Connected planning to infuse new rigor in finance
For long, businesses have built their financial planning and budgets based on past performances, and these budgets have been an essential part of an organization’s overall annual strategy. The increased uncertainty in the current times has placed CFOs under duress to anticipate and react to market changes more quickly and efficiently. Finance organizations are also walking a tightrope with the realization that financial plans, budgets and forecasts need to reflect the current reality and not that of bygone quarters. The typical first-generation planning tools for finance, the likes of Oracle-Hyperion, SAP and IBM (Cognos Planning and then TM1), have not been able to keep pace with the market evolution. They fell out of favor with finance managers and leaders owing to the expensive infrastructure, heavy reliance on IT systems, long implementation times, complex upgrades, and lack of integration capabilities. With financial planning technology having remained stagnant for a long time, very recently business have started to appreciate the need for continuous planning and an access to real-time plans, budgets and forecasts throughout the year.
Connected planning to the rescue
The continuous struggles of finance teams to deliver timely and relevant insights has led to the evolution of connected planning solutions that integrate people, data and processes across the enterprise. The new systems could easily automate manual data for quick insights to enable business decision-making. Let’s look at how these new solutions take a renewed approach to traditional finance challenges.
- Easy monitoring and measurement: By integrating source systems and processes, connected planning enables quick and easy generation of financial reports and dashboards. Financial leaders get an overview of financials in the form of easy-to-understand dashboards, and can also insert KPIs that need to be tracked continuously or at certain intervals, as the case may be. With complete visibility of financials, business leaders can quickly anticipate performance gaps between actuals, targets and forecasts and take remedial actions.
- Comprehensive analysis: Connected planning solutions allow financial planners an in-depth understanding of the performance, drilling into rich financial details, benchmarking actual vs. budgeted numbers, analyzing cash flows, calculating forecast trends, and reviewing the overall financial growth of the organization.
- Situation analysis: With such industry leading tools, financial planners can also anticipate the impact of alternate course of action Financial teams can analyze multiple scenarios to determine the most appropriate course of action and thus enhance strategic and effective decision making and execution.
- Multi-level integrations: Most leading connected planning solutions integrate easily with existing ERP and other source systems to create a unified view of the business. Thus, in addition to automatic data collection, teams can also collect data in traditional formats such as excel documents. The availability of this option is beneficial for business units that are still in the process of implementing or in-between ERP transitions.
Connected planning in action: a customer journey
A global FMCG organization took a phase-wise approach in their connected planning journey. They started out by mitigating their immediate challenges around revenue forecast, P&L budget, long range plan, and profitability modeling. In the second phase, they connected volume and revenue plans, followed by workforce and project portfolio plans in phase 3. The fourth phase took care of production planning and inventory optimization challenges, and in the fifth phase OpEx and CapEx issues were streamlined. Trade promotion planning was integrated in the sixth phase and then a zero based budgeting initiative was deployed in the final phase.
From automation to transformation – the path to connected planning success
Connected planning takes organizations on a transformation journey. Starting with immediate pain points, organizations gain efficiency by automating basic financial activities. The next stop on the journey is driving agility by adopting best practices and connecting multiple finance use cases. At the final stage, real transformation happens with the integration of key business units – supply chain, sales, marketing and HR, creating a dynamic, collaborative, and intelligent organization.