Hear that noise? It’s the sound of hearts sinking throughout industry and commerce as the annual budgeting marathon rolls around. In something like 86 percent of companies Excel is the de facto planning tool, ubiquitous but at the same time disliked for its lack of flexibility, inability to support what-if questions, vulnerability to data entry errors and the way it can seem to suck days, weeks and even months of management time into a black hole as people struggle to make an essentially fine worksheet application support a key business function that it was never intended to support.
It is only going to get worse. Budgeting will surely continue to require ever yet more detail, more integration, not less. In many sectors there is increasing recognition that once a year is not enough, especially in volatile times: resources must be allocated optimally if margins are to be maintained, so a more granular frequency is seen as superior to the annual snapshot. Rolling forecasts promise essential and more nuanced intelligence for enterprises that want to be faster and smarter at reacting to changing market conditions.
But if Excel is already creaking under the strain of the once a year budget round, how will it fare in the new world of constant budgeting? Companies that have looked into the abyss and recoiled in horror are increasingly turning to dedicated Corporate Performance Management (CPM) solutions. These are built from the ground up to integrate with existing IT, and because they automate key process they enable planning cycles to be shortened and carried out at a higher frequency, with ad-hoc analyses, reports and short-term forecasts generated and distributed quickly without the need to switch between different systems.
Users are finding that deployment of a dedicated CPM solution not only makes budgeting significantly easier but also enables upstream sales planning to be seamlessly integrated into mainstream business intelligence. Scenario calculations, simulations, ‘what if’ analyses and liquidity planning can be created at the push of a button according to regions, products, customers, seasons and other key variables.
In addition to supporting such multidimensional sales planning, a truly comprehensive CPM solution suitable for active business management will feature four further key elements: integrated financial planning and flexible cost centre planning, tight integration with Excel, convenient workflows with transparent visualisation, as well as secure mobile access.
If profit and loss, financial and balance sheet planning operate as a closed circuit and data inputs have an immediate effect on all areas of planning, users are able to gain a properly informed, pseudo-real-time view of company performance. For efficient cost centre planning, predefined logic enables users to plan all cost centres and account details within a chart of accounts while also including them in the overall planning. It is also very helpful if the solution allows data to be calculated based on values from the previous year or forecast values. Seasonalisation and indexing should be carried out automatically.
It is important that the solution allows cost centre planning to be managed centrally, yet allows decentralised access. It should enable users to monitor top-down and bottom-up processes, as well as carry out comprehensive analyses at position, account or receipt level. Furthermore, changes in cost centre planning should be displayed immediately. Other important must-haves include scenario calculations and ‘what if’ simulations based on sales, costs, financial data and KPIs. In addition, it should be possible to carry out ad hoc analyses, hit lists, benchmarks, automatic target/actual comparisons, year-on-year comparisons or aggregations.
Another bonus provided by a well-conceived solution is data consistency. It will provide automated interfaces between different databases to speed up data transfers and minimise the risk of deviations. The broader the range of source systems a solution supports beyond simply SAP or Microsoft then the more useful it will remain as the enterprise IT ecosystem evolves.
Mobile functionality too is a must-have for many enterprises so that activity is not time-limited or physically constrained. The planning solution must support data analyses and individual reports for specific user groups via easy-to-use mobile applications for smartphones and tablets. Important functions that should be included are drag & drop, drill-down and roll-up, as well as automatic report distribution. To ensure maximum security, it is particularly important that user rights can be managed centrally.
The consistent support of planning processes by a professional planning solution ensures efficient, high-quality planning, as well as a high level of user acceptance. Intuitive input forms and assistants guide users through data imports from source systems and provide them with a constant overview of all structures and transaction data. The comprehensible and transparent visualisation of analyses and evaluations via dashboards is another feature encouraging users to make use of the extensive functionality of planning solutions. The end result is that more granular planning can be undertaken, leading to better-informed management decisions and a more efficient and competitive enterprise.
The 10-point checklist. What a state of the art planning solution should look like:
- Support the business in the way it already works – not force disruptive process changes.
- Offer a high degree of standardisation. Important features include sophisticated planning functions, data distribution and aggregation, forecasting, parameter and structure simulation, workflow and commenting functions.
- Allow swift implementation.
- Support bottom-up, top-down and hybrid planning strategies.
- Include a comprehensive and integrated tool-set for analysis, reporting and dashboards, including management reports, plan/actual comparisons and deviation analyses.
- Include comprehensive ERP support so that data can be transferred seamlessly.
- Support sophisticated forecasting and simulation options so that all ‘what if’ scenarios can be tested.
- Support multi-year planning and strategic planning of different business areas, as well as risk management.
- Be intuitive and easy to use.
- Come from a vendor on the same wavelength as you. You are going to be partners for quite some time.