Any crisis, whether worldwide or impacting a single organization, tests an executive team’s ability to seize a fleeting opportunity, address an existential problem or mitigate future risks. Global turmoil highlights the need for the financial planning and analysis (FP&A) group to quickly deliver action-oriented advice and analysis that enables executives and managers to confidently make data-driven decisions. To do so, many FP&A groups will find that using the right technology will enable them to streamline time-consuming tasks so they can concentrate on analysis and planning that supports actionable decision making.
Organizations must confront three critical deficiencies to improve their responsiveness to swiftly changing external conditions:
Continuous planning uses technology to address these three deficiencies.
“Continuous planning” is the term Ventana Research uses to describe a high participation, collaborative, action-oriented approach to planning and budgeting built on frequent, short planning sprints. It enables organizations to improve the accuracy of their plans because refinements are made at shorter intervals. Short planning cycles enable companies to achieve greater agility in responding to market or competitive changes. Continuous planning is a methodology that redefines the role of FP&A in an organization into a role that is more strategic and better aligned with operations. It’s the most direct way of making FP&A a partner with the entire company in addition to its standing as a core capability of the finance department. Technology is the key to making this methodology practical.
Unfortunately, our Business Planning Benchmark Research finds that only 12% of organizations can fully explore all relevant contingencies in their planning process. Just 32% can understand the financial and operational implications of their sales plans. And fully 58% of organizations have a limited or no ability to measure trade-offs in assessing contingencies. Few companies can take an action-oriented, data-driven approach to evaluating and managing contingencies and scenarios, and this indicates a limited ability to quickly adapt to changes in the economy or the competitive landscape. One reason organizations lack this ability is that they don’t use technology that makes it possible for them to plan and budget with agility.
Technology enables FP&A leaders to play a more strategic role because it cuts the time spent on managing data, wrangling spreadsheets and hand cranking reports. Using the right software empowers FP&A professionals to spend their time doing what they were hired to do: analyze and provide guidance. Technology also can make planning and budgeting much easier for business leaders and budget owners because it can substantially cut the time it takes to create and update plans. Technology allows managers and executives to explore and understand the operational and financial implications of different scenarios. Having the ability to plan and understand the impact of different developments enables operating managers and executives to consider alternatives to find a more optimal approach. It helps them to make better decisions faster and more consistently. Continuous planning is the key process that supports the action-oriented decision making that improves agility and makes the difference in how organizations respond to challenges.