Integrated Business Planning, or IBP for short, is a strategic management process that connects various organizational departments to align business operations with financial goals. How? By integrating business functions – such as Sales, Marketing, Finance, Supply Chain and Operations – to create a holistic view of the company’s performance and future direction. This blog post offers a comprehensive guide to discuss what precisely IBP entails and how Finance can drive business results and collaboration within the organization via a robust and comprehensive IBP process.

What Is IBP?

While the business world and Finance have always had shared language and acronyms, some new (and reimagined) acronyms may now be flooding your feed.  One such topic you may be hearing a lot about lately is Integrated Business Planning (IBP).  Yet the concept of IBP isn’t new. In fact, it’s related to Sales & Operations Planning (S&OP), a concept that’s been around awhile.

Still, IBP may seem overwhelming in the context of all the different acronyms related to financial and operational planning floating around lately.  For example, IBP, S&OP, eXtended Planning and Analysis (xP&A) and others are just a few acronyms muddying the waters.  But this comprehensive guide to all things IBP aims to help demystify the process.

So what, exactly, is IBP?

IBP ultimately aims to unify business strategy with planning, budgeting and forecasting activity for all business lines and functions – providing one version of the numbers.  In turn, a trusted, common view of the numbers provides a robust baseline for agile decision-making.  That common view also keeps all teams collectively trying to achieve the same corporate objectives while staying focused on specific KPIs. In other words, the different teams maintain their independence while working in unison to achieve corporate success by leveraging the same trusted and governed data.

The bottom line?  IBP is about aligning strategy intent, unifying planning processes and bringing the organization together.

How IBP Works

The IBP process is a framework to address the C-suite needs and help implement the business strategy and manage uncertainty to improve decision-making.  So what’s the secret sauce of IBP to make all of that happen?  A collaboration between the different teams under a single view of the numbers that must unequivocally be tied to financial performance.  That’s how the C-suite gets value from IBP. Consequently, Finance plays a central role in the IBP process.

IBP typically focuses on horizons of 24-60 months, as opposed to the short term.  That focus equates to Integrated Tactical Planning or Sales and Operations Planning and Execution.  Since the process must be fully integrated, it removes the departmental silos.  Plus, the IBP process must adapt to the organizational construct of every business (IBP isn’t a one-size-fits-all type of process).

A typical IBP process involves several stages:

1. Data Collection and Analysis:  Gathering relevant data (e.g., sales forecasts, production capacities, inventory levels and financial projections) from different departments.
2. Demand Planning:  Predicting future demand based on historical data, market trends, customer feedback and sales forecasts.
3. Supply Planning:  Determining the resources and capabilities (e.g., materials, production capacity and distribution channels) needed to meet the forecasted demand.
4. Financial Planning:  Developing financial plans and budgets aligned with the demand and supply forecasts, considering factors such as revenue targets, cost structures and investment requirements.
5. Scenario Planning:  Creating alternative scenarios to assess how different strategies, market conditions or external factors impact business outcomes.
6. Management Business Review:  Collaborating across departments to make informed decisions on resource allocation, investments, pricing strategies and operational adjustments.
7. Execution and Monitoring:  Implementing the plans, tracking performance against targets, and continuously monitoring key metrics to identify deviations and take corrective actions.

The most efficient way to foster this collaboration is through a unified solution and data model that caters to the needs of the various agents involved on each review.  In fact, Figure 1 shows how one solution gathering all the capabilities in the greyed area under a unified data model is the most efficient approach to IBP.

Figure 1: A Unified Data Model for IBP

Core Elements and Stages of the IBP Process

The IBP process includes the following core elements:

1. Governance Structure:  Establishing a cross-functional team with representatives from key departments to oversee the IBP process, define roles and responsibilities, and ensure alignment with organizational goals.
2. Data Integration:  Integrating data from different systems and sources to create a single source of truth for decision-making, using technologies such as enterprise resource planning (ERP) systems, Corporate Performance Management (CPM) tools, business intelligence (BI) tools and data analytics platforms.
3. Collaborative Planning:  Encouraging collaboration and communication between departments to share insights, align objectives and develop consensus-based plans that support overall business objectives.
4. Continuous Improvement:  Implementing feedback loops, performance reviews and process refinements to enhance the effectiveness and agility of the IBP process over time.

Learn More

Want to learn how you can maximize the benefits of your IBP process and get leadership on board with the plan?  Check out our eBook Unifying Integrated Business Planning Across Finance and Supply Chain.  You’ll learn how to unify IBP across Finance and Supply Chain teams and read about use cases as proof points.  Plus, you’ll gain an understanding of the unique capabilities OneStream’s Intelligent Finance Platform brings to unify Finance and Supply Chain planning activities.

Today, the corporate budget planning process is vital for Finance.  Through this structured approach, organizations allocate resources, forecast financial outcomes and plan for future financial performance.  Those key uses underscore why the process is so crucial to effective strategic management.   

Corporate Budget Planning 

In essence, corporate budget planning enables businesses to align their spending and investment with their goals, priorities and market conditions. 

The process typically involves 10 key but straightforward steps. 

1.  Define Objectives and Strategy 

Defining objectives and strategy for corporate budget planning involves setting clear, actionable goals that align with the organization’s broader strategic vision.  These objectives, in turn, serve as benchmarks for what the company aims to achieve financially within a specific time period.  What aims?  A few examples include increasing revenue by a certain percentage, reducing operational costs, expanding into new markets or enhancing capital investment returns. 

At the same time, effective objectives are both ambitious and realistic.  They provide a focused direction for financial planning and decision-making.  Accordingly, the objectives should be developed through a collaborative process that involves input from key stakeholders across the organization.  Such input ensures alignment with overall business goals and accounts for the company’s operational capabilities, market conditions and competitive landscape. 

The strategy for achieving these objectives is the roadmap that outlines how the organization will allocate resources to meet its financial goals.  What’s involved in that strategy?  Key elements are detailed planning on revenue generation tactics, cost management initiatives, investment in growth opportunities and risk mitigation measures. 

This strategic planning requires a deep understanding of the business environment, including customer demand, economic trends and regulatory changes.  That understanding allows for making informed decisions on spending, saving and investing.  But whatever the strategy, it should be flexible enough to allow for adjustments in response to unforeseen challenges or opportunities. 

Ultimately, the combination of well-defined objectives and a robust strategy enables a company to efficiently execute its corporate budget planning.  And that matters because it ensures financial stability and supports long-term organizational growth. 

2.  Review Past Performance 

Reviewing past performance is an essential phase in the corporate budget planning process.   

That review acts as a mirror to reflect the organization’s financial health and operational efficiency over previous periods.  Thus, this retrospective analysis involves a comprehensive examination of financial statements (e.g., income statements, balance sheets and cash flow statements) alongside operational metrics. 

The goal?  To identify patterns, trends and anomalies that can inform future budgeting decisions.  By understanding where the company has had financial success and faced challenges, leadership can make more informed predictions and decisions for the future. (We believe that Finance teams using AI and Sensible ML to identify patterns, trends and anomalies are the ones getting the farthest ahead.) 

Yet this review process goes beyond merely looking at numbers.  Instead, it requires a deep dive into the reasons behind those numbers.  If the company experienced a significant variance in actual revenues compared to budgeted revenues in a recent FP&A report, for example, knowing the why behind that variance is vital.  Was it due to changing market conditions, a new competitor entering the market or perhaps internal factors such as production issues? 

Similarly, analyzing expenditure trends helps identify areas of inefficiency or overspending.  This analysis can involve examining costs line by line to see where the budget was exceeded and why.  Through that process, companies can identify opportunities for cost savings or process improvements. 

Reviewing past performance, however, is not just about identifying what went wrong.  The process also helps organizations recognize what went right.  Why does that matter?  Well, success in certain areas – such as a particularly effective marketing campaign or a cost-saving initiative – provide valuable lessons.  Those lessons can then be replicated and built upon in future periods. 

This phase of the budget planning process also encourages a culture of accountability and continuous improvement within the organization.  Essentially, by closely examining past performance, departments and teams can: 

• Set more realistic goals 

• Better align strategies with corporate objectives 
• Adjust plans based on what has been proven to work or not work in the past 

Ultimately, in the corporate budget planning process, reviewing past performance is a critical step.  It lays the groundwork for more accurate and effective budget planning.  In fact, this step ensures the budgeting process is grounded in reality – one where strategies and objectives are informed by empirical data and historical context.  This grounding helps organizations not only set more achievable financial targets but also devise strategic initiatives more likely to drive the organization toward its long-term goals. 

3.  Revenue Forecasting 

Revenue forecasting allows a company to estimate its future sales and income over a specified period.  What so crucial about this projection?  It helps with setting financial targets, making informed decisions about expenditures and planning for growth. 

Typically, revenue forecasts are based on a combination of historical sales data, market analysis and an assessment of external factors that could influence demand.  Those factors can include economic trends, industry developments and competitive dynamics.  By analyzing these elements, companies aim to predict their financial inflow with a reasonable degree of accuracy.  And they do it while adjusting for seasonality, market shifts and other variables that might impact revenue. 

Effective revenue forecasting requires a meticulous approach – one that blends quantitative analysis with qualitative insights.  Companies often use models that incorporate past performance trends while adjusting for future market expectations and strategic initiatives, such as product launches or expansions. 

Whatever the model, the forecasting process is inherently iterative, with forecasts regularly updated to reflect new information or changes in the business environment.  This dynamic approach allows companies to remain agile.  How?  It empowers companies to make strategic adjustments to operations, marketing and budget allocations in response to evolving forecasts. 

Ultimately, accurate revenue forecasting is essential for strategic planning, resource allocation and financial management.  Businesses can use the forecasts to set realistic goals and measure progress toward achieving them. 

4.  Cost and Expense Estimation 

Cost and expense estimation is essential for creating a realistic and effective corporate budget plan.  Why, exactly?  Such estimations help businesses anticipate financial outflows and manage resources efficiently.  For any cost estimation, both fixed and variable costs matter.  Salaries, rent and utilities are examples of fixed costs – which, by nature, do not change with the level of goods or services produced.  Meanwhile, materials, shipping and commissions are example variable costs, which inherently fluctuate with business activity levels. 

The accuracy of cost and expense estimation greatly impacts the ability to maintain profitability and cash flow.  To estimate costs effectively, companies analyze historical spending trends to forecast future expenses.  This analysis is supplemented with information about planned initiatives, expansion efforts or any operational strategy changes that could affect costs.  For variable costs, companies also consider projected sales volumes, pricing strategies, supply chain dynamics and other factors that affect the cost of goods sold and operational expenses. 

In addition, effective cost and expense estimation requires a forward-looking approach that considers external factors.  Market trends, economic conditions and regulatory changes are just a few of such factors.  For instance, anticipated increases in raw material costs, changes in labor laws or fluctuations in currency exchange rates can all impact future expenses.  Such considerations enable businesses to develop more accurate and resilient budgets. 

But companies must also maintain a degree of flexibility in those budgets to accommodate unexpected costs.  This accommodation, in turn, ensures companies can respond to unforeseen challenges – without compromising financial stability. 

Overall, cost and expense estimations are not just about predicting numbers.  This step is also about understanding the financial implications of a company’s operational and strategic decisions.  By carefully analyzing both internal and external factors that influence costs, businesses can create budgets that support their goals while effectively managing risk.  This process requires the following: 

• Collaboration across departments 

• Clear communication of financial goals and constraints 
• Regular review and adjustment of estimates to reflect new information or changing conditions 

Ultimately, through diligent cost and expense estimation, companies lay the groundwork for financial health, strategic growth, and long-term success in corporate budget planning. 

5.  Capital Budgeting 

Capital budgeting in corporate budget planning is a strategic process that helps companies evaluate and prioritize investments in long-term assets and projects.  How?  Assessments look at potential expenditures on assets (e.g., new machinery, property, technology upgrades or expansion projects), which require substantial upfront investment but generate returns over several years.  Accordingly, the capital budgeting process helps determine which projects align with strategic objectives and offer the best potential for financial return. 

Capital budgeting employs various analytical techniques, such as net present value (NPV), internal rate of return (IRR) and payback period calculations.  Using these techniques, companies evaluate the profitability and risk of investment proposals.  This meticulous evaluation, in turn, helps ensure a company allocates its limited resources to the projects most likely to enhance its competitive position and shareholder value over the long term. 

Yet capital budgeting is not merely about identifying and investing in profitable ventures.  It also involves strategic planning and risk management.  Thus, capital budgeting requires a forward-looking perspective that considers how investments might impact the company’s financial health and ability to respond to future market changes.  By carefully selecting projects that contribute to strategic goals (e.g., expanding market reach, improving efficiency or innovating product offerings), companies can sustain growth and adapt to evolving industry landscapes. 

Ultimately, this process demands cross-functional collaboration.  That collaboration involves input from various departments to ensure projects are feasible, strategically aligned and have a clear implementation plan.  Through effective capital budgeting, businesses position themselves to make informed decisions that drive long-term success and resilience. 

6.  Allocate Resources 

Allocating resources in corporate budget planning requires distributing financial assets among various departments, projects and initiatives to achieve strategic goals and operational efficiency.  Through this critical step, companies decide how much funding to allocate to different areas of the business.  Based on what?  The strategic importance, the expected return on investment and the alignment with the company’s overall objectives. 

Thus, allocating resources requires a delicate balance between supporting existing operations, investing in growth opportunities and maintaining financial health.  Effective resource allocation ensures that every dollar spent contributes to the company’s long-term success.  Whether through driving revenue growth, enhancing productivity or entering new markets, those contributions all matter to the company’s bottom line. 

Effective resource allocation demands thorough analysis and strategic thinking.  To get started, companies must clearly understand its priorities and objectives.  A detailed evaluation of the potential impact and costs tied to each budget request is also important.  Throughout the process, decision-makers must consider projected revenue, cost savings, market trends, competitive dynamics and other factors.  Yet the process isn’t static.  It requires continuous monitoring and adjustment in response to performance data and changing market conditions. 

Ultimately, companies must regularly review how resources are allocated and make data-driven adjustments.  By doing so, companies can invest in the right areas to support sustainable growth and adaptability.  This approach thus not only maximizes the return on investment but also strengthens the organization’s ability to navigate uncertainty and capitalize on emerging opportunities. 

7.  Prepare Budget Drafts 

Preparing budget drafts in corporate budget planning is a crucial phase.  Preliminary financial plans are developed in this step, reflecting the company’s strategic objectives, revenue forecasts, and resource allocation decisions.  This process involves compiling detailed estimates of expected income, expenditures and investments for the upcoming period, usually the next fiscal year. 

Drafting the budget requires a collaborative effort across various departments, ensuring each contributes its insights and requirements.  This collaborative approach ensures the budget aligns with both the strategic goals of the company and the operational needs of individual departments.  In essence, the draft budget serves as a working document – one that facilitates discussions and adjustments before being finalized. 

The draft incorporates all the key components of financial planning.  What are those components?  They include sales forecasts, cost estimates, planned capital expenditures and any other financial commitments.  By including these elements, the draft budget provides a comprehensive overview of the company’s financial strategy. 

The preparation of budget drafts is iterative, allowing for refinement and adjustment as more accurate or updated information becomes available.  That iteration, however, requires a balance between ambition and realism to ensure the budget is challenging but achievable. 

In this phase, Finance teams therefore play a pivotal role.  How?  They analyze data to ensure consistency across different parts of the organization and integrate strategic priorities into the financial planning process. This stage often involves scenario planning and sensitivity analysis to assess the impact of various assumptions and potential risks on the company’s financial performance. 

Ultimately, by carefully crafting these budget drafts, companies lay the groundwork for financial discipline, strategic alignment and operational efficiency.  The draft budget is therefore a critical tool for guiding decision-making, setting expectations, and providing a baseline against which actual performance can be measured and managed throughout the fiscal year. 

8.  Review and Approve 

In this phase, the draft budget developed through collaborative efforts across departments undergoes scrutiny by senior management and, often, the board of directors.  This step ensures the proposed budget aligns with the strategic goals of the organization, remains financially sound, and sets realistic revenue and expenditure targets. 

The review process involves a thorough examination of three aspects: 

1. Assumptions made during the drafting phase 

2. Validation of the financial forecasts 

3. Assessment of the proposed resource allocations 

Through those aspects, the process offers an opportunity for key decision-makers to challenge and refine the budget.  Doing so ensures it supports strategic initiatives, addresses operational needs and effectively manages financial risks. 

Notably, this phase may involve several rounds of review and adjustment, with feedback provided to department heads and Finance teams.  Why?  To further refine the budget until it meets the organization’s strategic and financial objectives.  After satisfying the scrutiny of the review phase, the budget moves to the approval stage.  This formal endorsement, usually by the company’s top executives and the board of directors, signifies the budget is the official financial plan for the upcoming period. 

In other words, the approval process solidifies the organization’s commitment to the budget’s targets and allocations, setting the stage for implementation.  The approval also serves as a signal to the entire organization about the priorities and financial direction for the forthcoming period.  With that signal, the approval emphasizes accountability and the importance of adhering to the budget. 

Ultimately, the approved budget becomes the benchmark against which financial performance is measured, guiding decision-making and financial management throughout the fiscal year.  This process of review and approval is crucial for ensuring the budget reflects the collective wisdom and strategic intent of the organization’s leadership.  Thus, the process effectively balances ambition with realism and aligns resources with opportunities. 

9.  Implement the Budget 

Implementing the budget in corporate budget planning marks the transition from planning to action.  In essence, the approved budget serves as a roadmap for the organization’s financial activities over the upcoming period.  This phase involves disseminating the budget details across departments, ensuring that managers and team leaders understand their financial targets and resource allocations. 

Implementation requires the following: 

• Setting up systems for monitoring expenditures and revenues 
• Establishing accountability mechanisms 

• Integrating the budget into daily operations and decision-making processes 

Effectively taking those actions during implementation ensures all parts of the organization work toward the common financial goals set out in the budget.  And everyone does it with a clear understanding of their roles in achieving the targets. 

Ultimately, implementing the budget is a continuous process that involves not just following the budget but also adapting to changes.  Successful adaptation requires ongoing communication and coordination across the organization to maintain alignment with the overall financial strategy. 

10.  Monitor and Review 

Monitoring and reviewing in corporate budget planning are an ongoing process that involves continuously tracking financial performance against the approved budget throughout the fiscal year.  Through this critical step, companies can ensure any deviations from the budget – whether in revenues, expenditures or other financial metrics – are quickly identified.  Doing so allows for timely adjustments to stay on track.  Collectively, the monitor and review process encompass the following: 

• Regular reporting on financial performance 
• Analysis of variances 
• Assessment of the budget’s effectiveness in supporting the organization’s strategic objectives  

Ultimately, the review component allows for reflection on what is driving any discrepancies between actual and budgeted figures.  Such reflection leads to insights that inform future budgeting cycles or immediate corrective actions.  Through the cyclical process of monitoring and review, companies can foster a culture of financial discipline, promotes accountability across departments.  That process thus enhances the organization’s ability to adapt to changing circumstances, thereby ensuring financial stability and strategic alignment. 

What’s Next for Corporate Budget Planning? 

Don’t forget to reflect on what you learn through every corporate budget planning cycle.   Insights gained from monitoring, reporting and adjusting the budget can feed into the next round.  In doing so, insights will help your company refine its planning approach and improve accuracy and effectiveness over time. 

Want a deep dive into budgeting, planning and forecasting?  Check out our free ebook! 

Maximizing Success through Corporate Performance Management in the Modern Business Landscape

In today’s competitive business world, achieving optimal performance and driving business success requires a structured approach.  Enter Corporate Performance Management (CPM).  Across the organization, CPM provides the tools and methodologies to define, measure, monitor and improve performance.

The definition of CPM, its methods and its key performance metrics are crucial knowledge for modern enterprises.  In this blog post, we’ll unveil all 3 aspects.  We’ll also highlight a few modern examples of organizations that have successfully implemented CPM in different functional areas to achieve desired business outcomes.

Let’s get started by defining precisely what CPM entails.

What Is Corporate Performance Management?

In essence, Corporate Performance Management is a comprehensive approach to managing business performance, encompassing the entire organization.  What does that entail?  Setting strategic goals, developing plans, budgeting, monitoring, analyzing data and making informed decisions aligned with business objectives are all part of CPM.  By adopting a comprehensive CPM approach, organizations can assess overall performance, enhance performance and drive business success.

CPM addresses the following pivotal questions (among others!):

• Are strategic goals being realized?
• How effectively are resources being utilized?
• What areas demand operational enhancement?
• Are stakeholders receiving adequate value?

Methods in Corporate Performance Management

Now let’s dive into 5 key CPM methods that help drive organizational success.

1.  Strategic Goal Setting and Planning

Strategic goal setting and planning is a fundamental aspect of CPM.  Why?  Through this method, an organization articulates its mission, vision and values.  Organizations can also establish SMART goals and devise strategic initiatives.  Accordingly, this method aligns activities with strategic objectives, ensures efficient resource allocation and maximizes business performance.

An example of this CPM method in action is Virgin Atlantic’s strategic goal-setting and planning:

• Long-term goal:  To make Virgin an industry leader in customer service.
• Actions:  Developing strategic initiatives (e.g., launching in-flight Wi-Fi, revamping seat designs and improving entertainment systems).
• Outcome:  Increased customer satisfaction and improved financial performance.

2.  Budgeting, Planning and Forecasting

Budgeting, planning and forecasting together form another essential aspect of CPM.  Why?  This method involves preparing budgets based on historical data, future projections and strategic goals.  By conducting regular monitoring and variance analysis, organizations can identify deviations and take corrective actions.  Effective budgeting and forecasting thus contribute to optimal resource allocation and planning.

An example of the budgeting and forecasting method in action is Coca-Cola’s CPM approach:

• Actions:  Employing continuous forecasting and performance tracking against KPIs.
• Outcome:  Well-informed decision-making, reduced costs and improved sales.

3.  Performance Measurement and Reporting

Performance measurement and reporting involves assessing the performance of departments, processes and business units against KPIs to set objectives.  How?  By employing performance reports, dashboards and scorecards to help not only visualize KPIs, but also identify areas of improvement and those that require attention.  Effective performance measurement and reporting drives successful decision-making and performance improvement.

One example of this CPM method in action is Netflix’s performance measurement and reporting:

• Actions:  Using performance reports and dashboards to measure organizational performance against subscriber retention, watch time and content quality – all metrics aligned with Netflix’s long-term objectives.
• Outcome:  Data-driven decision-making, improved subscriber satisfaction and comprehensive evaluation of organizational performance.

4.  Risk Management

Risk management in CPM involves identifying, assessing and mitigating risks that can impact an organization’s performance.  How, precisely, is that achieved?  The focus is on developing strategies for risk mitigation, conducting risk assessments and monitoring risk indicators.  Effective risk management, in turn, contributes to optimal execution and thus reduces the potential negative impacts on performance.

One example of this CPM method in action is Amazon’s risk management strategy:

• Risks to be managed:  Supply chain and logistical challenges, as well as concerns about meeting customer satisfaction levels, when launching Amazon Prime.
• Actions:  Implementing a proactive risk management strategy.
• Outcome:  Identification of potential areas of risk and actions to mitigate those risks.

5.  Continuous Improvement

Continuous improvement involves evaluating and refining processes to enhance overall efficiency, effectiveness and business outcomes.  What does that entail?  In short, this method involves adapting to changing environments and aligning tactics with evolving strategic goals.  Continuous improvement then drives innovation and enhances organizational competitiveness.

One example of continuous improvement in action is Toyota’s KAIZEN methodology:

• Actions:  Engaging in continuous process improvement, emphasizing corporate culture and prioritizing employee involvement.
• Outcome:  Fulfilled production demands and improved production quality, making Toyota one of the leading car manufacturers globally.

Key Performance Metrics in Corporate Performance Management

Choosing the appropriate performance metrics is crucial for effective CPM.  Why?  Well, appropriate and effective KPIs enable organizations to evaluate performance, identify areas of improvement and monitor progress toward goals.  Below are some common metrics used in different functional areas.

Financial Metrics

Financial metrics are vital for assessing the profitability, liquidity and overall financial health of an organization.  These common financial metrics, among others, are used in CPM:

• Revenue growth:  Measures the rate at which revenue is increasing over a specific period to indicate the effectiveness of sales and marketing efforts.
• Gross profit margin:  Calculates the percentage of revenue left after deducting the cost of goods sold, with a higher margin indicating better cost management and pricing strategies.
• Operating margin:  Reveals the profitability of core operations by measuring the percentage of revenue left after deducting operating expenses, indicating the efficiency of the cost control efforts.
• Return on investment (ROI):  Measures the return on investment generated from a particular asset, project or initiative to help evaluate the effectiveness and profitability of investments.
• Cash flow:  Assesses the inflow and outflow of cash, with positive cash flow indicating healthy liquidity and good financial stability.

By monitoring these financial metrics, organizations can assess their financial performance, identify areas for improvement and make informed decisions to enhance both profitability and financial stability.

Operational Metrics

Operational metrics evaluate the efficiency and effectiveness of an organization’s core operational processes.  Why?  Essentially, these metrics provide insights into productivity, quality and resource utilization.  The following operational metrics, among others, are used in CPM:

• Cycle time:  Measures the time taken to complete a specific process or cycle, helping to identify bottlenecks and areas for process improvement.
• Quality metrics:  Assesses the quality of products or services delivered via metrics such as defect rate, customer satisfaction score and product/service, which all reliably provide valuable insights into quality performance.
• Production yield:  Determines the percentage of units that meet quality standards during manufacturing, helping to detect inefficiencies and optimize production processes.
• Inventory turnover:  Calculates how quickly inventory is sold and replenished, with high turnover indicating efficient inventory management, to minimize risk of inventory obsolescence.
• Supplier performance:  Evaluates the effectiveness and reliability of suppliers in meeting quality, delivery and cost requirements, helping to optimize the supply chain and reduce operational risks associated with suppliers.

By using operational metrics, organizations can identify process inefficiencies, improve productivity, enhance quality and optimize resource allocation.

Customer Metrics

Customer metrics focus on measuring and evaluating the organization’s relationship with customers.  Why?  These metrics ultimately help assess customer satisfaction, loyalty and overall customer experience.  Examples of customer metrics used in CPM include the following, among others:

• Customer acquisition rate:  Measures the number of new customers acquired during a specific period, indicating the effectiveness of marketing and sales efforts.
• Customer retention rate:  Calculates the percentage of existing customers who continue to do business with the organization over a given period, with high customer retention rates indicating customer loyalty and satisfaction.
• Customer satisfaction score:  Evaluates customer satisfaction via surveys or feedback mechanisms, helping to identify areas for improvement and ensure customer-centricity.
• Net Promoter Score (NPS):  Determines customer loyalty and advocacy by measuring the likelihood of customers recommending the organization to others, with a higher NPS indicating stronger customer loyalty and a positive brand image.

By monitoring these customer metrics, organizations can understand customer needs, improve customer satisfaction and strengthen customer loyalty, eventually driving business growth.

Employee Metrics

Employee metrics assess the performance, satisfaction and engagement levels of the organization’s workforce.  Why?  These metrics play a crucial role in managing talent, fostering a positive work environment and promoting productivity.  The following common employee metrics, among others, are used in CPM:

• Employee satisfaction:  Measures employee satisfaction and engagement through surveys or feedback mechanisms, helping to identify areas for improvement and assess the effectiveness of HR initiatives.
• Employee turnover rate:  Calculates the percentage of employees who leave over a specific period, with high turnover rates potentially indicating underlying issues (e.g., low job satisfaction or ineffective talent management).
• Training hours per employee:  Quantifies the investment in employee training and development, helping to assess the organization’s commitment to enhancing employee skills and knowledge.
• Employee productivity:  Measures the output or performance of employees in relation to their time and effort, helping to identify high-performing individuals and teams, as well as potential performance gaps.

By tracking and analyzing employee metrics, organizations can make strategic decisions regarding talent management, employee development and overall organizational effectiveness.

Innovation Metrics

Innovation metrics evaluate an organization’s ability to innovate and bring new ideas, products or services to the market.  Why?  These metrics provide insights into an organization’s innovative capacity and can drive a competitive advantage.  Some key innovation metrics used in CPM, among others, include the following:

• Number of new product launches:  Measures the number of new products introduced to the market within a specified period, reflecting the organization’s commitment to continuous innovation and ability to generate new revenue streams.
• Research and development investment:  Includes the amount of funds allocated to research and development activities, which is essential information for organizations heavily reliant on innovation (e.g., technology companies or pharmaceutical firms).
• Patent filings:  Quantifies the number of patents filed by the organization, indicating its ability to protect intellectual property and a commitment to innovation.

By monitoring innovation metrics, organizations can assess their innovation capabilities, identify areas for improvement and foster a culture of continuous innovation.

Conclusion

Ultimately, Corporate Performance Management (CPM) enables organizations to manage performance, align activities with strategic objectives and make informed decisions.  With that in mind, here are the key takeaways from this blog post:

• Effective CPM methods (e.g., strategic goal-setting, budgeting and forecasting, performance measurement and reporting, risk management, and continuous improvement) drive organizational success.
• Appropriate KPIs (e.g., financial, operational, customer, employee, and innovation metrics) help manage CPM effectively.
• Success in applying CPM in different functional areas – as shown by Virgin Atlantic, Coca-Cola, Netflix, Amazon and Toyota – helps drive business outcomes and achieve success.

Learn More

For a more in-depth look at CPM in action, check out our Platform webpage – it’s all online, no forms required. 

Are you at an enterprise organization looking to upgrade your CPM processes?  Get started with a OneStream demo today! 

Government Finance leaders today are under pressure to improve decision support, increase transparency and create efficiencies.  In addition, agencies are up against the constraints of legacy systems, tedious manual processes and inefficient analytics tools.  Agencies thus turn to the best government budgeting software solutions to automate processes and mitigate those challenges.  Here, we’ve curated the 5 best budget government software solutions based on their features, customer reviews and industry recognition.

To compile this list, we’ve considered software that meets the following qualifications:

• Earns industry recognition on reputable review platforms such as Gartner Peer Insights
• Offers comprehensive budgeting features for government agencies
• Provides reliable customer support

What Is Government Budgeting Software?

For government agencies, budgeting software plays a pivotal role in the ability to streamline planning processes, increase transparency and gain new insights.  Solutions should be tailored to the specific needs of government agencies.  How?  By encompassing the entire budgeting process from strategic planning, budget formulation, budget execution and performance management to reporting and analytics.

Below are some common features found in budgeting software for government agencies:

• Automation of budget preparation tools
• Robust integration and enterprise data management
• Standard and ad-hoc reporting and dashboard capabilities
• Strong security measures
• Intuitive workflow management

By leveraging these features, agencies can streamline planning processes, minimize errors and make well-informed financial decisions.

Not sure what budget software solution best suits your agency?  You’re in the right place!

In the comparative analysis that follows, we’ll explore the features and functionalities of 5 leading government budgeting solutions:  OneStream, Oracle EPM Cloud, SAP, Workday/Adaptive and Anaplan.

The Best Budgeting Software Solutions for Government Agencies

1. OneStream

OneStream is a leading enterprise Finance solution trusted by government agencies.  It offers a comprehensive platform uniquely unifies financial consolidation, planning, reporting and analysis.  With robust budgeting features, OneStream offers the following benefits to government agencies (see Figure 1):

• Unifies all financial and operational data
• Allows agencies to accelerate and simplify planning processes across the Budget and Finance offices
• Embeds AI for better decisions and productivity

OneStream’s unified platform enables Finance and Operations teams to better collaborate and deliver a single source of truth.  Having that single source eliminates the complexity of multiple solutions, interfaces and integrations.  Not to mention, agencies can also avoid the heavy cost and duplication of data and metadata while avoiding time-consuming processes and upgrades.

OneStream’s unified platform enables Finance and Operations teams to better collaborate and deliver a single source of truth.  Having that single source eliminates the complexity of multiple solutions, interfaces and integrations.  Not to mention, agencies can also avoid the heavy cost and duplication of data and metadata while avoiding time-consuming processes and upgrades.

Pros:

• Highest customer success rate in the industry.
• Only complete, end-to-end FedRAMP Moderate certified and DoD Impact level 4 (IL-4) provisional authorized cloud CPM provider.
• Intuitive platform with a logical, efficient and modern user experience.
• Comprehensive platform that supports end-to-end PPBE processes for government agencies.
• Ability to support growth and evolution of agencies over time without reimplementing or adding more technical debt.
• Built-in self-service reporting, dashboarding, ad-hoc analysis and deep integration with Microsoft Office in one platform – from balance to transactional details with seamless drill down and drill back to supporting details for transparency, auditability and actionable details behind every number.

Cons:

• Implementation may require additional time and resources.
• Users may face a learning curve during initial implementation.

2. Oracle Enterprise Performance Management Cloud

Oracle Enterprise Performance Management Cloud (Oracle EPM Cloud) provides a solution for federal agencies to automate budget formulation and execution.  It offers features for planning, forecasting, reporting, security and workflow capabilities.

Pros:

• Access to a pool of skilled professionals, services, partners and domain expertise thanks to a large customer base and global network.
• Integration with Oracle solutions (ERP, HCM, CRM, etc.) and databases, and a good solution for master data management, data integration and data quality.
• FedRAMP low authorized provider.

Cons:

• Limited live references, footprint and peer reviews/insights for the cloud EPM solutions.
• Multiple fragmented solutions that require multiple complex integrations across solutions to reconcile actuals with plans and bring in financial and operational data to support end-to-end consolidation, close, financial & operational planning, and reporting processes.
• Implementation may require significant time and resources.

3. SAP

SAP’s solution for EPM are a combination of SAP Group Reporting embedded in S/4HANA for consolidations and SAP Analytics Cloud (SAC) for financial and operational planning.

SAP S/4HANA Group Reporting is an enterprise solution for consolidations.  As part of S/4HANA, the Group Reporting solution leverages a combination of features tied to Group Reporting for consolidations and S/4HANA for core close capabilities.  SAP Analytics Cloud is a cloud-based platform for planning, business intelligence (BI) and predictive analytics that enables organizations to visualize, plan and make data-driven decisions.

Pros:

• Reliance of both solutions on the same S/4HANA technology to streamline integration with SAP ERP systems.
• Global footprint that ensures access to a vast pool of skilled professionals and SAP domain knowledge.
• FedRAMP authorized provider.

Cons:

• Group Reporting and SAC use the same underlying technology, but remain separate solutions with separate implementations and resources.
• Multiple products must be connected and result in disparate data silos.  Each product implemented means an additional integration point.  Each integration is a point of failure risk due to needing data quality testing and problem resolution, plus on-going maintenance and modifications as requirements change.
• Lack of features, capabilities and flexibility means solutions cannot meet comprehensive and changing requirements of organizations.

4. Workday Adaptive Planning

Workday Adaptive Planning covers planning, consolidation, analytics and reporting functions.  Built on a proprietary in-memory database, the solution enables collaboration and real-time updates in a spreadsheet-like browser user interface. 

Pros:

• Supports financial planning process support that covers budgeting, forecasting and strategic planning.
• Intuitive interface for users across different departments.
• Easy integration with Workday Finance and HR.

Cons:

• Limited live references, footprint and peer reviews/insights for the cloud EPM solutions.
• Not a FedRAMP authorized provider.
• Fragmented, multiple solutions and technologies that require multiple complex integrations across solutions to reconcile actuals with plans.
• Limited data model for all CPM/EPM processes and limited data integration capabilities for managing the multiple ERP and other source system data integrations.
• Potential learning curve for new users.

5. Anaplan

Anaplan is a cloud modeling technology that enables planning, budgeting and forecasting on a single platform.  The solution serves clients in an array of verticals and functions, including Finance, Sales and Marketing, Supply Chain, and HR and Workforce.

Pros:

• User-friendly browser interface.
• Flexible modeling that supports a broad set of planning use cases.
• Professional services team that works alongside its partner network to ensure implementation support.

Cons:

• Limited live references, footprint and peer reviews/insights for the cloud EPM solutions.
• Not a FedRAMP authorized provider.
• Extra time and resources potentially needed to scale and evolve with agency to update and/or connect modules in response to changes.
• Limited financial intelligence in platform, requiring everything to be developed each time.
• Potential learning curve for new users.

Conclusion

Choosing the right budgeting solution is essential for agencies looking to move beyond legacy/manual processes and evolve to a modern EPM solution.  In this blog post, each of the 5 best budgeting software solutions highlighted offers unique features and benefits, catering to the diverse needs of government agencies.

However, one financial budgeting software solution stands above the rest if you’re looking to streamline back-office Finance processes and significantly increase confidence in reporting and planning.  OneStream ultimately offers the best software to handle your agencies evolving needs, no matter how complex.

Learn More

To learn more about how government agencies are conquering complexity and modernizing back-office processes, click here to check out our customer success with government agencies.

In recent years, Financial Planning and Analysis (FP&A) providers have seen a relative explosion in the number of AI software solutions.  AI software for FP&A is gaining importance because it significantly enhances the efficiency and accuracy of financial analysis.  In fact, the best AI software solutions for FP&A enable organizations to quickly analyze vast amounts of financial data, identify patterns and generate insights.

AI helps automate routine tasks, freeing up Finance professionals to focus on the more strategic aspects of financial planning.  Overall, the integration of AI in FP&A contributes to resource optimization, efficiency, agility and better-informed decision-making.

In this blog post, we examine the Top 5 AI software solutions for FP&A in 2024 using our own interpretation of their relative offerings.  We only include software that meets the following non-negotiable qualifications:

• Earned at least 4.5/5 stars on Gartner Peer Reviews – Financial Planning Software
• Listed in the Budgeting Section on Capterra
• Offers a wider EPM offering

What Is AI Software for FP&A?

AI software for FP&A enables Finance teams to move beyond historical reporting and embrace machine learning (ML)-backed predictive analytics.  By analyzing historical data patterns, AI algorithms can more accurately forecast future trends.  Those trends then help organizations make more informed financial decisions.  For example, AI can analyze customer behavior, purchase history and market trends to predict the ideal price point for each product or service.  This personalized approach maximizes both revenue and customer satisfaction, paving the way for sustainable growth.

As FP&A teams continue to embrace AI, adopting a sensible approach to ML – one that balances automation with transparency and human insight – has become increasingly important.  After all, effective planning is critical for businesses to remain competitive and adapt to changing market conditions.

Common features across AI software solutions for FP&A include the following capabilities:

• Easy-to-access interactive dashboards that FP&A teams can use to discern financial trends.
• Enhanced forecast accuracy by generating more precise analysis using business intuition or external factors within forecasts.
• Easily visualized impact of planning decisions on profitability and margins with “What-if” driver-based planning.
• Reduced forecast bias within scenarios, compare against human forecasting to drive better dialogue and collaboration.

By leveraging these features and others, organizations can transform the FP&A function, plan with confidence, gain insights and forecast more accurately.

This comparative analysis explores the features and functionalities of 5 leading AI software solutions for FP&A:  OneStream, Planful, Board, Workday Adaptive and Wolters Kluwer CCH Tagetik.

The Best AI Software for FP&A

1. OneStream

OneStream is how finance teams can stop wrangling data and start making more of an impact on the business. It’s the only enterprise finance platform that unifies all your financial and operational data, embeds AI for better decisions and productivity, and lets you keep adding capabilities without adding technical debt.

Pros

• Enables users to create thousands of highly accurate daily and/or weekly ML forecasts across products and locations via the unique “Model Arena” concept where models compete to win the most accurate forecast for each individual team.
• Allows the capture of business intuition such as promotions, events and other external factors within ML forecasts.
• Fully unifies and aligns demand forecasts with driver-based sales, material costs, inventory and labor plans across financial statements including the P&L, Balance Sheet and Cash Flow.

Cons

• Tailored implementation process potentially requiring additional configuration time to meet customers’ unique business requirements.
• Potentially prohibitive pricing, especially for smaller businesses.
• Smaller but growing market presence compared to other alternatives – despite growing popularity and having 1,300+ customers across the globe.

2. Planful

Founded in 2001, Planful is a private company supported by private equity firm Vector Capital.  The Planful platform aims to streamline diverse business processes, such as planning, budgeting, consolidations, reporting and analytics.  Used globally, this platform acts as a tool for Finance, Accounting, and Business users to improve their planning, reporting and closing processes.  Planful’s ultimate stated aim with its AI software for FP&A tool is to accelerate process cycles, boost productivity and enhance overall accuracy.

Pros

• Offers very user-friendly, adaptable interface (i.e., functions in both web and Excel interfaces) that requires little IT help and has syntax similar to Excel.
• Allows customers to only buy what they need since Planful is sold as modules.
• Receives very highly rated customer service within public reviews.

Cons

• Difficult-to-detect seasonality due to the lowest granularity being monthly.
• Inability to allow capture of business intuition such as promotions, events and other external factors within predictive forecasts.
• Limited scale as users are constrained to running only 10 models at one time.
• Data integration delivered using a third-party solution – not developed by Planful.

3. Board

Board was founded in 1994 in Chiasso, Switzerland, and has headquarters in both Boston and London.  While the overall product is marketed as integrated business intelligence reporting and analytics with enterprise scalability, Board markets its planning solution as Intelligent Planning for FP&A teams.  Board is a private company with customers worldwide, the highest percentage in Europe.

Pros

• Employs a model competition concept where models compete to win the most accurate forecast for each individual line item – enabling users to create thousands of highly accurate daily and/or weekly ML forecasts across products and locations.
• Provides prebuilt integrators with ERPs and over 270 APIs to multiple source systems that import GL and transactional information.
• Offers visually appealing UI with tight connection between the presentation layer and back-end.

Cons

• Ongoing maintenance required as everything must be built, meaning little pre-built functionality exists.
• No ability to allow capture of business intuition such as promotions, events and other external factors within predictive forecasts.
• Limited accuracy improvements due to only statistical models vs. machine learning models being available.
• No health monitoring of models and auto-rebuilds to maintain accuracy of models.

4. Workday Adaptive

Workday is a leading provider of enterprise cloud applications for Finance and Human Resources. Founded in 2005, Workday delivers financial management, human capital management and analytics applications.  Workday Adaptive Planning originates from the acquisition of Adaptive Insights in 2018. Marketed as enterprise planning software, the Workday solution helps Finance create budgets and forecasts with more speed, flexibility, collaboration and accuracy.

Pros

• Provides Finance-focused planning solution with strong market awareness, especially in the US.
• Uses automation and connectivity to Excel through Office connect, ensuring ease of use.
• Offers outlier reporting and anomaly detection, allowing for quick analysis and plan comparison.

Cons

• Limited accuracy improvements due to a single model applied across all line items or product-location combinations vs. a specific model application for each line item, which can be achieved through a Model Arena.
• No ability to allow capture of business intuition such as promotions, events and other external factors within predictive forecasts.
• No health monitoring of models and auto-rebuilds to maintain accuracy of models.

5. Wolters Kluwer CCH Tagetik

Wolters Kluwer is a global entity specializing in professional data, application solutions and services.  The company targets sectors such as healthcare; taxation and accounting; corporate and financial compliance; legal and regulation; and corporate performance and ESG.  Originally developed in 2005 to deliver trusted, comprehensive and scalable CPM solutions globally, CCH Tagetik was acquired by Wolters Kluwer in 2017.

Pros

• Surfaces drivers impacting the business.
• Shows accuracy uplift with forecast comparison of statistical predictive vs. baseline forecasts.
• Offers unified platform approach that differs from multi-solution approaches (e.g., SAP and Oracle).

Cons

• Separate ML product requiring integration, administration and, therefore, unification and transparency.
• Limited accuracy improvements due to a single model applied across all line items or product-location combinations vs. a specific model application for each line item.
• Limited accuracy improvements due to only statistical models vs. machine learning models being available.

Conclusion

Choosing the right AI software for FP&A is essential for organizations seeking to move away from unreliable, inadequate EPM applications and/or spreadsheets and instead evolve to a modern AI-driven EPM solution.

Each of the Top 5 solutions featured in this blog post offers unique features and benefits, catering to the diverse needs of organizations across industries.  Ultimately, however, if you’re looking to streamline your key Finance processes and significantly increase confidence in your reporting, OneStream is the best AI software for FP&A to handle all your needs, no matter how complex.

Learn More

To learn more about how organizations are managing the complexity in their financial planning and analysis by using AI, check out our whitepaper titled “Revolutionize Your Planning with Sensible ML.”  And if you’re ready to take the leap from spreadsheets or legacy EPM solutions and start your Finance Transformation with OneStream, let’s chat!

To chart an organization’s fiscal future, Financial Planning and Analysis (FP&A) managers examine, analyze and evaluate the organization’s financial undertakings.  FP&A managers also simplify complex financial information for executives (often with little time), narrate financial performance and advise on adhering to the strategic plan.  How?  With FP&A reports. 

Yet despite the explosion of data across sophisticated organizations, many organizations still struggle to meet the information requirements of executives and managers because the organizations just don’t have the right tools for the job.  In fact, only 14% of Finance leaders classify their reporting and analytics as insightful, as illustrated in Figure 1. 

Figure 1.  Source:  Reporting and Analytics for Intelligent FP&A 

With the right FP&A software, reporting should be easy – if you know which reports will drive the organization furthest.  And we’ve got you covered in that regard.  Below, we’ve aggregated the most important FP&A reports for enterprise Finance teams. 

The Best FP&A Reports 

Regardless of the platform you’re using (even if OneStream is the most straightforward), FP&A reports offer important insights and information.  The following reports will help keep the financial division at your organization well-coordinated month to month, quarter to quarter and year to year. 

1.  Income Statement (Profit and Loss Statement) 

Figure 2. Screenshot of an income statement from OneStream

Sometimes called a “profit and loss” or “P&L” statement, an income statement is a critical financial report.  It summarizes the revenues, costs and expenses incurred during a specific period, usually a fiscal quarter or year.  Through such details, this FP&A report provides a clear view of the company’s operational efficiency and profitability over time. 

Here’s how FP&A views and uses an income statement: 

Operational Insight 

• Revenue Analysis:  FP&A teams dissect revenue streams to understand the business’s income sources and identify trends, seasonal variations and growth opportunities.  In turn, this analysis helps with forecasting future revenues and setting realistic sales targets. 
• Cost and Expense Management:  By examining the costs of goods sold (COGS) and operating expenses, FP&A can pinpoint areas of inefficiency or overspending.  This insight is used to recommend cost-saving measures and operational improvements. 

Financial Health and Profitability 

• Gross Profit Margin:  Analyzing the gross profit margin helps FP&A assess the direct profitability of the company’s core activities, excluding overhead costs.  When FP&A is evaluating the effectiveness of production and pricing strategies, this analysis is crucial. 
• Net Profit Margin:  The net profit margin reveals the overall profitability after all expenses, providing a comprehensive view of financial health.  With this information, FP&A can advise on budget adjustments, investment decisions and strategies to improve profitability. 

Forecasting and Strategic Planning 

• Trend Analysis:  By comparing income statements over multiple periods, FP&A teams can identify trends in revenue, costs and profit margins.  This historical analysis is foundational for accurate financial forecasting. 
• Scenario Planning:  FP&A often uses the income statement for scenario planning.  Using this report, FP&A can assess how different strategic decisions (e.g., market expansion, product launches) might impact the company’s financial performance. 

Performance Measurement 

• Budget vs. Actual:  By comparing actual results with budgeted figures on the income statement, FP&A can measure organizational performance, identify variances and understand why they occur.  This evaluation is crucial for refining future budgets and improving forecasting accuracy. 

Communication and Reporting 

• Executive and Stakeholder Communication:  By translating the complex details of the income statement into actionable insights, FP&A can give strategic advice to executives and stakeholders.  This communication involves highlighting key financial metrics, risks and opportunities in a comprehensible manner. 

In essence, from an FP&A standpoint, the income statement is not just a retrospective financial report.  The statement is also used for ongoing analysis, strategic planning and decision support – providing a foundation for guiding the organization toward financial stability and growth. 

2.  Balance Sheet 

Figure 3. Screenshot of an balance sheet from OneStream

As a fundamental financial statement, a balance sheet gives a snapshot of a company’s financial condition at a specific point in time.  The statement details the organization’s assets, liabilities and shareholders’ equity to provide a comprehensive overview of financial health and stability. 

Here’s how FP&A views and uses a balance sheet: 

Asset Management 

• Current Assets Analysis:  With this analysis, FP&A teams evaluate current assets (e.g., cash, marketable securities and receivables) to assess the company’s liquidity and ability to meet short-term obligations.  The analysis then helps organizations effectively manage working capital. 
• Fixed Assets Management:  In fixed assets management, long-term assets – such as property, plant and equipment (PP&E) – are assessed.  FP&A specifically looks at the role fixed assets play in the company’s operational capabilities and long-term strategy (e.g., investment, depreciation and disposal decisions). 

Liability Oversight 

• Short-Term Liabilities:  Analyzing short-term liabilities (e.g., accounts payable and short-term debt) helps FP&A understand the company’s immediate financial commitments and liquidity pressures. 
• Long-Term Liabilities:  Evaluating long-term obligations (e.g., bonds payable and long-term leases) provides FP&A with insight into the company’s long-term financial planning and sustainability. 

Equity Evaluation 

• Shareholders’ Equity:  This evaluation includes analyzing retained earnings, paid-in capital and other equity items.  Through this analysis, FP&A can understand the company’s funding structure and the impact of operational performance on equity.   The information and insights gained are especially crucial for decisions related to dividends, stock repurchases and equity financing. 

Financial Ratios and Health 

• Liquidity Ratios:  When assessing financial health, FP&A uses ratios such as the current ratio and quick ratio to evaluate the company’s ability to pay off short-term liabilities with short-term assets.  Such analysis is crucial for liquidity management. 
• Leverage Ratios:  Debt-to-equity and debt-to-asset ratios are analyzed to understand the level of indebtedness and the financial leverage of the company.  In turn, the organization can use the information and insights gained when making impact risk assessments and capital structure decisions. 

Strategic Planning 

• Capital Structure Analysis:  Through capital structure analysis, FP&A assesses the balance between debt and equity financing.  The information and insights gained are then used to recommend strategies for optimizing the company’s capital structure.  For any strategy, key considerations include cost of capital, risk and financial flexibility. 
• Investment and Growth Opportunities:  By analyzing the balance sheet, FP&A can identify surplus cash or underutilized assets.  Any surpluses or assets can then be redirected toward growth opportunities, mergers, acquisitions, or other strategic investments. 

Risk Management 

• Contingent Liabilities:  Potential future liabilities (e.g., lawsuits or warranties) are considered given their potential impacts on financial planning and risk management strategies. 

Stakeholder Communication 

• Communicating Financial Stability:  FP&A translates balance sheet data into insights about the company’s financial stability, growth potential, and risk profile for investors, lenders and internal stakeholders.  In turn, the information and insights gained help support informed decision-making. 

The balance sheet is not just a static reflection of assets, liabilities and equity.  Instead, this financial statement is a dynamic tool.  It’s used for managing liquidity, assessing financial stability, guiding strategic investments and ensuring the company is positioned for sustainable growth. 

3.  Cash Flow Statement 

Figure 4. Screenshot of a cash flow statement from OneStream

A cash flow statement is an indispensable financial document.  Why?  It tracks a company’s incoming and outgoing flow of cash over a specific period.  Through that information, a cash flow statement provides a detailed breakdown of cash movements related to operating, investing and financing activities.  This statement thus offers a clear view of a company’s liquidity, solvency and overall financial health – beyond what income statements and balance sheets can reveal. 

Here’s how FP&A views and uses a cash flow statement: 

Cash Management 

• Operating Activities:  By analyzing cash flows from operating activities, FP&A can better understand the cash generated from the company’s core business operations.  This analysis is vital for assessing the quality of earnings and the company’s ability to sustain operations without relying on external financing. 
• Investing Activities:  Cash flows, particularly a 13-week rolling cash flow, related to investing activities are scrutinized to evaluate the company’s investment strategy and the impact on long-term growth.  Through this analysis, FP&A looks at activities such as the purchase or sale of assets, investments and capital expenditures. 
• Financing Activities:  Examination of financing activities provides insights into the company’s financing strategy and approach to managing capital structure and shareholder returns.  Through this analysis, FP&A looks at activities such as issuing debt, repaying loans or distributing dividends. 

Liquidity Analysis 

• Short-Term Liquidity:  To assess the company’s ability to meet short-term obligations and efficiently manage working capital, FP&A uses the cash flow statement.  This process includes planning for potential cash shortfalls or allocating excess cash. 
• Long-Term Solvency:  Analysis of long-term cash flow trends is essential for evaluating the company’s solvency.  Specifically, the analysis looks at the capacity to fund operations, repay debt and pursue expansion opportunities over the long term. 

Forecasting and Planning 

• Cash Flow Forecasting:  By analyzing historical cash flow patterns, FP&A teams forecast future cash flows, which helps with budgeting and financial planning.  This forecasting is crucial for ensuring the company maintains sufficient liquidity to meet any operational and strategic needs. 
• Scenario Analysis:  Using the cash flow statement, FP&A performs scenario analysis to understand how various strategic decisions and external factors could impact the company’s cash position.  This analysis helps in risk management and strategic decision-making. 

Performance Measurement 

• Free Cash Flow Analysis:  Free cash flow (FCF) is a key metric derived from the cash flow statement.  Through this metric, FP&A can better understand the cash a company generates after accounting for cash outflows to support operations and maintain capital assets.  FP&A uses FCF to evaluate the company’s financial performance, dividend-paying ability and potential for growth investments. 

Communication 

• Stakeholder Reporting:  FP&A communicates the insights gained from the cash flow statement to internal and external stakeholders.  With those insights, FP&A can present a clear picture of the company’s financial health, operational efficiency and future outlook. 
• Strategic Recommendations:  Based on the analysis of the cash flow statement, FP&A advises senior management on cash management strategies, investment opportunities and financial risk mitigation. 

In essence, a cash flow statement is a strategic tool for managing financial health, supporting operational needs, guiding investment decisions and planning for sustainable growth. 

4.  Budget vs. Actuals Analysis 

Figure 5. Screenshot of a budget vs actuals analysis from OneStream

The analysis of budget vs. actuals compares planned financial outcomes (budget) with actual results.  Using this report, FP&A teams can identify variances, understand the reasons behind these differences and take corrective actions if necessary.  The report also helps with refining future budgets and improving forecasting accuracy. 

Here’s how FP&A views and uses a budget vs. actuals analysis: 

Performance Measurement 

• Identifying Variances:  One of the primary functions of the budget vs. actuals report is to identify variances between what was expected and what has been achieved.  By analyzing these variances, FP&A seeks to understand their causes, whether they stem from changes in the market environment, operational challenges or deviations in strategic execution. 
• Operational Insights:  By analyzing the differences between budgeted and actual figures, FP&A can pinpoint underperforming or overachieving operational areas.  This insight is crucial for making informed decisions about operational adjustments and resource allocation. 

Financial Control and Management 

• Cost Control:  By monitoring actual expenses against budgeted expenses, FP&A can identify areas of overspending.  Such information then prompts immediate corrective action to control costs and improve efficiency. 
• Revenue Management:  Analyzing actual revenues against forecasts enables FP&A to gauge the effectiveness of sales strategies and market conditions, potentially leading to strategy adjustments. 

Forecasting and Strategic Planning 

• Refining Forecasts:  The insights gained from budget vs. actuals analysis are instrumental in refining future forecasts.  By understanding the reasons behind variances, FP&A can make more accurate predictions, improving the reliability of financial planning. 
• Strategic Adjustments:  Regular analysis of budgetary variances informs strategic decision-making, helping to more closely align future budgets with strategic goals and market realities. 

Accountability and Performance Incentives 

• Driving Accountability:  The budget vs. actuals report serves as a basis for evaluating the performance of departments and managers.  Through that evaluation, FP&A can be held accountable for their financial management and operational execution. 

• Performance Incentives:  The analysis of budget vs. actuals informs the development of performance incentives, linking financial rewards to the achievement of budgeted targets and strategic objectives. 

Communication and Stakeholder Engagement 

• Internal Communication:  The budget vs. actuals analysis report is a vital tool for internal communication.  With the insights from this analysis, FP&A can provide management and stakeholders with a clear view of the company’s financial performance and operational efficiency. 
• External Stakeholders:  While primarily used internally, insights from the budget vs. actuals analysis can be shared with external stakeholders to demonstrate fiscal responsibility and operational transparency. 

Risk Management 

• Identifying Financial Risks:  Regular comparison of budgeted and actual figures helps in identifying financial risks early.  Using that information, FP&A teams can recommend risk mitigation strategies and contingency plans. 

In other words, the budget vs. actuals analysis report is a comprehensive tool for operational and strategic management.  The report ultimately enables informed decision-making, enhances financial discipline and drives organizational growth. 

5.  Forecast Reports (Financial Forecasts and Projections) 

Figure 5. Screenshot of a forecast analysis from OneStream

Encompassing both financial forecasts and projections, forecast reports are forward-looking documents that estimate a company’s future financial outcomes.  Those estimates are based on historical data, current market trends and assumptions about future conditions.  For FP&A teams, these reports are pivotal for strategic planning, resource allocation, risk management and decision-making processes. 

Here’s how FP&A views and uses forecast reports: 

Strategic Planning and Decision-Making 

• Guiding Strategic Decisions:  Financial forecasts provide a foundation for strategic decisions.  With the information and insights gained, companies can plan expansions, investments, new products, or market entries by projecting future revenue, expenses and cash flows. 
• Resource Allocation:  Forecasts enable the efficient allocation of resources by identifying future financial needs, potential funding gaps and areas where investments can yield the highest returns. 

Budgeting Process 

• Budget Preparation:  Forecasts often serve as a starting point for the budgeting process to offer an initial estimate of financial performance.  Then, that estimate gets refined into a detailed budget. 
• Dynamic Budgeting:  In a dynamic and uncertain environment, financial forecasts allow FP&A to adjust budgets in real time.  Those adjustments help FP&A respond effectively to changes in market conditions or operational performance. 

Performance Measurement 

• Setting Performance Targets:  Financial projections are used to set performance targets for departments and teams.  With such targets, FP&A can align operational efforts with the company’s financial goals. 
• Benchmarking:  Forecasts serve as benchmarks for evaluating actual financial performance, enabling companies to measure progress towards their strategic objectives. 

Risk Management 

• Identifying Risks and Opportunities:  By examining various scenarios, forecasts help identify potential financial risks and opportunities.  Companies can use the information and insights gained to devise strategies to mitigate risks and capitalize on opportunities. 
• Contingency Planning:  Financial forecasts are essential for contingency planning.  Through such planning, companies can prepare for various future scenarios by understanding the financial impact of different risks and uncertainties. 

Cash Management 

• Cash Flow Planning:  Forecast reports provide insights into future cash flows.  Using those insights, companies can better manage their liquidity, plan for debt repayments and make informed decisions about dividends or reinvestments. 

Investor Relations and Financing 

• Communicating with Investors:  Forecasting reports are crucial for communicating with investors and lenders.  Through the forecasts, FP&A gains a clear picture of the company’s future prospects and strategy for growth and profitability. 
• Supporting Financing Decisions:  Financial projections support decisions related to raising capital, whether through debt or equity.  Using forecasts, a company can show  potential lenders and investors its growth prospects and ability to generate returns. 

Market Analysis and Competitive Strategy 

• Market Trends Analysis:  FP&A teams use financial forecasts to analyze market trends, customer behavior and competitive landscapes.  As a result, FP&A can adjust strategies to maintain or enhance the company’s market position. 
• Competitive Strategy Formulation:  Projections inform strategic decisions that affect the company’s competitive stance.  With the acquired insights and information, FP&A can improve pricing strategies, market differentiation and customer acquisition efforts. 

Forecasting reports are strategic tools that guide the entire spectrum of corporate planning and operational decision-making. The reports help companies navigate uncertainty, plan for the future and position themselves for sustainable growth. 

More FP&A reports? 

These 5 FP&A reports are a good starting point, but many other reports are available to FP&A teams.  For a more in-depth look at FP&A in action, check out our Budgeting, Planning and Forecasting e-book – it’s all online, no forms required. 

Are you at an enterprise organization looking to upgrade your FP&A processes?  Get started with a OneStream demo today! 

What is Financial Planning & Analysis (FP&A)?  At its core, FP&A is a holistic approach to strategic financial management.  The approach includes planning, budgeting, forecasting and analysis to secure a company’s health and growth trajectory.  FP&A combines financial data, operational data and market insights to provide a systematic view of the company’s current and future financial health. 

FP&A requires a deep understanding of the operational dynamics of the business, relevant industry trends and the broader economic landscape.  Serving as the architects of financial strategy, FP&A professionals craft detailed plans aligned with the company’s long-term goals and objectives.  How?  By providing a bridge between the raw data of day-to-day business operations and the strategic insights needed by senior management to make pivotal decisions. 

The FP&A team typically reports to the CFO.  In turn, the CFO seeks to better understand the current state of the company’s financial position and predict future revenue, expenses, profits and cash flows through data.  CFOs therefore often invest in dedicated FP&A software to aid in FP&A analysis. 

Why is FP&A so important? What does process entail, and how does it work in action? Keep reading to find out (and to check out some of our industry examples). 

The Strategic Importance of FP&A 

FP&A’s strategic importance cannot be overstated.  In today’s volatile and competitive business environment, the ability to plan effectively, anticipate future financial challenges and navigate strategic decisions with confidence is critical.  FP&A provides the foundation for this capability; it offers a comprehensive and forward-looking view of the company’s financial health.  Ultimately, FP&A enables businesses to be proactive rather than reactive, positioning them for sustainable growth and success. 

What Is the FP&A Process? 

FP&A aims to answer important financial business questions.  Below are just some of the key questions FP&A teams seek to answer throughout the process: 

• What is our breakeven point? 
• If revenue declines by 10%, will the company still be profitable? 
• What are the financial forecasts for the next year/quarter, and how do they align with strategic goals? 
• How do currency fluctuations, interest rate changes and other external economic factors affect financial performance? 
• What impact will an acquisition or divestiture have on the bottom line? 
• Should we raise debt or equity financing? 
• What is the path forward for AI/ML Finance Transformation? 

To address these complicated, organization-defining questions, FP&A uses 5 core steps to create comprehensive financial plans and analyses. Typically, these steps come after the long-range planning (LRP) and the annual operating plan (AOP) process.  

1. Strategic Planning

The journey of FP&A begins with strategic planning, through which the overarching organizational goals and ambitions are set.  As a crucial first step, this stage defines the direction and scope of all subsequent financial planning and analysis efforts.  Strategic planning thus involves high-level collaboration with various departments to ensure the financial strategy aligns with operational capabilities and market realities. 

2. Budgeting and Forecasting

Central to FP&A is the dual process of budgeting and forecasting.  Budgeting involves tactically allocating resources based on the strategic plan to set financial targets for revenues, expenses and capital expenditures.  Acting as a financial blueprint, budgeting guides spending and investment decisions over a specific period.  Forecasting, on the other hand, extends the vision further into the future using historical data, market analysis and economic indicators to predict financial outcomes.  Providing a dynamic view of the company’s financial trajectory, forecasting allows for adjustments in strategy in response to changing market conditions or internal factors. 

3. Financial Modeling and Analysis

Financial modeling is another cornerstone of FP&A, providing a framework for analyzing the financial implications of various strategic decisions and scenarios.  Through models, FP&A professionals can simulate the impact of different strategies, market conditions and operational changes on the company’s financial performance.  This analysis supports risk assessment and thus helps companies mitigate potential financial setbacks and capitalize on opportunities. 

4. Variance Analysis and Performance Measurement

An essential aspect of FP&A is the ongoing analysis of the company’s financial performance against organizational plans and forecasts.  Through identifying discrepancies between actual results and budgeted or forecasted figures, variance analysis offers insights into why these discrepancies occurred.  This continuous evaluation process helps companies refine financial strategies, optimize performance and achieve strategic goals more effectively. 

5. Reporting and Decision Support

FP&A culminates in the synthesis and presentation of financial insights to senior management and stakeholders.  This stage involves the preparation of detailed reports, dashboards and presentations that highlight key financial metrics, trends and analysis.  By providing a concise view of the company’s financial status and outlook, this step supports strategic decision-making and ensures all stakeholders are aligned with the financial objectives. 

Examples of Financial Planning & Analysis in Action 

To illustrate the real-world application and importance of FP&A, let’s explore a few examples across different industries: 

• Technology Startup:  For a fast-growing tech startup, FP&A might focus on cash flow forecasting and burn rate analysis.  FP&A essentially predicts when the company will need additional funding.  By doing so, the process helps the startup plan for capital raising activities and strategically manage its growth trajectory. 

• Manufacturing Company:  For a manufacturing company, FP&A plays a critical role in capital budgeting and cost control.  FP&A essentially analyzes the financial viability of investing in new machinery or entering a new market.  By doing so, the process helps the company efficiently allocate resources and maximize ROI. 

• Retail Chain:  For a retail chain, FP&A is crucial in inventory management and sales forecasting.  FP&A essentially analyzes sales trends and market demand.  By doing so, the process enables the company to optimize inventory levels, reduce holding costs and plan for seasonal fluctuations. 

• Healthcare Provider:  For the healthcare sector, FP&A might focus on revenue cycle management and profitability analysis by service line.  This process helps the provider understand where to focus efforts to improve financial performance and patient care. 

Conclusion 

What is Financial Planning & Analysis?  As the post above establishes, FP&A is an indispensable business partner and function that helps organizations navigate uncertainty, capitalize on opportunities and mitigate risks.  FP&A combines strategic insight with financial acumen, giving FP&A professionals a way to empower companies to make informed decisions and drive sustainable growth.  As businesses continue to operate in increasingly complex and volatile environments, the role of FP&A will only grow in importance. 

Learn More 

Looking to get started with FP&A? Check out our ebook called “Budgeting, Planning and Forecasting.” No form fill required!  

Introduction

Global organizations have relied on SAP BPC (SAP Business Planning and Consolidation) for their financial consolidation and planning needs. Unfortunately, the end-of-support for SAP BPC has been updated and set for 2030. Organizations are thus exploring modern SAP BPC competitors that offer the same capabilities. Yet those alternatives must also meet the challenges of complex global consolidation requirements, broader close capabilities (e.g., account reconciliations), and financial & operational planning scenarios, with the volumes of data needed to support those processes.

Organizations are looking to finally deliver on the promise of one source of truth. To unify the full consolidation and close lifecycle and financial & operational planning with built-in dashboarding, reporting and analysis, from the balance to the transaction level in one solution. Ultimately, the goal is a single solution that meets the requirements of modern organizations and grows with them to meet future requirements.

In this article, we’ll review SAP BPC competitors to examine the key features, capabilities and pros/cons. We aim to give you the information needed to make an informed decision about the right SAP BPC alternative for your organization.

What Is SAP BPC?

SAP BPC was developed to bring together consolidations and planning into one Excel-based interface to ensure familiarity among Finance professionals. With built-in financial intelligence, SAP BPC helped Finance streamline consolidations and produce consolidated Profit & Loss, Balance Sheet and Cash Flow statements. Because of its Excel-based interface, ability to cover multiple planning scenarios and a common data model, organizations were able to run their planning and forecasting scenarios and reconcile plans to actuals for variance reporting and analysis.

With SAP BPC end-of-support set for 2030, many organizations have either already selected or are currently in various stages of selection processes to find SAP BPC alternatives.

To produce this article, we evaluated numerous reviews and analyst reports, which serve as the typical starting point for selecting the right CPM/EPM platform. We then evaluated alternatives based on five key criteria:

1. End-to-end management of enterprise-wide consolidation, close, and financial & operational planning and forecasting
2. Built-in data quality engine, in the hands of Finance, to provide a strong, flexible foundation in integration and data quality
3. Ultimate agility to adapt to varying levels of granularity in the business and across consolidation, planning and forecasting processes
4. Optimized end-user experience to drive efficiency and effectiveness, eliminating time-consuming and error-prone manual processes
5. Trusted insights from the balance to transaction level with transparency, auditability and actionable details behind every number

Now let’s dive into an overview of the key features, highlights and benefits of SAP BPC for consolidation and planning. To help you find the right solution for your organization, we’ll cover the pros/cons and alternatives. Looking for more information on other top CPM/BPM software? Check out our review: 5 Best SAP BPC Alternatives for 2024.

What Was SAP BPC Used For?

For decades, global organizations have relied on solutions such as SAP BPC for global consolidations and planning processes. SAP BPC had built-in financial intelligence to streamline consolidations so that Finance could produce consolidated Profit & Loss, Balance Sheet and Cash Flow statements. In addition, SAP BPC had built-in planning capabilities (e.g., spreading) to streamline the planning user input during planning processes.

However, SAP BPC never delivered on the promise of one solution. Most customers needed to manage separate consolidation and planning applications. Then, these applications would need to be integrated. Additional applications were often needed to bring everything together for analysis and variance reporting.

SAP BPC Key Features

SAP BPC is known for several key capabilities:

• Financial Consolidation: Facilitates financial consolidation processes, helping companies streamline reporting, eliminate errors and stay compliant with regulatory requirements
• Financial Planning: Enables business planning to create detailed budgets and forecasts, incorporating various factors (e.g., historical data, market trends and business objectives)
• Workflow: Automates workflow processes related to planning, budgeting and consolidation, reducing manual effort and improving efficiency
• Reporting and Analysis: Delivers reporting and analysis capabilities, allowing users to generate customizable reports, perform ad-hoc analysis and gain insights into financial performance
• Data Integration: Integrates with various data sources – including ERP systems, databases and spreadsheets – bringing all financial data for consolidations, planning, reporting and analysis into one solution

SAP BPC Pros

• One application to manage financial consolidation and planning processes
• Built-in financial intelligence and workflows to streamline consolidation and planning processes
• Flexible deployment and integration options with SAP systems and tools

SAP BPC Cons

• SAP BPC is in end-of-support, set for 2030
• A lack of feature parity in future solutions to replace SAP BPC (Group Reporting for consolidations requiring S/4HANA to be implemented first, SAC for planning)

SAP BPC Alternatives

Enterprises today are looking to replace SAP BPC with more modern, cloud-based approaches to CPM/EPM. Many SAP BPC alternatives take the traditional multi-solution approach to CPM, which still results in complex management of multiple solutions, interfaces and integrations. However, solutions such as OneStream unify consolidation, close, and financial & operational planning, reporting, and analysis in one platform.

Enterprises therefore have options to achieve organizational CPM/EPM goals and, with the right choice, can get closer to that elusive one source of truth. The following solutions are the best alternatives for end-to-end management of enterprise-wide consolidation, close, and financial & operational planning and forecasting:

·         OneStream

·         SAP EPM

·         Oracle EPM

·         Wolters Kluwer CCH Tagetik

·         Workday Adaptive Planning

Conclusion

With the looming end-of-support for SAP BPC, organizations are actively looking for alternatives. OneStream’s Intelligent Finance Platform is the only CPM/EPM solution that delivers end-to-end management of enterprise-wide consolidation, close, and financial & operational planning and forecasting in a unified platform. This platform enables Finance and Operations teams to better collaborate and finally deliver on a single source of truth.

With over 1,400 customers globally, many successful migrations from SAP BPC to OneStream and a mission to ensure every customer is a reference, OneStream stands as the only truly unified platform for CPM/EPM.

Learn More

Want to know more? Check out OneStream’s video about what comes after SAP BPC/BFC/BCS here.

If there is one thing any business analyst can forecast is this: sustained uncertainty. And organizations can’t do much to change this. What organizations can do though, is to prepare to deal with market variability by addressing the business challenges internal organizations may have: disconnected and lengthy planning processes, an insane amount of time collating data, siloed decision-making, lack of forecasting accuracy, poor sight into operational assumptions and what is driving margin. That’s what Integrated Business Planning is aiming for.

What is Integrated Business Planning (IBP)?

Integrated Business Planning aims to unify business strategy with planning, budgeting and forecasting activity for all business lines and functions – providing one version of the numbers. A trusted, common view of the numbers provides a robust baseline for agile decision-making and keeps all teams together, collectively trying to achieve the same corporate objectives while staying focused on specific KPIs. In other words, the different teams maintain their independence while working in unison to achieve corporate success by leveraging the same trusted and governed data.

The bottom line is that IBP is about aligning strategy intent, unifying planning processes and bringing the organization together.

IBP Process: How Does it Work

The Integrated Business Planning process is a framework to address the C-suite needs and help them implement the business strategy and manage uncertainty to improve decision-making. The secret sauce of IBP is a collaboration between the different teams under a single view of the numbers that must unequivocally be tied to financial performance, that’s how the C-suite gets value from it. Consequently, finance plays a central role within IBP.

IBP typically focuses on 24- 60 months horizons, as opposed to short term: that’s Integrated Tactical Planning or Sales and Operations Planning and Execution. The process must be fully integrated, so it should remove the departmental silos and it must adapt to the organizational construct of every business (it is not a one size fits all type of process).

Figure 1 outlines the five core elements of the IBP cycle with its responsibilities:

The most efficient way to foster this collaboration is by having a unified solution and data model that caters the needs of the various agents involved on each review.  Figure 2 shows how one solution gathering all the capabilities in the greyed area under a unified data model is the most efficient approach to IBP.

IBP Business Benefits

The benefits an organization can expect from an IBP implementation are diverse. In the big picture, IBP can certainly improve financial and business performance. Figure 3 outlines some of the most remarkable KPI improvements.

Learn More

Want to learn how you can maximize the benefits of your IBP process and get your CEO onboard, read our blog on the 5 Considerations to Help Your CEO Trust the IBP Process.

At large manufacturing organizations, Finance professionals are pivotal in steering their organizations toward sustainable growth and financial success. One important piece of the Financial Planning and Analysis (FP&A) umbrella these professions use is strategic workforce planning. Strategic workforce planning combines financial acumen with human resource strategies to ensure the workforce aligns with the overall organizational business objectives.

While adding more planning processes to FP&A’s plate might seem overwhelming, strategic workforce planning is critical to Finance teams. Why? It aligns human capital strategies with financial goals and ensures optimal resource allocation, risk mitigation and adaptability – which collectively drive organizational success through a well-aligned and agile workforce. Now more than ever, then, Finance professionals looking to expand their skills need to understand strategic workforce planning and the role it plays in financial planning.

Strategic Workforce Planning Defined

Strategic workforce planning is a comprehensive approach to aligning an organization’s workforce and business strategy. Such planning involves anticipating and identifying the workforce capabilities required to achieve short- and long-term business goals.

But why is this planning important for an already busy Finance department in large organizations? Well, for Finance professionals across all industries, but especially in manufacturing, strategic workforce planning goes beyond traditional financial planning and forecasting. By integrating financial insights with human capital considerations, workforce planning ensures the workforce is cost-effective and strategically aligned with the company’s growth objectives.

Key market trends related to workforce and people planning in 2024 and beyond are important to understand. Especially important is how these trends are shaping the way organizations think about and manage their workforces.

Here are some of the most important trends:

• The aging workforce:  The global population is aging, and this trend is having a significant impact on the workforce.  In many countries, the number of working-age people age is declining as the number of retirees is increasing.  This situation is putting a strain on social security systems and making it difficult for businesses to find qualified workers.
• The rise of remote work:  The COVID-19 pandemic has accelerated the trend toward remote work.  Many businesses have found that their employees can be just as productive working from home, leading to a shift in the way we think about work-life balance.
• The demand for skills-based hiring:  Historically, businesses often hired based on qualifications and experience.  The rise of technology and the increasing complexity of work, however, is making skill-based hiring more important.  This trend is leading to a demand for more flexible and agile workforces.
• The need for diversity and inclusion:  Businesses are increasingly recognizing the importance of diversity and inclusion in the workplace.  A diverse workforce will not only bring new perspectives and ideas to the table, but also help to improve employee morale and productivity.

Why Strategic Workforce Planning Matters for Finance Professionals in Manufacturing

Strategic workforce planning provides a framework for Finance and other departments across the enterprise, including HR and Operations, to bring together their planning efforts into one cohesive, financialized plan that conceptualizes all the variables involving human capital. Bringing these variables together provides the following benefits, among others:

1. Cost Optimization and Efficiency:  Financial analysts will be familiar with the delicate balance between cost management and operational efficiency.  Strategic workforce planning allows planners to optimize workforce costs by identifying areas for improvement, such as skill gaps, redundancies or over-reliance on external talent.  By aligning workforce planning with financial goals, organizations can allocate resources more efficiently, ensuring the right people with the right skills are in the right roles.
2. Risk Mitigation:  In the volatile manufacturing sector, unforeseen disruptions can profoundly impact financial stability.  Strategic workforce planning enables Finance professionals to assess and mitigate risks associated with workforce dynamics, such as talent shortages, turnover and skill gaps.  By identifying potential risks early on, Finance teams can develop proactive strategies to address these challenges, safeguarding the organization’s financial health.
3. Strategic Alignment:  Finance must ensure that the organization is strategically positioned to adapt to industry changes.  Strategic workforce planning helps align the workforce with the company’s strategic goals, fostering agility and responsiveness to market shifts.  By having a workforce that can quickly adapt to new technologies and market demands, manufacturing companies can gain a competitive edge, directly impacting the bottom line.
4. Talent Development and Retention:  Investing in talent development is a crucial aspect of strategic workforce planning.  By working closely with HR, Finance professionals can identify critical skills needed for the future and then implement training programs or hiring strategies accordingly.  Retaining top talent is just as vital as talent development.  By performing robust strategic workforce planning, companies can create an environment that fosters employee satisfaction and loyalty that ultimately decreases turnover and lessens the financial implications including recruitment costs and productivity loss.

The Role of Software in Strategic Workforce Planning

Bringing together many people across multiple departments with data from multiple sources can be challenging.  After all, combining people, data and processes into one plan is already challenging enough.  Being held back by outdated processes and systems adds another layer of complexity.

OneStream’s unified Corporate Performance Management (CPM) platform was built specifically to address these concerns in financial processes. By bridging the gap between data and people, OneStream’s best-in-class CPM platform gives users divisional autonomy while maintaining corporate standards and control – and does so with transparency and auditability into key financial data and decisions.  Below are just a few of the technical enablers within OneStream that allow Finance teams to break free of burdensome technologies to unleash better strategic workforce planning:

• Financial Reporting and Analytics:  OneStream unifies financial and operational insights to drive performance and deliver value.  With OneStream, Finance teams not only can deliver the right information in the right format at the right time, but also can replace spreadsheets and standalone financial reporting software with a unified CPM platform.  That platform can then be used to create customized dashboards and other useful self-service visualizations to allow Finance teams to quickly assess financial results on a regular basis.
• Real-Time Data:  OneStream’s approach to financial signaling (Figure 1) provides real-time monitoring capabilities, allowing Finance professionals to continuously track key workforce metrics.  This capability ensures organizations can break the month-end reporting cycle by transforming daily and weekly financial and operational signals from multiple data sources into actionable insights to drive performance.
• Scenario Modeling:  OneStream’s CPM solution facilitates scenario planning, allowing Finance professionals to model various workforce scenarios and their financial implications.  By using robust software that enables robust strategic workforce planning, Finance helps create contingency plans and adapt to different economic or industry conditions.  OneStream allows users to create multiple what-if scenarios to model the impact of changes to key business drivers and internal scenarios to evaluate the financial outcomes of different workforce strategies.
• Predictive Analytics:  Strategic workforce planning relies heavily on data analysis to enable informed decision-making.  Advanced analytics allows for processing large datasets, providing Finance professionals with valuable insights into workforce trends, performance metrics and financial implications.  With OneStream, Finance teams can enhance speed and accuracy by automating tasks; improve risk management to identify risks and capitalize on opportunities; and increase strategic decision-making with more data analysis done quickly with predictive analytic capabilities.

Ultimately, if the right people have access to the right data in a timely and repeatable manner, the quality of the outputs of strategic workforce planning becomes actionable and valuable to the organization. The experience of those involved in putting together the plan also improves.

Conclusion

Strategic workforce planning is vital to successful financial management in the manufacturing sector. Accordingly, Finance professionals are crucial in integrating financial strategies with human capital considerations to align workforce planning with overall business objectives. And by embracing software solutions like OneStream’s unified CPM platform for strategic workforce planning, Finance teams are empowered to leverage data-driven insights, streamline processes and make informed decisions that positively impact the bottom line.

As manufacturing continues to evolve, the collaboration between Finance and HR, facilitated by innovative software tools, will be vital in navigating the complexities of workforce dynamics and securing long-term financial success.

Learn More

To learn more about the power of planning for human capital and how OneStream’s intelligence finance platform can enable robust people planning, check out our solution brief People Planning for more.

Integrated Business Planning (IBP) is arguably the most comprehensive framework to manage planning across an organization.

Ultimately, IBP is the evolution of Sales & Operations Planning, which is a process deeply rooted into sales and supply chain operations. Many organizations therefore manage IBP from within Operations and avoid or disregard Finance participation. But that shouldn’t be the way. Why not? Well, IBP is not an operational process. When done right, IBP is a process to help the C-suite – particularly CEOs – to deploy strategy and make faster and better decisions. And because CEOs speak the financial language, IBP should be a Finance-led process.

With the above in mind, many organizations unsurprisingly fail to get the right level of sponsorship, and their IBP initiatives fail to deliver what they should. CEOs aren’t interested in partial or biased views of a plan. Instead, they expect IBP to help them compose a neutral view that drives business performance effectively. And that’s a succinct reason that CEOs will trust and support IBP.

How, then, can you get your CEO to trust the IBP process? This blog will dive into 5 considerations to help your CEO trust IBP.

5 Considerations to Help Your CEO Trust the IBP Process

Much has been written about the lack of executive support for IBP, but not much has been written about how an IBP initiative can win your CEO’s heart and mind. The following considerations can help:

1. Anchor IBP to Finance metrics for P&L, Cashflow, and Return on Invested Capital. Finance metrics (e.g., EBIT or ROIC) make the IBP process effective. Therefore, organizations with mature IBP processes use key Finance metrics because they are the best value indicators and CEOs understand those metrics.
2. Focus on the right time horizons. IBP is primarily a strategic planning process used to address long-term horizons (3-5 years). At the same time, it should also serve as a connector to the short-term plans and initiatives (1-2 years). Calibrating to the right time horizons is therefore a fantastic opportunity to connect IBP with the C-suite.
3. Make it all-inclusive. IBP can include the Finance, Product, Demand, Supply and Support functions. Traditionally, S&OP connects Supply Chain with the Demand Generation and Sales teams. IBP expands to Finance and Product, but what about other functions that – for example – require workforce or CapEx planning? There’s no better presentation card than an all-inclusive IBP discipline to represent the holistic planning view of the organization that the CEO leads.
4. Make IBP auditable and accountable. One of the main purposes of IBP is to foster collaboration and accountability. Thus, orchestrating and synchronizing becomes critical, and accountability must be well-defined at every step of the process. At the same time, data, numbers and assumptions must be auditable and traceable all the way up to financial statements and results. This capability will raise the CEO’s confidence in the numbers, insights and recommendations from the IBP team.
5. Balance granularity versus insight. By focusing on the daily operational details, organizations can miss the bigger picture and fail to provide the appropriate insights for the leadership team. Given that, is it necessary to drill down to the part-number level? Does IBP really require daily information?

From Integrated Business Planning to Improved Business Performance

If you’ve reached this point in the post, you might be thinking that the five considerations above make sense. They aren’t trivial, however. In fact, they can be hard to achieve. How, then, do you get there?

IBP is ultimately about deploying the company strategy through structured and cohesive planning across the organization. And the considerations outlined in this post are difficult to achieve without the proper technology solution.

Often, technology during IBP implementations focuses only on reporting and visualization capabilities, disregarding other key capabilities. For instance, the capabilities below might be disregarded:

• Data management automation
• Data cohesiveness (one set of numbers)
• Data integrity and pedigree (anchored to financial metrics and artifacts)
• Adaptive and intuitive process workflows and approvals (auditable collaboration)
• Calibration between insights and detail

When the technology covers all these aspects, Integrated Business Planning becomes the right framework to improve business performance.

And unequivocally, modern EPM solutions are the best choice to bring all these capabilities together and establish an IBP process that serves a purpose for the CEO and C-suite.

All Things Considered…

IBP done right is ultimately a Finance-driven process. And OneStream’s Finance Platform is the only market solution capable of providing every single mission-critical process for Finance. Need proof? Look no further than Autoliv, a world-leading supplier in safety systems. Autoliv used OneStream and its unified data model approach to transform financial and operational planning to respond to market changes and make faster decisions.

In other words, the unified data model, data management and quality, financial intelligence, automation and analytical AI services in OneStream make it uniquely positioned to win your CEO’s heart and mind.

Learn More

Want to learn how you can maximize the benefits of your IBP process and get your CEO onboard, read our article on how to unify IBP and maximize the benefits.

The need for software tools that enable finance and business leaders to navigate today’s challenging economic landscape and vast array of enterprise-level risks with predictive insights and agility couldn’t be greater.  This is driving demand for modern, cloud-based financial planning software applications that can replace spreadsheets and legacy planning applications and enable more confident decision-making.  

So it’s timely that the 2023 Gartner® Magic Quadrant™ for Financial Planning Software¹ was recently published, in which OneStream was recognized as a leader for the second year in a row.  Read on to hear the highlights of the report and why OneStream was named a leader.

Assessing the Planning Software Vendor Landscape

In the 2023 MQ for Financial Planning Software, the Gartner analyst team evaluated 16 software vendors based on their ability to execute and completeness of vision, including market understanding, offering strategy, innovation and geographic strategy.  Based on their evaluation, OneStream was recognized as a Leader for the 2^nd year in a row in this report. This comes on the heels of OneStream recently being recognized as a Leader in the Gartner Magic Quadrant for Financial Close and Consolidation Solutions².

Why was OneStream recognized as a Leader in the report?  I suggest reading the entire report to get the full story, but a few strengths highlighted in the report are:

• Data volumes: OneStream was cited as having one of the fastest data transfer times and user concurrency levels among vendors.
• Innovation: OneStream’s Sensible ML solution was called out as a key innovation, along with our strong roadmap and plans for leveraging Generative AI within our platform.
• Solutions exchange: The OneStream Solution Exchange was highlighted providing customers with access to 75+ add-on productivity and business solutions developed by OneStream, partners and customers to quickly address new requirements.

We believe this recognition underscores our continued momentum in the market, innovation we are driving with our AI/ML strategy, and the value that OneStream’s unified platform delivers to customers, enabling agile financial and operational planning and reporting processes. 

Organizations that have adopted OneStream for FP&A are streamlining their budgeting, planning and forecasting processes by an average of 58%, aligning financial and operational planning across the enterprise, and are using our built-in Analytic Services to report and analyze daily and weekly financial and operational signals and trends by integrating large volumes of transactional data.  A growing number of customers are leveraging our Sensible ML solution to deliver faster and more accurate demand and revenue forecasts to support more confident decision-making. Here are a few examples:

Polaris – leveraging Sensible ML, Polaris is reducing forecasting cycle times and improving the accuracy of their demand forecasts. The Finance team also has more insights into the key forecast drivers, helping drive more informed decision-making.

Autoliv – leveraging Sensible ML’s capabilities to produce detailed, granular forecasts at a daily level, Autoliv was able to create forecasts to match the granularity of their demand planning. In addition, Sensible ML can produce more accurate and more frequent forecasts at scale and at a fraction of the time and cost.

AI-Powered Planning Goes Mainstream

In the report, Gartner highlighted several key market trends that are driving rapid growth in the FP&A software market.  This includes the following:

• The market continues to invest in AI-powered Finance solutions, with new capabilities that are significantly enhancing adoption and operational efficiency.
• Greater transparency in AI/ML predictive results is accelerating adoption.
• Enhanced Integrated Business Planning (IBP) as vendors advance their ability to extend financial planning processes across the enterprise to align with operational planning.
• The evolution of Natural Language Processing (NLP) can help FP&A leaders make more informed decisions by automatically processing and summarizing textual information as well as providing context to the numerical data displayed in dashboards.
• Stronger cross-functional collaboration is increasingly a key priority for organizations, and important in driving more meaningful forecasting and planning efforts.

And as mentioned in prior reports, the transition from on-premises to cloud-based financial planning software reflects a broader trend toward SaaS offerings, facilitating faster implementation, improved ease of use and reduced dependence on IT staff for management. Additionally, these solutions provide adaptability and collaboration for tighter operational and financial performance feedback loops, extending their adoption across the enterprise.

Learn More

To learn more about the key market trends, and how OneStream compares to the other vendors in the financial planning software market, download the Gartner MQ report and contact OneStream if your organization is ready to reduce reliance on spreadsheets and legacy applications and maximize business impact!  

Sources:

¹Gartner Magic Quadrant for Financial Planning Software, Regina Crowder, Matthew Mowrey, Vaughan Archer 5 December 2023

²Gartner Magic Quadrant for Financial Close and Consolidation Solutions, Nisha Bhandare, Permjeet Gale, Jeffrin Francis, Renata Viana, 27 November 2023

GARTNER is a registered trademark and service mark of Gartner and Magic Quadrant is a registered trademark of Gartner, Inc. and/or its affiliates in the U.S. and internationally and are used herein with permission. All rights reserved.

Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner’s research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.