negative trends or patterns related to performance.

Prioritizing RPA opportunities where tasks address high volumes of data that are both highly-
structured and rule-based.

When focusing on relevant data sources associated with AI/ML priorities, be sure to account for
expanded requirements in the volume, variety and velocity of data that will be required to support
identified use cases. Keep in mind that compromising on the quality of data used by AI models can
lead to suboptimal results and inaccurate outcomes. To help the finance organization embrace these
technologies, application leaders should also plan to periodically rotate FP&A staff working with AI.
This will ensure that the entire team gets familiar with these technologies and can contribute their
business knowledge and domain expertise. As you address each challenge, gather and broadcast
success stories. Focus on FP&A staff that have successfully achieved productivity increases and
improved decision support quality. This will help to remove fear and build organizational confidence in
these new technologies.

Lower Priority
Seize New Opportunities to Extend Integrated Financial and Operational Planning in Support of xP&A
While not an immediate priority, application leaders in finance should start planning to use FP&A as
the basis for integrating the office of finance with planning efforts that are currently associated with
other business domains. The very nature of xP&A means that the effort to extend collaboration
between finance and business planning never ends. This effort will involve bridging and integrating all
relevant areas within the enterprise. Expectations will rise over the next two years, putting these
initiatives front and center. Ensure that all prioritized xP&A initiatives aim to meet financially focused
planning requirements in areas requiring more agile, action-oriented financial planning. Higher levels
of maturity will be characterized by ever-increasing integration and operational involvement linked to
increasing plan accuracy.

Application leaders should consider:

Cross-functional participation to build a central shared catalog (or an inventory of datasets) that
identifies and standardizes common business-critical data across the organization.

Evaluating preintegrated FP&A vendor solutions marketed and sold into operational planning areas
that are capable of accelerating xP&A initiatives.

Only through continuous observation and evaluation by both financial and nonfinancial personnel can
financial data be understood to a degree that builds confidence throughout the organization. A central
catalog of standardized data elements can accelerate initiatives by identifying anomalies across
datasets in addition to missing, incomplete and duplicative data.

As xP&A initiatives are advanced, continue focusing on data quality. Financial and operational data is
often stored in different locations and recorded in different ways across the business. Robust planning
models will often require that data is subjected to significant cleansing and standardization in order to
deliver accurate results.

Use AI/ML and RPA to Achieve Improved Insight From Larger Datasets Associated With xP&A Initiatives
Justifications for enterprise investments in marketing, sales, R&D and human capital will increasingly
require rich planning models linked to financial data. These models will need to be capable of using
AI/ML and RPA to help support and analyze a range of highly variable and dynamic business
scenarios and assumptions. As these technologies become more accessible and familiar to business
users, the financial organization must prepare itself to support and help lead efforts. By their nature,
these efforts will encompass ever-larger datasets derived from a multitude of internal and external
data sources. Application leaders in finance will be expected to seek out additional opportunities for
digital technology to be exploited in support of these efforts.

Application leaders should consider:

Relating the organizations’ needs to the use cases of other organizations implementing AI within
the same industry.

Contacting other AI teams within the organization to team up on efforts that can be mutually
beneficial.
 Following up with business domains that finance has collaborated with in earlier rollouts. Look to
identify new needs and opportunities.

As finance organization efforts emanate and expand outward in support of xP&A, application leaders
must continually ensure that their FP&A solution and technology platform remains capable of
supporting these initiatives. Proposed planning models seeking to exploit artificial intelligence will
require increasingly large data volumes that are consistent and relevant enough to support meaningful
predictions and classifications.

For application leaders in finance to focus on collaboration efforts, they will have to continue to work
with IT and other stakeholders. Together, they must build and maintain data management standards
and ensure that there is organized data environment in place that is capable of supporting large data
volumes. Vendor advances in RPA must also be tracked. These advances should be embraced. They
can help simplify complex tasks and automate the tedious discovery, delivery and transformation of
data associated with these larger datasets. If successful, the office of finance will be able to contribute
transformational leadership, and emerge as the primary authority supporting the evolution of FP&A to
xP&A.

Acronym Key and Glossary Terms

AI artificial intelligence

BOB best of breed

FP&A financial planning and analysis

IFP integrated financial planning

ML machine learning

RPA robotic process automation

xP&A extended planning and analysis

Evidence
The 2019 Cloud Financial Planning and Analysis Magic Quadrant Customer Reference Survey was
conducted in February 2019.

The 2019 Cloud Core Financial Management Solutions Magic Quadrant Customer Reference Survey
was conducted in April 2019.