Modern Planning: Streamlined, More Relevant and Driving Performance

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1 : Streamlined, More Relevant and Driving Performance Ideas for improving your planning processes and leveraging leading technologies Executive Summary: 64% of finance practitioners say their budget process could be streamlined, according to the Association for Financial Professionals (AFP) Design your budgeting and forecasting processes around supporting your company s competitive advantage Determine how to improve your planning processes before deciding on and implementing technology to support them Modern technologies deliver features that support nimble, driver-based and interactive planning to align resources, decisions and actions with corporate goals 64% of Corporate Finance Professionals Want to Streamline Planning Among the survey s key findings, a few things stand out: For their 2017 FP&A Survey How Relevant is Your Budget? the Association for Financial Professionals (AFP) got feedback from over 600 financial professionals in organizations spanning a wide range of industries and sizes, both publicly owned and privately held. The results provide insights into the usage of budgets and budgeting styles, how useful senior managers perceive the budget, and the relevance of budgets for monitoring performance and managing the business. While support for budgets is very strong in Finance, the Board of Directors and the C-Suite, support decreases across functions outside Finance as well as down the organization chart. Not every company budgets the same way: Some are intense budgeters that take longer for their budget process, while some are fast budgeters who spend less time. The degree of managerial discretion and budget flexibility also vary, from iron-clad to non-binding. Page 1 of 10

2 Finance managers have a high level of support for budgets and are generally satisfied with how the budgets are used, even across different planning methods. But the survey also found that 64% of them say the budget process could be streamlined. As for the last point above, in the survey s summary report, AFP gives a possible reason: That budgets are still driven by top-down requirements rather than by operational needs. But today, with modern planning technologies available, there is no good reason a plan can t build a strong connection among the strategic goals, operational strategies and the corporate financial objectives. How can you better connect your company s corporate goals, operations and the financial plan, regardless of your organization s planning style? How can you streamline the planning process while increasing support for the plan across and down the organization? To us at Analysis Team, the solution has two sides: process and technology. In this paper, we will present ideas for both. Before going further, we strongly suggest that you consider the following perspective: (a) Don t expect technology alone to make planning easier or more effective, and (b) refine (or redefine) your planning processes to support building competitive advantage before deploying new technology. As a senior Finance manager we worked with once said, Automating the current bad process only enables us to make the same mistakes faster. Ways to Improve the Planning Process Planning is the means by which corporate strategies and goals drive operational decisions and actions, thereby improving financial outcomes. The monetary numbers in a budget reflect the allocation of resources and the financial goals, and also set metrics by which progress will be measured. What are some ways your planning process can achieve its critical purpose, and at the same time be more streamlined? Begin by asking yourself the following questions: What are my company s business goals, in the short and long term? How do we intend to achieve them? In light of those goals, what would a more effective planning process look like? Thinking about your last planning cycle, where could improvements be made? Here are a few areas we examine with our clients: Page 2 of 10

3 Alignment with corporate goals: Are you confident the detailed plans of each function and business unit align well with the company s overall objectives? Just as corporate-level KPIs are defined to monitor overall progress, indicators and benchmarks need to be developed and monitored across and down the organization. The planning process is an opportunity for each function and BU to define its role and goals, in coordination with other groups. Benefits include getting the organization to work better together across functions, and always with corporate goals in view. Driver-based planning: Financial results are driven by activities such as the number of customers or market share, how many of which products you ll sell by market segment, or how many people (and what skills) you ll need and when. How much do you use business drivers and rates to determine how your financial goals will be reached? Benefits include being able to understand the why behind variances and determine how to shift plans and activities to accommodate underlying changes in the business. Scenario planning: Are you able to develop plan versions based on best and worst case scenarios, how markets and competition might change over your planning horizon, or to reflect the impact of launching new products or acquiring another company? Benefits include being prepared when reality changes and new opportunities arise, and staying ahead of the curve when you need to adjust plans and actions during the year. Availability of historical trends: Do you have recent actual business driver and financial trends easily at your disposal to help you build and review your plan? Make relevant financial and business driver trends available to planners, and integrate validated projections into the budget process. Benefits include creating a more realistic, informed plan that s less prone to surprises at the very beginning of the new fiscal year. Improved collaboration: With simpler user interfaces, modern software enables functional managers to participate directly in the planning process without becoming Excel experts. Have you opened the process to include those who actually run the business? Are functional managers contributing their business expertise, including submitting relevant commentary to explain their submissions? Benefits include a more informed plan, increased ownership of the plan at the right levels in the organization, and less time and effort on the part of financial analysts to investigate variances each cycle. Better process control: Do budget process participants submit their numbers on time? Are you easily able to keep track of who submitted and who didn t, as well as monitor all the manager approvals along the way? Workflow management is a feature offered by modern planning systems. Benefits include keeping everyone synchronized on the process schedule and removing a lot of the effort and stress associated with chasing people down to confirm they have submitted or updated their numbers. Single method for all cycles: Many companies do a detailed budget once a year, a somewhat less detailed quarterly forecast, and high-level forecasts the other two months of a quarter. As modern software makes planning models and processes easier to manage, why not simplify to one method for all planning cycles? Benefits include smoother transition between cycles, improved analysis of variances more frequently, and a less stressful annual budget cycle. Page 3 of 10

4 Rolling forecasting: Fiscal quarter and year-ends are non-events to your customers and your competition; business is a continuous, organic activity. Are you using a rolling planning method that always looks out over the next 12, 18, 24 months? Benefits include supporting a bigger-picture planning mindset every cycle and making annual budgeting practically a non-event in your organization. Quick turn-around of iterations: Planning cycles may involve several iterations, often on short timeframes. How quickly and easily are new scenarios created, major assumptions updated, and calculations turned around? How quickly can you produce revised financial statements and supporting schedules? A flexible, integrated and automated system could provide a significant advantage. Benefits include fewer late nights tying out numbers and the ability to be more responsive to the CEO and Board. Reduced mistakes and risk: Do broken spreadsheet links, bad formulas, or a rigid planning system result in extra effort to fix the mechanics of your model mid-process, and cause additional effort to review and validate numbers? Spreadsheets are infinitely flexible but risky, while a purpose-built system could be clunky to update to accommodate current needs. Is it time to update your model and/or technology? Benefits include reducing risk, improving data integration, and better supporting business modeling needs as they evolve cycle to cycle. Most important, your planning process should support the specific competitive advantages your enterprise has (or is trying to build) in its industry. While there are best practices in planning, what s best for your company is a planning process that helps build enterprise value and supports the business and financial goals of senior management. This points out a key consideration when considering planning systems: What planning solution will best support your strategic value-building processes and help strengthen your company s competitive advantage? As with planning processes, when it comes to software technology one size does not fit all. Streamlining Planning with Leading Technologies Modern planning software enables you to implement and derive benefits from improvements in your planning process. With a better process designed to meet the specific business needs and goals of your organization, you re ready to decide on and integrate a technology that will bring the greatest impact. Modern planning systems deliver a range of key fundamental capabilities to support any planning process: driver-based modeling, scenario and version management, robust security and process administration, and ease of use for non-financial personnel, to name a few. These solutions often can be your company s de-facto financial reporting solution, providing actual Page 4 of 10

5 financial statements with variances to budget and forecast, KPI and trend reporting, and attractive dashboards as well. Modern planning solutions integrate detailed operational and functional plans to provide company-level Income Statement, Balance Sheet, and Cash Flow Statement. With driver-based modeling and integrated data flows, changes anywhere in the plan are reflected immediately in the top-level financial statements. Scenario modeling lets you create and manage multiple versions during each budget and forecast cycle. Workflow and security features enable you to control when users have access, see who has completed their input, and drive the review and approval process. For users, web forms provide an easy-to-use interface for reviewing past trends and inputting or updating their budgets and forecasts. Analysis Team, Inc. is aligned with today s leading planning and reporting solution providers including Oracle, Applied OLAP and Adaptive Insights. We bring technical skills in these vendors applications together with financial process expertise to deliver highly effective solutions for our clients, mid-market and large enterprises in a range of industries. Oracle Hyperion Planning (On-Prem) and Planning and Budgeting Cloud Service (PBCS/EPBCS) Oracle s Hyperion Planning is an established legacy standard for budgeting and forecasting. Oracle s Planning and Budgeting Cloud Service (PBCS) is the cloud-based successor to on-prem Hyperion Planning, and available as a service (SaaS). The Enterprise versions of Hyperion Planning and PBCS (called EPBCS) include purpose-built frameworks, or modules. These integrated frameworks enable a highly functional and integrated enterprise planning solution: Financial Statement Planning: Provides full P&L, Balance Sheet and Cash Flow, and integrates data from each of the other modules into the enterprise financial statements. Workforce Planning: For planning headcount and salaries by individual, department or job type; calculates bonuses, taxes, benefits and other people-driven expenditures. Capital Asset Planning: For planning acquisition of new capital assets, including intangibles; calculates depreciation and amortization of existing assets and future purchases. Project Financial Planning: Enables driver-based planning for internal projects, for example in IT, marketing and R&D; supports planning of headcount, revenue, expenses and capital by project. Strategic Modeling (cloud only): This module is the cloud version of Hyperion Strategic Finance; used for high-level financial target setting and scenario modeling including funding (debt vs. equity), debt scheduling, cash flow planning, and mergers & acquisitions. Page 5 of 10

6 Hyperion Planning and PBCS/EPBCS can be integrated with a range of data sources including Oracle and other vendors accounting and ERP systems. Budget and forecast data can be sent back to the ERP. Both the on-prem and cloud applications offer drill-back to the underlying general ledger or other detail, if needed. Oracle s solutions are well integrated with Microsoft Excel through Oracle s Smart View Add-In, to provide easy reporting and ad hoc analysis in a familiar spreadsheet environment with almost no learning curve. Hyperion Financial Reporting (HFR) is an option for creating and distributing formatted financial statements to management and the Board of Directors. Adaptive Insights Business Planning Cloud (Adaptive Planning) The Adaptive Insights Business Planning Cloud (Adaptive Planning) was designed and built as a cloud planning solution and is recognized as a leader by market research firms such as Gartner and Forrester. Offering robust functionality for planning and reporting, Adaptive Planning has been gaining prominence as a solution for midsize and large enterprises. In 2018, Adaptive Insights was acquired by cloud ERP vendor Workday. Adaptive Planning s ease of use enables collaboration across the organization and provides the agility to update models as business needs evolve. The solution unifies workforce planning, operations planning, sales planning, project-based planning and financial planning. Operational planning can be customconfigured to include models for particular business needs including, for example, capacity planning, profitability modeling, product planning, marketing planning, facilities planning, and more. Individual groups can plan and model their own aspects of the business at the needed level of detail, and then these plans can be federated into an integrated enterprise model. Adaptive Planning s cloud platform is based on a multi-tenant, secure and redundant foundation. Proprietary Elastic Hypercube Technology enables scalable and intelligent aggregation, scenario planning, reporting and analytics. User input and reporting can be done through a web browser, Microsoft Excel, or mobile devices. Interactive dashboards are included, to report performance data and analytics visually across the organization. Robust workflow management and role-based security help keep the planning process on track. A process tracker provides visibility into tasks and deadlines, gives visual indicators of completion, and keeps users informed with threaded conversations. Visual Model Overview provides a graphical representation of the model and allows administrators and users to understand the model and data flows in a single view. The system provides a complete audit trail, tracking what was updated, when, and by whom. Page 6 of 10

7 Adaptive Planning integrates with leading ERP, HR and CRM systems including Workday, Oracle, SAP, PeopleSoft, NetSuite, Sage Intacct, MS Dynamics, and Salesforce. Open, standards-based APIs allow for importing data from any source while also allowing for exporting budgets, plans, and forecasts back to external systems, including reporting tools like Tableau or Qlik. Oracle Essbase with Applied OLAP s Dodeca (On-Prem and Cloud) Purpose-built solutions are great for automating and managing a planning process that follows a mostly standardized methodology. However these applications must, by design, predetermine which common methods to support and features to include in order to serve a wide a range of customers. While some degree of customization is possible, customizing could take more than a little effort to develop and revise down the road as business needs dictate. SaaS solutions come with a particular risk of having significant customizations break without warning when the vendor makes routine software updates. If the nature of your business and its planning needs require unique modeling a more flexible approach, Oracle Essbase combined with Applied OLAP s Dodeca can deliver a great solution. Essbase is a well-established multidimensional analytic tool that s become popular with Finance departments across all industries to support financial analysis, scenario planning and management reporting. Essbase enables sophisticated business and financial modeling, is very well integrated with Microsoft Excel for reporting and write-back, and stores data centrally so all users have access to one version of the truth. Essbase and Dodeca, from Applied OLAP, Inc., together provide a powerful combination of technologies to support user-friendly, enterprise-wide planning and reporting. Dodeca is an application development environment that s designed to work with Microsoft technologies including Excel and take advantage of Essbase s modeling and calculation capabilities. It also works with relational databases (for example Microsoft SQL Server) to provide even greater versatility. While fully leveraging Essbase s underlying multidimensional data store and modeling engine, Dodeca can also deliver functionality that a relational database is better suited for, blending the best of both technical worlds into a full-featured solution that can address unique or very detailed operational planning requirements. Dodeca brings a range of features to the table including: Reporting and input templates that are built once and centrally maintained, and easily available to thousands of users enterprise-wide Write-back to Essbase and relational data stores Ability for users to add and store commentary Drill-through to data sources Audit logging to provide tracking and accountability Page 7 of 10

8 Automated processing of updates and distribution of reports One of our clients replaced a legacy planning system with an Essbase/Dodeca solution that significantly streamlined planning and reporting for 1,000 users worldwide. This solution delivers reporting and planning functionality that meet complex requirements, while being easy to use and maintain. Essbase is now available in the cloud, as part of Oracle Analytics Cloud (OAC). OAC is a Platform-as-a- Service (PaaS) and pricing is based on metered usage, so you pay only for what you use. Dodeca has been adapted to work just as well with the cloud version of Essbase as with the legacy on-prem version. Leverage the Cloud and Keep Your Legacy Applications If you still use the legacy on-prem versions of Hyperion Planning, Essbase or Dodeca and you aren t planning to move to the SaaS or PaaS versions soon, you can still benefit from the easier management and lower costs offered by the cloud. Your existing applications can be moved off internal servers to be hosted in either a private or public cloud infrastructure. There are several advantages with this approach. You don t have to exchange your existing software licenses for cloud subscriptions, and you don t have to make significant changes in your current customized applications or data integrations. There is no disruption to users, as the planning solution is merely shifted from one computer or virtual environment to another. A little effort might be needed to update and test automated processes, but overall it s a relatively easy and quick transition. Page 8 of 10

9 How Can Analysis Team Help? You ve got several options to choose from, and the choice may not at first appear easy. Analysis Team can help you make the right decision and deploy an effective planning solution, based on your company s current and future planning needs and IT strategy. Our services include: Helping you decide which application is best for you, and whether to go on-prem or cloud, given your planning needs, IT strategy and business goals Updating your existing models and data integrations to reflect current and upcoming analysis, reporting and planning needs Designing and implementing a new planning solution by working with you through all the steps from start to finish, including business requirements assessment, organizational alignment, solution development and deployment, training and ongoing support Migrating your current on-prem planning application to the cloud, or migrating your on-prem solution to external cloud hosting Plan to succeed! Links for more information: 2017 FP&A Survey How Relevant is Your Budget? Association for Financial Professionals (AFP) Oracle Hyperion Planning Oracle Planning and Budgeting Cloud Service (PBCS) Oracle Essbase Page 9 of 10

10 Oracle Analytics Cloud (OAC) Applied OLAP, Inc. s Dodeca Adaptive Planning from Adaptive Insights (a Workday company) About Analysis Team, Inc. Founded in 1995, Analysis Team is a leading provider of Business Intelligence (BI) and Enterprise Performance Management (EPM) consulting services, delivering solutions that support business performance analysis, financial planning and management reporting. More information is available at. Our software alliance partnerships include: Copyright 2019 Analysis Team, Inc. Page 10 of 10