In my day, and I’ve been retired for a while, traditional planning consisted of a strategic plan sometimes called a long-term plan and an operational plan called an annual plan or budget, all calculated and presented with pen, paper, Excel and PowerPoint. I guess FP&A should have been called PPEP&PPP: Pen Paper Excel Planning & PowerPoint Presentations. No need for an A for analysis!
Old fashioned
This evolved during my career to more sophistication with scenario plans and contingency plans. The more intelligent of us used standing plans, which don’t stand or sit, but are designed to be used again and again. They should have been called repetitive plans because they stay more or less the same and are modified when necessary. Then someone invented the single use plan, again incorrectly named, used for one-off projects. Most accountants call them project plans. So we were up to six different plans by the end of my career.Today accountants have gone mad. Not only is the old-fashioned traditional planning criticised, modern accountants looked down their noses at it, with comments such as:
“We need to recognise that traditional planning no longer works.”
“The business landscape has evolved so much one annual plan and quarterly forecasts are insufficient.”
“Dynamic developments in recent years have shown that traditional planning has its limits.”
Excel and PowerPoint are called outdated and sometimes, scathingly, ‘reactive and static’.
Today planning has become dynamic, proactive and automatic, surrounded by planning buzz words and acronyms which are impossible to understand for ordinary mortals, and perhaps even some accountants.
Scenario planning for instance has become ‘real time scenario planning’. Planning has become real time, continuous and data driven, based on big data. Like little children, the words plan and planning are not allowed out on their own. They have been transformed into, for example, IBP, integrated business planning, as if business planning never existed. Now it is not only business but integrated.
Planning has also become predictive, as in predictive planning or the even more impressive ‘leveraged predictive planning and forecasting’, and teams that make these plans must be multi-skilled and multi-functional. When I did my plans, I must have been single-skilled and single-functional, a mere accountant working in a planning department. How boring.
Imagery
Garden imagery has come into planning with the landscape. Nowadays, everything has to be a landscape. There is the planning landscape, the business landscape, even the technology landscape. And now they have added shipping imagery. In my time, I coped with uncertainty in planning, now accountants navigate it. Some accountants like trains and use this imagery, encouraging companies to upgrade to complex capable analytics platforms for their planning. Some prefer farming, breaking their planning down into silos between departments in the organisation. From the mundane, we have moved into poetic planning.
Even the familiar FP&A has evolved and someone has corrupted it to xP&A. (Note the x is not upper case; it usually represents ‘extended’ as in extended planning & analysis so accountants have taken up using the second letter of a word for their acronym: xL&N). Some say, for instance that xP&A gives us 360° performance. They have copied from the well known 360° feedback used by Human Resources to evaluate management. Nothing new, buzz words again. And xP&A uses ERP (enterprise resource planning) and CRM (customer relationship management) and other sources to make their plans. So today, even our familiar FP&A is out of date. Financial planning and analysis was part of my era. Now xP&A is the modern way to plan, but only if we no longer know what the letters stand for. And note how fast planning has become. Plans pivot with speed, accuracy and agility today.
Stories, plays and balls
But my favourites are storytelling, playbooks and the crystal ball. Now given my age, I don’t understand the intriguing notion of FP&A storytelling. I don’t know how I coped without it for all those years. It appears the advantages are so numerous. I reveal here but a few. FP&A storytelling enables a fact-based decision-making process. It gives actionable insights and of course data-driven insights, but only if you understand the concept of insight in business planning. What is important in storytelling is the narrative which, of course, includes facts – clearly essential to making a plan. The implication being that we never used facts in our planning in my time.
Nor did I know what a playbook was as part of the planning process. Now they are as numerous as storytelling and every bit as indispensable. I found so many: business planning playbook, strategy planning playbook, strategic planning playbook (not sure if there is a difference between these two), annual planning playbook, pull planning playbook, and there is even a wedding planning playbook. Modern accountants can no longer plan without a playbook.
But one must not forget the crystal ball in planning: ‘The Crystal Ball Method of Business Planning’. I now admit I had to go to the book, Business Models for Dummies (by Jim Muehlhausen, May 2013) to discover what this is all about. With some relief, I learn that it is more than daydreaming or simply guessing the future, it is a whole process where ‘you paint a vivid picture of what the business environment will be…’ In my day, we didn’t have a business environment, we had a market, with a section in our PowerPoint presentation called ‘Evolution of the market’. I guess that is too dull for a title nowadays. Had we learnt to call it something like the ‘Vivid vision of the vigorous market’, the crystal ball may never have caught on!
X, y or z
It is a mystery that accountants can still have a reputation for being dull when they have so many sexy, dynamic buzz words for the mundane task of making a plan – plans which, by definition, will never come out as planned, however buzzy the process: some things never change!
But if this is not enough, the trend shaping FP&A in 2024 and beyond is already artificial intelligence. So FP&A will soon need a change of name to either FP&AI (financial planning and artificial intelligence) or to a trendy zP&Ai. Beware.
