Many companies today suffer through an inflexible planning process month after month, year after year.  It is painful and costly to build up a full forecast or budget, ask to see it with slightly different assumptions, and be told it isn’t possible.  Most companies today come up with a single estimate number but cannot model different scenarios to see how their decisions would change the performance of the company.  To evaluate why your process is so rigid, I would ask the following two questions.

Does your process confine you to an inflexible planning process?  

Often times the reason that a forecast is so rigid is because the process doesn’t allow for anything else. A flexible process has the following foundational elements:

  1. Definition: Every financial forecast should have a definition around what you are planning to (what managers think will happen, best case scenario, etc.). If that isn’t defined, it will be impossible to get an accurate representation of the information you are looking to gather.  This needs to be defined for base versions as well as any scenario modeling done off those versions.
  2. Coordination: If you are looking to re-forecast or model a scenario, you will need to make sure you get the right people involved.  Planning is a collaborative effort, but everyone needs to be on the same page to get a meaningful result.  Determine who needs to be a part of the process and ensure everyone understands the purpose, their responsibility, and timing required.
  3. Required Inputs: How is your plan built?  Are all numbers keyed in from an excel spreadsheet into a system? Do they live entirely in Excel?  Or can the process be defined in a way that formulas are built in a system, and users are inputting their drivers into a tool? If you can get to the point where the system oversees the calculations, it will be much easier to change assumptions and rely on a system to calculate the outcome.

Do your tools confine you to an inflexible planning process?

Another big reason people are confined to an inflexible planning process are the tools they use.  If your entire planning process is managed within spreadsheets, it is going to take a long time to coordinate company-wide assumptions and changes in an efficient manner.  For example, see below for the top criteria a planning tool should have to allow for a flexible planning process:

  • Versioning and version copy capability
  • Driver-based modeling
  • Centralized assumptions
  • Drill down reporting
  • Cross version reporting and analysis
  • Simple security management

If your planning tool is missing the above criteria, you will have a difficult time ensuring a flexible planning process. One tool to consider is Adaptive Insights Planning tool. Adaptive Insights offers all the features above in a simple, easy to implement format.  Many tools offer those capabilities, but none of them work as easily as Adaptive Insights.

How do I fix my issues?

 Now that you’ve identified what’s holding you back from having a flexible planning process, you need to combat it.  Firstly, start by evaluating the process and making sure the infrastructure is in place to allow for your desired outcome.  Then make sure you have the tools in place to achieve these goals.  Request a demo of a tool that can you help you in this process.  Or follow this link to read about other ways to improve your planning processes.

 

David Grande

David is a certified implementation specialist and has led, designed, built, and deployed multiple enterprise-wide implementations at Fortune 500 companies across a variety of industries. He specializes in corporate finance processes and technologies but has also led implementations in sales, supply chain, and SG&A.

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