Achieving business agility with continuous planning.
Every day, the correlation between business agility and competitive success grows stronger. Especially now, in the aftermath of a global pandemic that’s intensified more than a decade of compounding instability. The gap separating today’s top-performing businesses from those getting left behind is growing wider, as the enterprises that plan for change accelerate, and those that only react stall. But global outperformers understand that business agility is a result of better planning.
Planning has enormous strategic potential to help businesses accelerate into the lead.
Effective planning unlocks the ability to continually anticipate change and quickly operationalize a coordinated response at scale. It helps organizations stay ahead of the competition, despite radical instability and disruption.
But traditional planning in most organizations never reaches its full potential. Decisions take too long. Silos hinder visibility. Great ideas don’t translate into impact. Within most organizations, the planning function simply can’t keep up with today’s pace of change. And it keeps finance leaders from realizing their role as a strategic part of the business.
In contrast, high-performance planning has evolved to become a strategic success lever, empowering the entire enterprise to anticipate and respond to a faster and more dynamic rate of change.
Today’s planning is:
• Continuous, continually recalibrating to offer a dynamic and ever-improving source of predictive insight.
• Company-wide, with a unified, coherent, strategic capability across the business.
• Cloud-first, with a tech-forward, built-for-purpose foundation of planning intelligence, automation, and scalability.
Moving toward this modern planning model is much easier than you think, read on and get practical actions to take right now.
Continuous planning
Planning hasn’t deviated far from the typical annual budgeting and forecasting cycle in 100 years.
The trouble with this basic model is that it’s static, retrospective, and not built to scale with today’s pace of change. Decision-making is often based on stale data.
Today, that’s like driving down the highway looking out your rearview mirror. Without being able to anticipate what’s ahead, you’re stuck with rigid, inflexible plans that almost certainly don’t provide the best path to achieve your goals.
The solution is to transform retrospective planning into a process of continuous recalibration by gaining insights in real time and acting on them.
Continuous planning is broad and multidimensional, facilitating coordinated acceleration across the organization. There are two key things finance teams can do today to start transforming planning into a major business success lever.
1. Rolling forecasts
Forecasts are designed to put historical information about performance into informed predictions that guide future decision-making. But traditional forecasting is limited, riddled with data gaps, and time-consuming.
Periodic forecasts seldom reflect your business reality—by the time you’ve created them, the forecasts are rarely worth the spreadsheets they’re written on. And yet the organization still uses them for high-level decision-making.
In contrast, rolling forecasts offer continuous performance insight where actuals are rolled forward monthly, quarterly, or at a regular cadence that makes sense for the business. So you can make faster decisions that align with unfolding events.
“Rolling forecasters outperform quarterly forecasters in every category, most markedly in terms of agility. In a period of great uncertainty and change, rolling forecasts are noteworthy for providing much-needed agility.” CEO Professional Service Firm
Getting started with rolling forecasts.
Although rolling forecasts are technically possible using spreadsheets, their inherent limitations make it extremely difficult to gather, reconcile, model, and act on data fast enough.
Conversely, built-for-purpose, cloud-first planning technology is much more able to support continuous forecasting.
It’s dramatically easier to gather and process real-time data on demand, conduct insightful variance analysis, empower business partners to participate in analysis, and provide a data-driven framework for discussing opportunities or course corrections. Plus, you can easily make forecasts available to decision-makers across the business (especially among leaders who aren’t as spreadsheet-fluent as finance).
When you do that, you can make decisions informed by insights for more accurate forecasting and business-wide empowerment to identify, prioritize, and seize opportunities faster
2. What-if scenario planning.
Business agility is much easier when you reduce the unknowns lurking around the corner.
What-if scenarios are already incredibly powerful tools for today’s strategic decision- makers. Organizations can model different versions of the future based on predictive analytics, weighing different courses of action before choosing the best path forward.
But it’s a myth that what-if scenario planning needs to be complex in order to be effective. It can be as simple as tweaking a few performance projections to see how changed expectations impact other business outcomes.
For example, how would decreased sales in EMEA impact operating cash flow? Insights like that help decision-makers identify problems and prioritize solutions, to move the needle against important outcomes.
That said, more advanced scenario planning can also become richer and broader, incorporating any combination of financial and non-financial inputs to continuously guide decision-making in real time.
Then you can start to answer more nuanced questions to better understand and prepare for the many possible futures ahead. For example, how would increased customer churn in EMEA impact employee retention? And how would declining retention impact our net promoter score? Does increasing support headcount solve the churn problem? Or would a loyalty program prove more profitable?
“Scenario modelling based on a range of assumptions is a best practice …by envisioning and preparing for what’s ahead, organizations can be far more agile, proactive, and successful.” VP Analytics, Professional Services Firm
Evolving your what-if scenario planning
The enterprises that model the richest versions of the future accelerate fastest toward it. But, like rolling forecasts, traditional what-if scenario planning is held back by legacy planning tools and spreadsheets.
To start building richer and broader modeling capabilities, you need a specially engineered platform that can bring together all your financial, transactional, and operational data into a unified, dynamic data core.
Traditional scenario planning is also limited by the humans driving the creative process—the right people asking the right questions about the right data.
The next evolution for what-if modeling is beginning to see global outperformers leverage AI and machine learning to ingest vast amounts of financial and non-financial data from across the business, to automate high-volume, high-complexity modeling at scale. As this practice starts to become mainstream, the enterprises that are acting now to prepare their data and evolve will shift into a whole new gear.
Learn more about The Path to Modern Planning in Part II