At its core, strategic planning involves creating a mid-range financial plan for an enterprise to help the business achieve strategic goals and understand the financial impact of those strategies. But before even starting the strategic planning process, an organization must set the goals and targets that will shape the strategic initiatives. Those targets and goals not only shape the strategies that will lead the organization to hit all those targets, but also serve as benchmarks – offering something to measure against as the strategic plan becomes operational. In short, strategic planning ultimately drives capital resource allocation, but the process starts with target setting.

Driving Capital Resource Allocation through Strategic Planning

Some of the most important decisions CFOs and Finance teams make focus on how to allocate limited capital resources.  But what’s the best way to do that?  To start, Finance can generate a 3- to 5-year strategic plan to help make those decisions.  Such planning should not only be integrated with the P&Ls, balance sheets, and cash flow statements, but also clearly model the business as it exists today with possible strategies layered over top.  These strategic plans then determine how capital planning can support strategic initiatives across an enterprise in a manner that best supports the mid-range goals the organization intends to prioritize. 

Potential strategies that can be modeled in a strategic plan include acquisitions and divestitures; debt issuance, share buybacks; projects for IT, capex and marketing; and more (figure 1).  Strategic planning must allow for agile scenario analysis as well.  Such analysis allows Finance to quickly model, evaluate and, if necessary, pivot to alternate scenarios while strategic planning.

Before the strategic planning process can take place, then, Finance must set and understand the mid-term organizational goals and targets.  Strategic planning fits into the existing budgeting, planning and forecasting process by driving the budget.  After all, the financial impact of the important strategic initiatives – which impacts both the budget and forecasts – has been modeled and determined during the strategic planning process. 

But how can Finance pick which strategies will ultimately steer the direction of the organization?  The answer is simply: by determining the targets and goals an organization wishes to focus on, Finance can model and implement strategic initiatives that support those goals, based on which initiatives will (likely) yield the best results.

Determining Organizational Goals and Targets Shapes Strategic Plans

Before determining a mid-range strategic direction, an organization must first identify the it’s goals and targets the strategies will address.  Below are some example organizational goals and targets that might shape an enterprise’s strategic direction, broken down into three types of objectives.

• Financial objectives allow the organization to focus capital in the areas that will drive financial growth by analyzing revenue trends, evaluating spending and decreasing costs for example. 
  • Increase revenue: An organization can increase revenue by modeling price changes, adding new products or services, increasing sales efforts, or reducing manufacturing costs.  These potential strategies can be modeled for their impact on revenue ahead of decision-making.
  • Maintain profitability:An organization can analyze profitability to maintain an edge, whether by eliminating nonessential processes, decreasing waste, or improving vendor negotiations for better pricing on raw materials and resources to ensure profitability.
• Internal objectives help an organization determine which processes will help drive innovation, customer relations and operational excellence.
  • Grow sales for new products:  An organization can model potential strategies for growing market share for new products by analyzing and evaluating a new strategic marketing direction and campaigns.
  • Streamline core business processes:  An organization can evaluate scenarios for streamlining core business processes by assessing how to increase cost-efficiency by streamlining software, improve productivity and communication with better management systems, and ultimately improve time management and minimize risk.
• Customer objectives ensure an organization can develop and retain customer relationships by offering competitive pricing, maintaining product value to cost, and evaluating potential new product offerings and strategies.
  • Increase market share:  Strategic models can generate scenarios for increasing market share by looking at opportunities for innovation, price-lowering strategies, advertising initiatives and even acquisitions.
  • Expand product offerings:  The impact of adding a new product line or diversifying an existing product line can be modeled from a financial perspective to understand how change can impact product offerings.

Ultimately, understanding what goals and targets an organization wants to prioritize in the mid-term can help determine which strategic initiatives should be focused on.  And that drives the strategic scenario modeling that feeds the eventual budget.

But doing all that also depends on deploying the right tech.

Enabling Effective Strategic Planning with Good Technology

If an organization is determining goals and targets but cannot create a useful strategic plan, the whole effort falls flat.  The process can also get too bogged down with painful, manual processes that rely heavily on manual calculations and disparate spreadsheets.  As a result, the value in the process diminishes. 

But it doesn’t have to be that way.  Technical enablers can help drive a better strategic planning process in the following ways:

• Utilizing a solution with financial signaling:  By leveraging a solution that has built-in financial signaling, Finance can create agility in the strategic planning process by surfacing daily and weekly trends ahead of month-end to drive strategic initiatives (see figure 2).  This includes but is not limited to signals on sales volumes, supplier analytics, working capital, etc.
• Leverage a solution with built-in self-service reporting and analytics: By leveraging a solution that allows for visualizing and sharing the results of strategic scenario analysis, Finance can quickly and easily disseminate the analysis and results with key business partners and stakeholders to help spur collaboration and drive performance. 

Good strategic planning may start with target setting.  But the planning is kept alive with good technology and processes that support an agile, repeatable process that ultimately drives business value and alignment with business partners and key stakeholders within the organization.

Conclusion

Finance can drive strategic growth and initiatives across an organization by first determining the goals and targets the organization hopes to achieve.  Strategic planning is there critical to help prioritize the key initiatives required to achieve those targets.  While Strategic Planning processes must start with good target-setting, best-in-class Finance teams rely on technology that unifies planning targets across enterprise scenario planning and reporting processes.

To learn more about how to best implement a strategic planning process, check out our solution brief on Conquering Complexity in Strategic Planning.

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Planning for business is becoming increasingly more complex, requiring new approaches supported by sophisticated planning technologies.  Recent research even indicates that business strategy, financial and other planning activities (operational, HR, sales, etc.) are better together.  Thus, Connected or Integrated Business Planning (IBP) has become a hot topic for leaders who want to thrive in this challenging business context.  But why is IBP so hard to implement?

This blog series looks to answer that question by diving into why companies aren’t successful when adopting Integrated Business Planning.  In doing so, the series explores why the CFO is best positioned to lead the change.  Part 1 explores why Integrated Business Planning is difficult.

A Broken Mirror

Connecting or integrating business planning activities across the enterprise is not a new idea.  In fact, concepts like xP&A aim to respond to this need from a technology perspective, and terms like Integrated Business Planning have been around for decades.  However, today’s unique market volatility combined with failed attempts at connected planning shows why the topic needs to be elevated to the C-level.

Organizations encounter various obstacles when implementing an Integrated Business Planning process. And those organizations invest significant resources and time trying to overcome challenges and get the process to work.  Amid a long list of challenges, 3 stand out as the most difficult to overcome:

1. Leadership skepticism and misalignment around the IBP process.  As Oliver Wight rightfully points out, “one set of numbers” is a stepping stone in a well-deployed IBP process.  However, getting there isn’t easy.  But why?  First, the current state of technology and data strategy in many organizations doesn’t support an IBP process.  Second, some might be uncomfortable with this better reality: the visibility that comes with one view of the numbers can surface human bias, shortcomings or resource buffers that some leaders want to keep hidden.
2. Culture and organizational change can’t do it alone.  Companies structured in silos fail to connect strategic goals with planning, model the wrong behaviors (conflicting targets, biased assumptions, etc.) and force a fragmented planning approach.  How does all this affect the IBP process implementation?  Well, adjusting the culture and behaviors is hard work, as well as setting up a solid management system and implementing horizontal roles to coordinate planning activities across silos.  This process requires an enormous effort in culture change, and it doesn’t stick in the long term:  organization and culture tend to mold and deform over time in response to leadership changes or strategic direction shifts.  Further, today’s volatile business environment requires unparalleled speed in decision-making that can’t be held up by sluggish changes in governance and organizational design.
3. Ignoring the technology trap.  Having one technology for all planning is a complex endeavor. Finance planning, business unit planning, sales & operations planning, workforce planning (to name a few) are all processes with different goals, data structures, units of measure, mathematical foundations and needs.  Even if functional technology is in place to handle these different planning needs, scalability becomes an issue when the solutions are exposed to massive amounts of data.

So…what are the options?  Well, many of the solutions out there cannot adapt to current needs due to being made of multiple modules that must be integrated or simply not having the depth and breadth required to support varied planning needs.  The alternative, then, is spreadsheet abuse that’s slow, laborious and prone to error.  And those organizations that manage to integrate all these modules from different software vendors do it at a high cost and effort, living up with an infrastructure that doesn’t scale and a tremendous technical debt.  In other words, the alternative is high RISK and high COST.

Since culture change is never easy and most technology can’t address the needs of truly unified planning, leaders are discouraged from embarking on an IBP journey and stall with sub-optimal processes and technologies.

This sub-optimal status often means a higher impact from risks and uncertainty due to a sluggish decision-making process.  Ultimately, that impact translates into the loss of business opportunities and a higher cost of doing business.

A Closer Look at the Technology Trap

Even with strong alignment and commitment around the IBP process, a closer look into the problem shows that organizations struggle to achieve the promised benefits for a specific reason.  Primarily, a consensus among planning activities that effectively links strategic & finance goals with financial and extended planning (xP&A) is complicated when technology isn’t fit for the task.

The Pulse Survey launched by BPM Partners in 2021 (Figure 1) displays some of the main challenges an organization can face with budgeting and planning activities:

Collectively, such challenges are strongly correlated to the flawed technology solutions that organizations use to support these processes.  

Often, many organizations undertake the implementation of IBP from a process and organizational standpoint, leaving the technology discussion for later.

However, if one set of numbers is a non-negotiable in IBP, why not address the technology trap for starters?  Wouldn’t collaboration be easier with a common foundation of data and information?  Wouldn’t it be easier for top leadership to execute flawlessly when all planning is based on the same numbers?  Why wait for a perfectly fine-tuned process when the right technology can accelerate the adoption of IBP?

There’s Another Way

When business planning isn’t unified, the leadership team can’t really get quality insights fast enough to improve the business performance.  Because planning is a cornerstone to budgeting and forecasting processes, both are impacted when the planning processes are carried out in a containerized way supported by inferior technology.  The different departments and functions suffer the consequences of a fragmented planning approach.

Despite the many attempts to join and synchronize all planning activities, these planning processes remain disconnected because they rely on different technologies and systems that cannot provide a common data structure.

But a (better) way forward exists, one where the CFO leads the change by implementing a collaborative planning approach with business lines and other functions.  Whether that occurs through xP&A, integrated business planning or connected planning, ultimately what CFOs really need to do is unify business planning.

By unifying IBP or connected planning processes,organizations ensure they take a data-first approach to all planning activities.  Such planning approach aims to unify business strategy with planning, budgeting and forecasting activity for all business lines and functions – providing one single version of the truth.  That single version is verifiable and certified in just one technology platform.

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To learn more about unifying business planning, watch this video:

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Machine learning (ML) has the potential to revolutionize Enterprise Performance Management (EPM) by providing organizations with real-time insights and predictive capabilities across planning and forecasting processes.  With the ability to process vast amounts of data, ML algorithms can help organizations identify patterns, trends and relationships that would otherwise go unnoticed.  And as the technology continues to evolve and improve, even greater benefits are likely to emerge in the future as Finance leverages the power of ML to achieve financial goals.

Join us as we examine Sensible ML for EPM – Future of Finance at Your Fingertips.

The Shift to Intelligent Finance

For CFOs, whether artificial intelligence (AI) and ML will play a role across enterprise planning processes is no longer a question.  Today, the question instead focuses on how to operationalize ML in ways that return optimal results and scale.  The answer is where things get tricky.

Why?  Business agility is critical in the rapidly changing world of planning.  To think fast and move first, organizations must overcome challenges spanning the need to rapidly grow the business, accurately predict future demand, anticipate unforeseen market circumstances and more.  Yet the increasing volumes of data across the organization make it difficult for decision-makers to zero in on the necessary data and extrapolate the proper insights to positively impact planning cycles and outcomes.  Further exacerbating the problem, many advanced analytics processes and tools only leverage high-level historical data, forcing decision-makers to re-forecast from scratch whenever unforeseeable market shifts hit.

But with AI and ML, business analysts can analyze and correlate the most relevant internal/external variables.  And the variables then contribute to forecasting accuracy and performance across the Sales, Supply Chain, HR and Marketing processes that comprise financial plans and results.

Those dynamics underscore why now is the time for Intelligent Finance.

Over the coming weeks, we’ll share a four-part blog series discussing the path toward ML-powered intelligent planning.  Here’s a sneak peek at the key topics in our Sensible ML for EPM series:

• Part 1:  4 Driving Forces for Change.  These forces have the potential to accelerate ML and move organizations away from descriptive and diagnostic analytics (explaining what happened and why) and toward predictive and prescriptive analytics
• Part 2:  Increase Accuracy and Transparency.  Today more than ever, organizations are looking to become more agile, accurate and transparent with their financial plans to stay competitive.  And Sensible ML can help.  It allows input from users closer to the business to infuse business intuition into the model, which can increase accuracy and ensure all the available information is considered. (see figure 1)

• Part 3:  Key Capabilities for Intelligent Planning.  Sensible ML is unlike “most” predictive analytics forecasting capabilities (looking at prior results and statistics and generating forecasts based on what happened in the past).  Specifically, Sensible MLhas the capability to not only look at prior results but also then take on additional business intuition – such as events, pricing, competitive information and weather – to help drive more precise/robust forecasting.
• Part 4:  Customer Success Stories.  Every customer must be a reference and a success.  OneStream’s mission statement drives everything we do.  Taking a deeper look into customers who have reaped the benefits of leveraging Sensible ML can help any organization gain true predictive insights.

Regardless of where you are in your Finance journey, our Sensible ML for EPM series is designed to share insights from the experience of OneStream’s team of industry experts.  We recognize, of course, that every organization is unique – so please assess what’s most important to you based on the specific needs of your organization.

Conclusion

The aspiration of ML-powered plans is nothing new.  But to remain competitive amid the increasing pace of change and technology disruption, Finance leaders must think differently to finally conquer the complexities inherent in traditional enterprise planning.  ML has the potential to greatly improve EPM by providing organizations with real-time insights and predictive analytics.  However, organizations must overcome challenges (e.g., ensuring good data quality and selecting the right ML algorithm) to achieve success.  As ML continues to evolve, increasingly more organizations are likely to leverage its power to drive better financial and operational outcomes.

Several challenges lie ahead for organizations of all sizes, but one of the most important decisions will be implementing the right ML solution – one that can effectively align all aspects of planning and elevate the organization toward its strategic goals.  Sensible ML answers that call.  It brings power and sophistication to organizations to drive transparency and increase the velocity of forecasting processes with unprecedented transparency and alignment to business performance.

Learn More

To learn more about the value of Sensible ML, download our whitepaper titled “Sensible Machine Learning for CPM – Future Finance at Your Fingertips” by clicking here.  And don’t forget to tune in for additional posts from our machine learning blog series!

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Artificial intelligence (AI) and machine learning (ML) have revolutionized many industries, but the field of financial planning & analysis (FP&A) has been slow to adopt this technology.  Despite the numerous benefits AI – and more specifically, ML – can bring to Finance (e.g., increased efficiency, accuracy and strategic insights), many organizations still hesitate to implement either in their FP&A processes.  What’s holding FP&A back from reaping the vast benefits of ML?

To answer this question and more, this blog will explore some of the challenges holding FP&A back from fully embracing ML and how those challenges can be overcome.

Market Appetite for ML

While not yet as widely accepted as the move to the cloud for the financial close and planning processes, ML adoption is already increasing, according to the 2022 Data Science and Machine Learning Market Study by Dresner Advisory Services.  In 2016, less than 40% of responding organizations reported using or actively exploring ML.  That same metric was about 70% in 2022 (see Figure 1), showing a steady increase over the last seven years.  On the surface, that progression underscores the AI hype and excitement for the potential benefits of using AI for FP&A.

But what happens if the data gets broken down by function?  A bit of a different reality emerges for the Office of Finance and FP&A.

In fact, the study shows that only 20% (see Figure 2) of Finance organizations are currently using AI and ML, and Finance actuals lag most functions, despite all the buzz and chatter out there.

What’s Holding FP&A Back?

With so much buzz yet low adoption, what key barriers are holding FP&A and Operations teams back from mainstream adoption of ML solutions?  Figure 3 depicts the barriers.

Below, the details about these key barriers show why they’re preventing widespread implementation of cutting-edge ML technologies:

Lack of Expertise

• FP&A teams can struggle to deploy ML in enterprise planning processes, such as rolling forecasting or demand planning, due to lacking the required expertise in ML and machine learning modeling techniques.  Without dedicated business analysts and data science engineers, teams cannot realize the full potential of ML in planning processes.  
• A lack of expertise is especially relevant for organizations with existing ML investments, where the lack of specialized resources hinders the ability of FP&A teams to effectively utilize ML in their work.  Without dedicated expertise or resources, FP&A teams are severely limited in their ability to take advantage of AI and ML.

Lack of Scale

• For organizations with existing data science teams, creating repeatable and systematized ML processes and infrastructure across the enterprise is expensive.  Additionally, most ML capabilities within CPM tools today are only capable of producing a single forecast (target) at a time.  Why does that matter?
• FP&A’s role is to lead and drive effective planning processes across lines of business and functions (e.g., HR, Sales and Operations).  And if unable to empower the organization to forecast at scale, FP&A is not executing as a strategic business partner.  AI solutions for FP&A that cannot scale are no different and will never reach mass adoption, causing the solutions to ultimately fail.

Lack of Business Intuition & Transparency

• Traditional ML modeling processes within CPM tools are often a “black box” to FP&A teams (see Figure 4).  Why does this matter?  Well, ML modes aren’t complete without material business “intuition” and/or offer users only limited visibility or traceability into model inputs and results.  Such limitations can result in a lack of trust or confidence in the results.

As a strategic business partner, FP&A must instill confidence in forecasting processes.  And while leveraging AI and ML is likely to increase forecast accuracy, P&L owners cannot assess the drivers that comprise forecasts – P&L leaders who can’t will never own their forecasts.

And if P&L owners don’t own their forecasts, forecasting processes break down and fail altogether.  That means FP&A has failed too.

Fragmented & Disconnected Processes

• Current AI and ML solutions within CPM typically require data movement and reconciliation between fragmented systems and Finance processes.  Those requirements increase the technical debt and limit the ability for advanced analytics to scale across the organization.
• The fragmented software and technical processes needed for connected planning create added technical complexity and administrative burden for FP&A teams.  This burden includes constantly moving and reconciling data, monitoring data latency, and managing security between fragmented products or models.  Collectively, the burden dilutes the ability of strategic FP&A teams to focus on driving performance and supporting critical decision-making.

Conclusion

Despite these challenges, ML has the potential to significantly improve Finance operations and outcomes.  By automating manual processes, ML can help Finance professionals save time and improve accuracy, which can lead to more effective decision-making.  Additionally, ML can provide real-time insights into financial performance.  Those insights can then help Finance professionals identify trends and make informed decisions.

As AI and ML for FP&A enter the mainstream, organizations will undoubtedly have several choices to consider.  On one spectrum, solution vendors for AI (see Figure 5) are offering everything from AI infrastructure solutions to data science toolkits and complete AI platforms to create and deploy ML models.  While these are powerful tools addressing varying use cases, the tools aren’t designed for FP&A teams.

Corporate performance management vendors are also investing in AI capabilities to support extended planning & analysis (xP&A) processes such as demand planning and sales planning.  As Figure 5 illustrates well for AI vendors, CPM vendors will also solve their customers’ AI needs in different ways.

So then, what’s the lesson in all this?

Don’t let AI hype cloud the evaluation process.  Start with a clear understanding of “what” business outcomes the FP&A team is trying to achieve with ML.  Identify “who” is using the solution and “how” the solution is unified into existing planning processes.

And with answers to these questions in mind, use the evaluation process to “get under the hood” to learn whether the solution will unleash the organization from the key barriers holding FP&A back from moving beyond the hype.

Learn More

Want to learn more about how FP&A teams are moving beyond the AI hype?  Stay tuned for additional posts from our blog series, or download our interactive e-book here.

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Scenario planning is a powerful tool for Financial Planning and Analysis (FP&A) teams –one that helps them anticipate and prepare for potential changes in the modern business environment. As businesses today grapple with increasing uncertainty from inflation, changing economic conditions and geopolitical forces, Finance must understand the range of potential scenarios that could await and how to react to them. By incorporating scenario planning into the budgeting and forecasting cycles, Finance professionals can improve forecast accuracy and the effectiveness of the financial and operational forecasts. Collectively, those improvements will better position the organization for success in a rapidly changing world.

Understanding Scenario Planning, an Everyday Process

Most people regularly perform scenario planning in everyday life without even realizing it.  Deciding whether to bring an umbrella on a night out in case it rains or keep a spare tire in the trunk in the event of a flat time (or in my case, having roadside assistance since there’s no way I’m changing a tire!) are a few examples.  These decisions represent scenario analysis.  What is that exactly?  Scenario analysis helps avert potential disaster (or a wet hairdo on date night).

For FP&A teams, scenario planning can be a powerful piece toolkit to help anticipate potential challenges and opportunities and then make better-informed decisions.  That planning prevents Finance and operational leaders from always having to react in the moment to fire drills.

The basic concept of scenario planning requires identifying a range of possible future conditions and then developing plans to respond to each condition.  This approach helps organizations be more resilient and adaptable.  How?  In short, they are better prepared to react to unexpected challenges and changes.  FP&A can especially benefit from incorporating scenario planning into budgeting and forecasting processes.  Doing so ultimately elevates the Finance function to the role of valued strategic business partner tasked with proactively driving financial and operational results within the business.

But how?  To incorporate scenario planning into the budgeting and forecasting cycles, Finance should first identify key drivers of the business and then create a set of scenarios to account for possible changes to any of those drivers.  For example, a manufacturing company might want to understand the potential scenarios where manufacturing costs per unit changes because of a change in the price of raw materials.  In this scenario, three potential outcomes could be evaluated: (1) price increases, (2) price decreases, and (3) price remains stable. OneStream’s Analytic Blend (figure 1) capabilities can help enable effective scenario planning by tracking key operational analytics that form the basis of alternate scenarios.

Getting Started with Scenario Planning

As FP&A leaders prepare to take advantage of scenario planning to drive performance across the organization, the steps below will help begin the journey:

• Identify KPIs That Drive Business Results to Develop a Scenario Plan

After identifying the KPIs such as weekly sales and volume, inventory carry costs, working capital and more, Finance can then craft potential scenarios and develop financial projections for each scenario.  Those projections then help Finance not only better understand the financial impact to the budget and forecast, but also identify and track risks and opportunities as a metric against the forecast.  In doing so, Finance then has the information to assess forecast accuracy and proactively drive the most favorable outcome –ahead of month-end close before the impact hits the actuals.

• Position Finance as a Strategic Business Partner with Scenario Planning

Beyond just the impact to the budget and forecast, FP&A teams can also help drive more strategic decision-making across the organization by weighing the financial impact of potential strategic initiatives.  Such initiatives include acquisitions, divestitures, share buybacks, projects ranging from IT to CapEx, and more.  By analyzing and providing a financial context to important strategic initiatives, Finance can be poised to earn a seat at the decision-makers table and become a valuable business partner to stakeholders and business leadership.

• Drive Collaboration and Agility with Scenario Planning

By driving the process of scenario planning and incorporating into day-to-day forecasting processes, FP&A can increase its organizational reach and improve agility in the face of uncertain times.  Both collaboration and agility come with owning the process and bringing together stakeholders from Supply Chain, Operations, Marketing, IT and more to develop the various scenarios, outcomes and plans to react to those scenarios.  Such planning therefore helps generate valuable discussion within the organization and prepares the organization for future situations.

Conclusion

In sum, scenario planning is a valuable tool that empowers the Office of Finance to not only improve the accuracy and effectiveness of the budget and forecasting efforts, but also become a strategic partner to the organization.  By understanding possible outcomes and having a plan in place to react, businesses can be better positioned for success in a rapidly changing world.

No one can predict the future, of course.  But Finance professionals who leverage a robust scenario planning process can anticipate and prepare for potential change, leverage opportunities before they pass and make strategic decisions that position the organization for long-term success.

To learn more about how Finance can become a valued strategic partner to the business, check out our Conquering Complexity in Strategic Planning solution brief.

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The life of FP&A professionals doesn’t have to mean collating reports and files from different sources to get the right data and information.  In fact, FP&A should move away from spending time on data integration, cleansing and harmonization tasks and instead spend more time on applying the team’s knowledge to build the right insights to make timely decisions with agility.  The latter drives business performance.

A day in the life of an FP&A team working with fragmented systems and a look under the hood of Enterprise Performance Management (EPM) systems both underscore why the integrated data that comes with Intelligent Finance helps teams elevate their game.

Monday Again! A Day in the Life of a Finance Planning and Analysis Team

It’s 9:00 am on Monday.  Loria di Frangelico – a fictional character profiling a diligent FP&A leader of a large corporation – reviews the week’s goals and prepares the actions and schedule for the coming days.  Trying to get the 3+9 Forecast with actuals that includes the previous week’s data has always been a hassle.  Loria calls Joe Murphy, the FP&A Analyst:  “Joe, I’d love to get the figures earlier this time, on Wednesday.”

Joe responds: “Of course, Loria, you know we get the product line information automatically from the ERP with little manual enrichment.  But for the services lines, we depend on getting the data files extracted by IT.  Let me reach out to them now to get that going!”

On Wednesday, Loria follows up with Joe, and he responds: “The IT folks had a data integration issue. They’re still cleansing the data and reviewing the mappings since the data transfer didn’t go as expected.  However, I can get you the product lines information now.”

Thursday arrives, and Joe finally provides a complete forecast consolidated on a spreadsheet.  Loria not only wishes she could have gotten the information earlier in the week but also expects the information to be accurate.  Yet Joe’s file shows a $250K variance in the service line!  Joe is requesting clarifications from the field service department, but Loria gave up the fight with IT a long time ago.  With no time left, she’ll need to just report the inaccurate figures to her boss and take the criticism that will surely follow.

A Look under the Hood

Arguably, the narrative above isn’t a one-off story for FP&A teams since getting good information on time is often a drag.  Why?  Well, the analyst is almost always juggling miscellaneous data sets, files and systems.  This struggle occurs in almost every organization with complex product portfolios and diverse business models.  But a look under the hood that shelters the EPM activities of many organizations offers some insights on what can go wrong:

• The existing EPM solution landscape is fragmented with different tools and showing different levels of granularity into the data:  Oracle EssBase, SAP BPC, Hyperion Financial Management (HFM), Hyperion Planning, ERP modules, spreadsheets, etc.
• Custom-build applications and system add-ons have been layered upon this patchwork architecture.  That approach resolves specific business needs but slows down the performance and makes the overall EPM architecture difficult to maintain and scale.
• System and data integration is too often manual, and the data mappings are sometimes faulty – creating heavy dependencies with scarce technical resources.  And that environment makes it impossible for IT to commit to a delivery schedule.
• Data under these circumstances is compromised, making it less available, less credible or both.  Poor data then feeds the information and insights that crafts (equally poor) strategic decision-making.

If the goal is to provide best-in-class products and services, why should an organization live with underperforming processes and archaic technology?  The answer?  It shouldn’t.  Getting the right data, at the right time should be an instant process that makes data available to the FP&A analyst whenever required. A unified EPM platform minimizes system and data integration needs and empowers the FP&A team to provide better insights and more agility to critical decision making.

A Better Performance: Breaking Away from the EPM Toolkit Chaos

FP&A teams at organizations with under-performing processes and out of date technology face a reality much like Joe Murphy in the narrative above – drowning in an ocean of reports, files and spreadsheets. Such professionals accept their fate because they don’t understand the root cause of this chaos, let alone imagine a better way.  

One of the main issues – the EPM Toolkit chaos (i.e., the complex IT infrastructure that supports these essential process) – lies buried six feet under, unseen by them and those who most need to see it.   

Organizational and process changes circumvent this complex infrastructure but don’t really try to fix it – yet doing so is a necessity for modern FP&A teams.  After all, getting the right system setup ought to be a priority for organizations that aspire to be quicker at reacting to new market dynamics.

Today, organizations can replace complex EPM infrastructures with one single platform.

 Figure 1 (The Pyramid of Empowerment for the FP&A Team) shows how such an integrated system is possible and the benefits that flow through to the daily job of planners and analysts.  By having one platform that directly connects to the systems of record (ERP/MES) and systems of engagement (CRM), the platform can natively load and transform the data just once and supports all the planning and consolidation requirements of modern organizations, including the ability to support M&A activities without adding complexity.  

The result is impressive: analysts and planners are empowered to apply their knowledge and expertise to build sensible insights.  And the business benefits for the organization are ample:

• Enhanced visibility to what’s happening with minimal data integration.  Financial and operational data is relatable because it lives in the same place.  In fact, the platform supplies with one version of the truth for planners and analysts from any business unit or function and it allows to inquiry the source systems for additional detail (see Figure 2).
• More agility in strategic decision-making.  Data handling friction is removed, and with applied financial intelligence and machine-learning capabilities native to the platform, high-quality information is made available to planners, analysts and business leaders.
• Motivation to planners and analysts when they can spend more time on intellectual, forward-looking activity.  As a result, they quickly realize they can apply their knowledge to shape the course of business and finance.
• Lower cost of ownership by replacing limited solutions with one platform.  The low-hanging fruit is getting rid of all that infrastructure, but the value comes when IT resources are freed up to adopt new technologies or support other projects.

Contrarily, those organizations that choose to stay with silos of planning and analysis tools and models are facing the hidden costs of a fragmented EPM landscape.

Conclusion

The need for data integration isn’t going away for FP&A teams – but the process can be greatly simplified.  Doing so just requires adopting a well-reasoned strategy and investing in an EPM solution that reduces the dependence of systems and data-handling activities to give more time back to analysts and planners.  Organizations with scattered and complex EPM landscapes should consider investing in a solution with embedded capabilities to handle data and information from the source systems.  When choosing a solution, organizations should also consider the following key considerations (among others):

• Offers a one-stop shop for data management to simplify the collection, consolidation, transformation and certification of data coming from various disparate systems and sources.
• Secures the timeliness and completeness of data, both financial and operational.
• Reduces costs of ownership by unifying all planning processes into one.
• Secures compliance, internal controls and audit requirements because the data can be traced back to the source system or file.
• Includes purpose-built financial intelligence capabilities in the platform to improve confidence in forecasting and planning activities.

A solution of this kind increases transparency in the information and takes planning, analysis and strategic decision-making to the highest level.

At OneStream, we call this Intelligent Finance.

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Want to learn more about industry-leading data integration practices for EPM? Click here to see how OneStream can help you take things to the next level.

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This past year has undoubtedly been challenging for all organizations, regardless of their size and structure, given the impacts of ongoing global events.  But the trajectory of a once-stable path has created an opportunity to rethink a better, more promising path.  As organizations ramp up for 2023, Finance teams must take time to not only reflect on the past 12 months but also look ahead and determine what actions taken today will help the organization power through the uncertainty ahead.  That path should be one where agile rolling forecasts and continuous collaboration help improve Financial Planning & Analysis (FP&A) processes and performance.

Missing Collaboration Opportunities

Today’s Finance leaders have more organizational influence than ever.  And with an abundance of technological innovations at their disposal, Finance can continue shift its focus from back-office activities to delivering insights across the enterprise.  Many of the same leaders, however, are not putting the same emphasis on measuring and improving collaboration across the enterprise.  Why?  Well, while silos of point solutions solve for individual processes – because they are typically not unified, – they can actually lead to misaligned forecasting processes which crushes collaboration opportunities. 

Where’s the proof?  To start, there are all the times over the past year that Finance teams had to chase down monthly forecast files from Sales, HR, Supply Chain, etc. – only to discover the provided files are incomplete or have some anomalies that require follow-up.  After all, most organizations strive for the following:

• To understand how internal and external forces impact performance management, Finance data must be integrated with data from different functions (e.g., Sales, Demand, Supply Chain, etc.).
• To enable better decision-making, agility, and speed, rolling forecasts must get done in a timely manner, without compromising accuracy.
• For effective collaboration, the flexibility of a single unified intelligent platform is critical to unifying the forecasting function with data and processes across the organization.

2022 Challenges Hamper Organizational Planning

The acceleration of FP&A as a profession has changed dramatically over the past 12 months – transforming the function into a true business partner focused team.  That evolution has been shaped by prevailing business conditions and the corresponding challenges presented to management.  

In the past, FP&A primarily focused on historical analyses to provide business insights – playing a passive support role in planning and decision support.  But today’s uncertain business climate where radical change can happen in a matter of weeks makes this approach far from adequate.

To thrive in today’s complex economy, sophisticated organizations face tremendous pressure to evolve with the changes and do so at speed.  Yet unforeseen events (e.g., global inflation) can render past trends obsolete and modify the way teams work across the organization.  Similarly, supporting a planning regime that cannot cope with the complexity of fast-changing markets is also futile. 

Not to mention, normal annual challenges only get amplified with the introduction of new global disruptions.  The time to think about New Year’s Resolutions is therefore right now given that many Finance leaders feel the pressure of the below challenges:

• Long working hours while Finance staff chase down anomalies
• Lack of continuous on-demand planning and forecasting
• Need for data inconsistencies and constant data validation across data models
• Fragmented systems and tools
• Outdated planning, budgeting, and forecast processes
• Lack of flexible Finance systems
• Out-of-cycle downward budget adjustments

Such challenges don’t need to continue derailing FP&A practices year after year.

The New Year Offers a Restart with Practical and Simple Solutions

Today, Finance chiefs are challenged with helping their organizations break the reliance on annual plans and embracing more accurate, agile, and collaborative planning techniques.  Those techniques include driver-based planning and rolling forecasts, and three resolutions can help Finance teams ensure a successful restart in the new year: 

• Focus on continuous planning to accelerate agility
• Remove manual processes that erode data accuracy and trust
• Engage Finance and Operational Planning teams to drive collaboration

In recent years, Finance leaders have taken on several major strategic initiatives to prepare for an ever-evolving landscape.  Those initiatives include replacing detailed annual planning cycles – which take too long and result in an out-of-date budget as soon as it’s complete.  With continuous planning, however, Finance is more effective due to focusing on rolling views that look 12 to 18 months ahead.  How?  Continuous plans enable managers to respond more rapidly to emerging events and trends and to changing business environments while increasing higher levels of corporate collaboration (see Figure 1).

In fact, collaboration is forever joined to continuous planning – fostering agility and enabling a more accurate and updated response to economic pressures that traditional forecasts simply can’t offer.  And a strategic dialogue focused on driving performance.  That agility is important in a planning world more complex than ever, and if FP&A is to continue being a valued business partner, its role and approach must change.

Empowering FP&A Empowers the Organization

The past few years have shown that existing systems, processes and ways of working are not agile enough to deliver the greater demand for data, insights, scenarios, forecasts and plans.  In short, the old ways of working and organizing simply aren’t strong enough to create and maintain the collaborative bond needed for accurate and trusted planning, budgeting, and forecasting.

But continuous planning empowers the organization in several key ways, among others:

• Aligning operationally relevant plans and actuals with financial goals
• Creating granular driver-based plans at the person, customer and/or product level
• Conquering the complexity of creating predictive and machine-learning models without data science expertise
• Quickly creating various what-if scenarios without requiring a full bottom-up forecast

Conclusion

While 2022 had been challenging, Finance teams have the opportunity in 2023 to rethink a better, more promising path for organizational success. Finance is poised to lead organizational transformation by expanding continuous planning and increasing finance and operational collaboration across the enterprise. The right solution, like OneStream, makes it possible by enabling better access to data and better processes – all of which ultimately allow the annual plan to remain relevant in tracking business goals and objectives into the year, even as conditions constantly change. 

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To learn more about how FP&A teams are moving to continuous rolling forecasts, click here to download the ebook titled “Unified Planning, Reporting & Analytics.”

State & Local Agency Budgets: Planning and Forecasting Challenges

For state & local agency budgets, planning and forecasting are critical functions that ensure the efficient use of taxpayer funds.

But despite having made significant investments in Enterprise Resource Planning (ERP) technology, many agencies still find significant challenges in navigating the extremely complex process of government budgeting.  Why?  Because ERP systems were not designed to manage the complexities of government budgets.  Unfortunately, many entities strive to build around these limitations with patchwork systems of point solutions of financial forecasting software and spreadsheets.  This patchwork approach only leads to further challenges where agency financial teams must contend with bottlenecks, disparate data sources and siloed planning processes.  So how can state and local agencies rise above these challenges?

In Smarter, Faster, Better Budgets: How to Supercharge Your ERP to Make Better Use of Financial Data – a recent webinar hosted by Governing, a division of e.Republic – panelists discussed the answer to that question.  

Governing provides news, analysis and insights for the professionals leading America’s states and localities.  Published since 1987, Governing is a trusted source of record for elected, appointed and other public leaders looking to manage the present and anticipate the future of state and local government.

In the webinar, moderator Justin Marlowe, Senior Fellow, Center for Digital Government, discusses with panelists Brenda Decker, Senior Fellow, Center for Digital Government, and Joel Bittick, Regional Manager – SLED, OneStream Software, the complexities and unique challenges of government agency budgets.  In addition, panelists discuss how modern financial forecasting software addresses these challenges by seamlessly integrating with ERP systems and unifying financial management functions.

Conquer Complexity in Budgeting with a Unified Finance Platform

Mr. Marlowe begins the discussion with a question on why so many state and local governments maintain standalone processes for key parts of financial processes despite significant investment in ERP technology.  Then, Mr. Bittick describes how most state and local agencies have made significant investments in ERPs to get actual results right but have realized a gap in what ERPs can deliver.  

This gap leads to those agencies relying on Microsoft Excel® or point solutions for many functions, such as fund/account reconciliations, grant planning, operational planning and Annual Comprehensive Financial Report (ACFR)/Popular Annual Financial Report (PAFR) statutory reporting.  As Mr. Bittick explains, these standalone tools, especially spreadsheets, are prone to errors, lack controls and audit trails, and have limited scalability.  

Mr. Bittick then explores how spreadsheets cannot effectively address the data dimensionality needs of state and local agency Finance teams (see Figure 1).

After that discussion, Mr. Marlowe addresses Ms. Decker with a question on how to respond when someone says their spreadsheet is too complex to integrate in a financial system.  Ms. Decker, drawing on her experience as the Chief Information Officer of the State of Nebraska for 10+ years, describes how most ERP systems were not designed for government agencies.  As a result, users often needed to rely on spreadsheets that could be built to users’ specific needs.  She explains the answer to this issue is to invest in a financial platform that can be layered atop ERP systems and meet the unique needs of government agencies.

Next, in a specific question to Mr. Bittick, Mr. Marlowe asks how an agency would use OneStream’s Intelligent Finance Platform to modify the static chart of accounts in an ERP system to be more appropriate for that agency’s reporting or budgeting.  Mr. Bittick describes how OneStream is a complementary layer to ERP systems, which primarily manage financial transactions.  Further, he emphasizes, OneStream seamlessly integrates with ERP systems to enable financial analysis, budgeting, planning, forecasting, close and reporting.  

He describes how OneStream does not replace ERP systems but instead complements and aligns with them (see Figure 2).  Elaborating, he discusses how OneStream empowers agencies to manage performance by combining efficient and transparent actual financials with forward-looking plans to measure outcomes and performance.  Ms. Decker adds to this discussion by explaining that ERP systems lack the planning capability to measure the value to fulfill agency obligations to citizens and efficiently manage their money.

Mr. Marlowe then begins a discussion on the challenges of managing federal funding to states and local agencies, such as funding from the Coronavirus Aid, Relief, and Economic Security (CARES) Act and the Inflation Reduction Act.  Focusing on some of the challenges with these funds, he discusses having to manage the variations in tracking and reporting requirements, among other related aspects.

Ms. Decker replies to note “that money comes with a lot of strings.”  Elaborating, she focuses on the variations in compliance and reporting of grant funding, including the difficulties in managing pass-through grants.  Those grants, she emphasizes, require the agency to not only report on how it dispersed the funds, but also track and report on how the recipients used those funds.  She further explains that, to remain compliant with grant requirements, government agencies must often track things that are not normally tracked in ERP systems.

Following that part of the discussion, Mr. Bittick explains how OneStream’s Intelligent Finance Platform unifies Finance processes, including solutions such as Grant Planning (see Figure 3).  He further explains how this solution enables government agencies to track all their grants and grant information within the platform regardless of the number of grants.  This grant tracking includes all spending split by salaries and wages, purchases, services and other expenses.  Emphasizing the benefits of the tracking, he notes how the solution incorporates both tracking and planning with full auditability.  Ms. Decker also jumps in to emphasize the importance of this planning capability as agencies must carefully evaluate the long-term impact of grants, especially when the initial grant funding will create a future funding obligation after the grant funds are used.

Continuing the theme of forward-thinking, Mr. Marlowe asks the panelists about the challenges government agencies face in reporting on return on investment and specifically with performance-based budgeting.

Ms. Decker describes how establishing ROI metrics can be very difficult for government agencies, who often must fulfill mandates that are challenging to measure.  As an example, she contrasts the clarity of measuring the completeness of a road construction project with an ease-of-access project.  In the latter, the results are relatively hard to define, so agencies should look for systems that can accommodate this need.  Mr. Bittick then provides an example of how a current OneStream customer is leveraging the platform to implement performance-based budgeting (see Figure 4).  Specifically, he describes how the customer engages OneStream to define ROI metrics.

As the webinar draws toward a close, the panelists conclude with a discussion of how current inflation rates are impacting state and local agencies’ budgeting processes.  Ms. Decker describes how agencies are being asked to plan for multiple scenarios in response to inflationary pressure and how ERP systems don’t have the capability for multi-scenario planning.  Continuing the discussion, Mr. Bittick explains how a large state agency that has been struggling with spreadsheets is leveraging OneStream to respond to changing inflation rates by recasting forecasts monthly with the previous month’s actuals included.  This process would be extremely difficult with spreadsheets, but it takes only a few minutes with OneStream’s financial forecasting software.

Conclusion

When seeking to improve the efficiency and effectiveness of budget processes to optimize the use of taxpayer funds, the Finance teams of state and local agencies are faced with different complications from their business counterparts.  ERP systems are effective in managing agency financial transactions, but the systems aren’t designed for the unique requirements of government planning.  And as the webinar highlights, OneStream’s Intelligent Finance Platform complements and aligns with ERP systems and enables agencies to conquer complexity in government budgeting, planning and forecasting.

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Want to learn more about OneStream’s state & local agency budget, planning and forecasting capabilities for Finance teams?  Watch the webinar replay here, or contact us for a demonstration.

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Have you ever gone through an annual planning cycle feeling comfortable enough with the information at hand to call the shots?  Did you have the chance to discuss every detailed operational planning assumption and build consensus with all stakeholders? Could you trust the forecasts provided?

No doubt, annual planning and budgeting cycles are tough and mostly unfair.  But why?

At the core of any annual planning process, data collection and segmentation are pervasive challenges. Information doesn’t flow at speed or with the accuracy needed to provide good insights. All too often, leadership often compromises with just a top-down approach using overly simplistic segmentation criteria and neglecting the richness of information from a bottom-up planning practice, only because true bottom-up planning is difficult to scale and execute consistently.  Sound familiar?

In growth industries with immature markets, a top-down only approach may be acceptable.  But in mature and cyclical industries with fierce competition and tight margins, failing to apply a bottom-up approach for planning can set the wrong course for the year.  Even worse, that failure adds risk to executing the company’s strategic plans. Enriching the annual operating plan (AOP) with granular operational planning can help achieve better strategic plans and improve financial results.

Contextualizing Annual Planning

The dramatic pace of market dynamics is forging new ways to elevate the annual planning and budgeting work.  Having a top-down approach based on last year’s attainment + growth target is insufficient, at least for any organization looking to thrive in current market conditions. Instead, bringing context to financial targets, budgets and plans is the key to success.

Achieving this success requires incorporating a bottom-up approach.  In such an approach, the annual financial plan is developed with inputs from the demand, sales and supply-chain planning processes.

Indeed, this ground-up planning method provides rich background.  Here are a few examples of the details provided:

• Sellers contribute with buying intent knowledge from customers
• Marketing informs about market dynamics (e.g., product performance, customer intent and competition)
• Demand planners inform plans with demand predictions that may affect volumes and price.
• Supply chain teams inform plans about resources needed to succeed in the annual plan (e.g., materials, equipment and workforce)

With all these useful insights, the number isn’t just a number – it instead takes on meaning.

But unifying annual planning with other detailed plans is not an easy endeavor, and many organizations fail.  Why is annual planning so difficult to implement then?

Because it relies on manual tasks and depends on many players.  And these conditions mean annual planning can hardly be done well and on time during the planning window.  Here are a few other reasons bottom-up operational planning process can be challenging:

• Inadequate data handling and business intelligence tools. Spreadsheets are still used widely for planning and budgeting because the systems in place can’t cope with the task of unifying plans.  This is neither scalable nor reliable.
• Limited collaboration. The fast pace in today’s business environment leaves little time to think outside the 4 walls of a function or business unit, discouraging open dialogue among teams.  Further, each functional area has its own jargon and idiosyncrasies, adding burden to any collaboration.
• Unwillingness to align. Different and sometimes contradictory KPIs and objectives bring organizational bias to forecasting, thwarting any attempt to increase accuracy, because each department will forecast higher or lower for protection (see Table 1).

Steps to Unify Annual Planning with Operational and Commercial Planning

Organizations that incorporate demand, sales and supply data into the annual planning cycle have more chances to increase revenue, market share, profits and cash flow.  Why?  Because operational planning directly impacts strategic targets.  At the same time, it enriches the annual planning and budgeting processes by connecting the target figures with realistic and committable initiatives and projects – e.g., to expand sales in a new market, launch a new product earlier to capture a forecasted demand trend, prioritize constrained raw materials to product B because it’s more profitable and so on.

In other words, the operational planning adds context and that drives motivation and performance.  When KPIs are aligned to the financial objectives, the organization can expect higher growth rates in revenue and market share, better use of cash and more.

For organizations evaluating their annual operational planning process, here are a few key considerations to create a more unified approach:

• Start high level and then get into the details. Finance must start by aligning strategic and annual plans, then work down to lower planning levels.  Then Finance team must consider unifying with one planning realm at the time – for example, beginning with demand planning – and then incorporating the other functional areas, such as sales, marketing, supply, etc.
• Align operational and financial KPI’s. Suppose that a target for the year is to improve days sales outstanding (DSO), but the order-to-cash organization focuses mainly on revenue driven KPIs (e.g., On-Time In-Full) and doesn’t consider invoice timeliness and accuracy as KPIs. That focus may lead to increased outstanding debt.  So getting all teams aligned to the same KPIs is crucial.
• Move away from spreadsheets. Spreadsheets prevent speed and agility in the annual planning process.  Further, spreadsheets bring risks to the process by making it extremely difficult to manage version control and prevent manual handling errors.  The good news is that there are technology solutions (see Figure 1) capable of providing both the granularity required to handle bottom-up tasks together with the dimensionality and flexibility needed to roll up numbers in the context of complex organizational constructs – all while maintaining the highest financial data quality

• Lead behavioral change. The Office of Finance needs to drive behavioral change to eliminate organizational bias.  How?  Finance needs to orchestrate and drive the conversation forward, understand the different perspectives (learn what matters, translate jargon and connect KPIs) and educate on how bias can impact financial and business performance.  The Finance organization must ultimately facilitate a collaborative process and provide the necessary tools and technology to unify the planning and budgeting activities.

Figure 1: Aligning Operational Plans with Annual Plan in one place. For more information, visit the solution brief.

Conclusion

Unifying annual with operational planning is a good way to provide the business background required to support the annual financial targets and strategic goals.  Unified planning also drives transformation from the Office of Finance, takes a holistic approach and works the details from there to align operational and financial indicators and targets.  Dealing with data collection, transformation and data handling is crucial to successfully tie in all the plans and needs to be prioritized.

The best way to implement these crucial steps is by leveraging one platform – such as OneStream’s Intelligent Finance Platform – that solves the problem of data collection and segmentation by unifying the different planning workstreams with financial consolidation for actuals.  Why?  Because having just one place to perform all this planning activity brings agility, alignment, and governance, making it easier to improve financial results.

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To learn more, download our whitepaper titled “Unify Connected Planning or Face the Hidden Costs” here.

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As the calendar year draws to a close, many Financial Planning and Analysis (FP&A) organizations are gearing up for the annual planning process.  Yet companies continue to grapple with change – whether it’s growth through mergers and acquisitions (M&A), unstable socioeconomic and geopolitical conditions, or continued supply chain and workforce disruptions.  Amid such changes, businesses must continuously monitor financial results to ensure the annual operating plan (AOP) is a living document.  Still, the annual plan becomes obsolete the moment it’s finished.  And static financial forecasts don’t cut it anymore either.  What’s the solution, then?

Below are 5 steps organizations can take to streamline the annual planning process to proactively drive performance with financial forecasting software.

Streamlining the Annual Planning Process in 5 Steps

To become a valued business partner and earn a coveted seat at the decision-makers table, FP&A must streamline the annual planning process and ensure that the output of the planning outputs remains efforts relevant throughout the year.

According to the Hanover Research survey of over 650 Financial Decision Makers in North America and EMEA, the top concern for businesses in 2023 is recession and economic disruption (see Figure 1).  The annual plan must take this concern into account and remain flexible into the coming year to accommodate any changes or unforeseen circumstances.

Figure 1:  Survey results showing what businesses are concerned about for 2023

But how?  Well, the 5 steps below can help an organization streamline the AOP process and ensure it remains relevant in the year ahead:

1. Automate tasks where possible: Organizations should avoid bogging down analysts with low-value, time-consuming tasks by automating wherever possible.  To put it plainly, put the “A” back in FP&A by allowing analysts to perform value-added analysis instead of being data wranglers and spreadsheet jockeys.  By utilizing financial forecasting software and eliminating the overreliance on manual processes that require a ton of time and analyst intervention, more time can be allocated to tasks that help move the needle in the business.
2. Don’t overlook important data points: Many planning processes – both financial and operational – occur simultaneously across large, complex organizations.  These processes are generating important data, but it doesn’t always make it into the final financial plan. But how can Finance ensure the outputs of all planning processes across the organization are being utilized in the AOP? By leveraging one single technological solution for all the planning, Finance can leverage all the ongoing planning efforts in the final annual plan, ensuring no one’s hard work is overlooked.
3. Rely on data (not on intuition): World-class Finance organizations understand that critical business decisions and organizational performance are best driven by facts and figures.  While most organizations have access to a wealth of both historical results and external data, ensuring what’s relevant to the AOP is accessible and digestible is key to driving results in the coming year.  But how can all the data be aggregated to make it valuable to the process?  Finance teams should be working with IT and all technological and operational stakeholders to leverage available data from across the organization to generate informed insights and make data-driven decisions.
4. Implement continuous planning: The annual planning process shouldn’t be one and done or set it and forget it.  To ensure the plan remains relevant throughout the year ahead, organizations must create a process that supports continuous updates as factors change and new data supports adjustments to the plan.  Instead of spending time with backward-focused analysis wondering why something happened, the focus should be on driving continual organizational alignment and collaboration – in other words, a process that allows the annual plan to be a living document.  But how?  By bringing together the plan data and the actuals data with financial forecasting software that supports reporting, analytics and scenario modeling, FP&A can continuously monitor and update the plan as data supports changes.  Modeling what-if scenarios quickly and easily and presenting the data in a way that’s quick and easy to understand ensures the plan can remain a useful living document instead of a static, outdated relic of the past.
5. Drive better organizational collaboration: Too often, when down to the wire on the annual plan, FP&A are forced to make too many assumptions without proper validation from business partners.  This approach not only results in less buy-in but also doesn’t help with building trust across the organization.  While the annual plan is a Finance-driven process, the whole organization should have consensus with everyone working toward the common plan and goals outlined in the annual plan.  But how?  By leveraging built-in reporting and analytics capabilities in a platform with self-service capabilities, Finance can easily and quickly build dashboards and reports that can be shared across the organization – and do it in a way in which everyone can understand and use.  While other Finance professionals may understand spreadsheets of data, not everyone has the time or the background to dig into those reports.  That’s why being able to hit the important points in a way that can be easily shared and discussed is critical when time is of the essence in the annual planning process.

Technology Enables Better Annual Planning Processes

Better technology enables automation with confidence, brings the data and key stakeholders together in one place, and drives confidence and efficiencies in the annual planning process.  Ultimately, this functionality allows the annual plan to become an important tool in tracking and managing performance against the plan throughout the year.  Figure 2 below shows the interactive dashboards and daily signals that can be used to track continuous performance.

Figure 2:  Dashboards used to track performance against the annual plan

Conclusion

The annual planning process allows FP&A to set expectations for the coming year, but the process often gets bogged down with legacy processes and tools.  To ensure the plan encompasses all relevant people and data, an organization must improve collaboration, automation and access to data to help drive the process.  Technology makes all that possible by enabling better access to data and better processes – all of which ultimately allows the annual plan to remain relevant in tracking business goals and objectives into the year, even as conditions constantly change.

Learn More

Want to learn more about how your organization can advance the annual plan to lead at speed?  Watch our video titled Lead at Speed in Planning & Analysis | Advancing Your Annual Planning.

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Failing to Prepare Is Preparing to Fail

Planning sales is tough, even frustrating, for the average sales manager.  Why?

A sales manager gets a top-down growth target from the CRO that’s always challenging – sometimes unrealistic – and then needs to come back explaining how that number will be met.  That task can feel overwhelming, so the manager’s immediate reaction is to gauge pipeline health, check account and territory allocation, review incentives, and ultimately assess whether the sales team is fit for the endeavor.

And that’s how sales planning starts:  with a worrisome thought and sometimes an exasperating feeling that the target can’t be met.  What comes next?  Well, many managers succumb to the challenge and accept the target without proper planning.

However, Sales planning is a crucial step of sales performance management (see Figure 1), and when done well, planning can boost sales performance.

At its best, sales planning considers collaborative approaches for planning with other functions, relies on product and service knowledge, measures full financial impact, and leverages new technologies to maximize and sustain growth.

Best Practices in Sales Planning to Boost Sales Performance

Sales planning is not only a critical process step in sales performance management but also a vital component of an xP&A or a connected planning footprint.  When aspiring to achieve higher revenue growth, companies should consider sales planning as a key input for better sales execution.  But they must plan sales as a component of a broader integrated business planning or connected planning process, in close connection with Finance, Operations, Marketing, Workforce, and more.

Here are 5 best practices that can help companies connect the dots between planning across the organization and sales performance management:

1. Adopt a collaborative planning approach – Sales must be open to sharing the sales plan with other functions to ensure they can support the sales plan along the way. Then, xP&A solutions can be used to instill cross-functional collaboration with Finance, Marketing, Supply Chain, and HR.
2. Incorporate financial metrics into sales planning – Sales planning must look at margin impact and the cost of “things” needed per every % point of additional revenue (see Figure 2). This broader view caters to healthier revenue growth and helps companies make better decisions when planning sales.  The approach also stays true to an xP&A or integrated business planning design, in which Finance is the center of planning activities across the organization.

 

3. Consider the Sales team’s expertise in the product and services – This consideration applies mainly for large organizations with a wide product portfolio. A product won’t sell if sellers can’t pitch its value.  In other words, companies can’t get their sellers to position a product when they can’t understand what it is used for.   Product expertise should therefore be considered a key input for sales and territory planning and for the marketing plan, to align campaign and promotion planning accordingly.  Informing the supply plan is also necessary to avoid inventory piling up of unwanted goods.
4. Factor bench time into the plan – The salesforce will inevitably need time for onboarding and continuous training, admin tasks, vacation, and other non-client-facing tasks. Onboarding, for example, takes time to ramp up and get reps to become fully productive.  A solid sales plan must incorporate these factors into the data models.
5. Leverage data and technology – Companies must build a sales forecast that can help determine which customers are likely to buy and which events may boost or decline sales performance. A recent market survey conducted by OneStream showed that the top use case for predictive analytics and machine learning is to improve revenue/sales forecasting (see Figure 3).  Some solutions can leverage machine learning to model thousands of scenarios, provide a high-accuracy forecast within minutes, and link it with revenue and margin targets.

 

 Key Takeaways

As with most things in life, success in sales performance management begins with good planning.  Adopting the best practices outlined above can help companies achieve and sustain revenue growth.

A good starting point relies on implementing one unified CPM solution with strong forecasting and modeling capabilities that aligns sales and financial plans by blending different types of data to generate insights linked to financial KPIs.  Ultimately, this approach offers an excellent way to build collaboration among teams.

Learn how OneStream can set your sales planning up to the game and achieve higher revenue growth.

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Good strategic planning ensures an organization can react quickly and effectively to a changing environment.  That’s the goal anyway.  And achieving this adaptability has become more challenging and crucial than ever with the post-pandemic changes to the business.  In fact, the ability to move beyond a static, antiquated process heavily reliant on manual processes and Excel® spreadsheets is critical to achieving organizational goals.  Elevating the processes from disconnected and inefficient spreadsheets to effective corporate performance management (CPM) software enables Finance teams to drive continual performance and evolve traditional processes into an eXtended Planning & Analysis (xP&A) future.

Strategic Planning in a Post-Pandemic World

Finance leaders are uniquely poised to understand the strategy needed to execute long-term organizational goals and aspirations through a strategic and financial lens.  Accordingly, Finance can naturally lead the effort for strategic planning.

In the planning and budgeting cycles, strategic planning sits between the short-term operational plans and the longer-term long-range plans (LRPs).  A successful strategic plan looks to define how an organization intends to realize long-term goals.  After all, having goals and a vision of the future, as laid out in the LRP, helps focus the overall vision and direction of the enterprise.  But without a strategy, the LRP can resemble a list of wishes without any direction.

Strategic planning, then, helps turn the fantasy into reality.  And being able to compile the strategic plan and continually track performance against it are key to an effective process.

Understanding the realistic path to achieve organizational goals and aligning them with the financial plan are important steps to charting a clear course for company growth and managing expectations.  A good strategic plan looks to allocate resources, align financial goals and track financial performance.

Excel Introduces Limitations to the Strategic Planning Process

Excel is a powerful tool for Finance professionals, and most can relate to feeling like they have a degree in the art of Excel after working as an analyst.  That said, Excel also comes with drawbacks that can frustrate users and waste time – introducing limitations to the strategic planning process.

As a former Finance professional, I can certainly attest to missing weekends, evenings, appointments, family events, and holiday time with my family to troubleshoot a corrupted Excel file that was used for one of the most important financial planning processes in our organization.  Excel often falls short, however, when it comes to powerfully tackling important financial processes that require traceability and reliability.

The challenges of wrangling a large dataset in Excel and maintaining confidence in the numbers can quickly overwhelm the planning process.  The consequence of that often forces Finance professionals to spend precious time re-validating and explaining numbers during crunch planning periods due to corrupted or difficult-to-follow Excel models.

The good news is that it doesn’t have to be that way.

Deliver Business Value in the Strategic Planning Process with CPM Software

To avoid limitations, Finance can evolve the strategic planning process from an error-prone and time-consuming effort in spreadsheets to instead leverage a CPM software solution – which will deliver big business value.

Here are a few key benefits of leveraging purposed built, CPM software for strategic planning:

• Time Savings: Give analysts time back to perform value-added tasks and meaningful analysis that leads to better insights by eliminating time spent troubleshooting buggy spreadsheets and digging through rows of data to fix mis-keys or errors.
• Better Collaboration: Eliminate long email threads with multiple attachments and version control issues by bringing together different teams in a single application and ensure everyone speaks the same language and gets on the same page by allowing everyone’s voice to be heard in the planning process.
• Improved Forecast Accuracy: Decrease erroneous changes and track plain performance to drive better insights that lead to improved forecast cycles, better/cleaner data and more accurate forecasts.

Improve on Excel with Technical Enablers in CPM Software

When evaluating CPM software to aggregate and unify operational and financial data to compile and track performance against the strategic plan, organizations should decide what technical enablers are critical.  Here are a few to consider:

• Data Integration: Ensure alignment in all business areas by tracking progress against the plan by leveraging insights from all available data – CPM software allows for various points of data integration, bringing in data from operational and financial sources to avoid missed insights.
• Workflow Capabilities: Ensure no parts of the review and approval process are missed.  Planning takes a village with many different people involved, making it vital to keep everyone in the loop to ensure nothing gets overlooked in the planning cycle.
• Auditability: Allow for drill-back capability into transaction-level data, and ensure confidence in the numbers with built-in Financial Intelligence. No more suffering from mis-keys or corrupted cells of data with no traceability thanks to complete confidence in the numbers used in the planning cycle.
• Built-In Excel Functionality: Leverage spreadsheets as intended – as flexible, on-the-fly tools for ad-hoc analysis – to drive the flexibility spreadsheets allow for data analysis and gain control of the connection back to the source data in CPM software.

Ultimately, these technical enablers deliver business value via time saved in the planning process, improving collaboration.  Time is money, after all – and the more time you can spend on valuable insights as opposed to wrangling data from disparate systems and troubleshooting temperamental spreadsheets the better, more reliable your plan becomes.

Not to mention, quality of life also greatly improves for the people involved in the process.   Having one single source of truth ensures the efforts of all the groups across an enterprise are aligned and ensures that changes and mistakes don’t go unnoticed saves time and effort.

100% Customer Success

Headquartered in Houston, Texas, with manufacturing facilities and sales offices on six continents, Prince specializes in developing, manufacturing and marketing performance-critical additives for niche applications utilized in the construction, electronics, consumer products, automotive, industrial and similar end markets.  Prince has processing centers strategically located globally and has been growing at an exponential rate – with 18 acquisitions over the last 13 years.  Today, Prince manages over 25 entities, more than half outside of North America.  Across the enterprise, multiple ERP systems – including IFS, Ross, and SAP – are in use.  And to make matters worse, Prince was relying on Excel to reconcile, translate, consolidate and report financial information.

After implementing OneStream, Prince can now drill back to the ERPs to understand data at the transactional level, by voucher line item or journal line item.  Prince is also now doing annual budgeting in OneStream – all while managing a five-year strategic plan.  Comparisons of actuals against budget are all being done in OneStream as well.  “We were able to utilize OneStream’s capabilities to produce an EBITDA bridge for our end markets, comparing periodic results to prior year, prior month, budget, etc.,” said the Controller at Prince.

Conclusion

While Excel spreadsheets can be a powerful tool, your team needs to have confidence in the output of your strategic planning efforts – and there’s no better way to do so than upgrading from a spreadsheet-heavy process to CPM software.  CPM software will save time in the strategic planning process by freeing up more time for driving strategic initiatives.  It also drives collaboration among the different teams needed for a strategic plan with a full view of the organization because you leverage the platform across the Finance department and beyond.

Ultimately, with CPM software, your strategic plan becomes more accurate thanks to increased collaboration in the planning process and less time wasted on non-value-added activities (e.g., troubleshooting spreadsheets).  Adopting CPM software also drives more dialogue on risks and opportunities, providing a better understanding of cash and capital requirements.  Collectively, those benefits culminate in more business value – and that empowers your team lead at speed.

Learn More

Want to learn more about how your organization can align its strategic plan with financial goals?  Click here to watch our video titled “Lead at Speed in Planning & Analysis: Unifying the Strategic Plan with Financial Goals.”

Watch the Video