It's that time of year again – when quarter- and year-end obligations have finance departments frantically crunching numbers to wrap-up their annual reports and create plans for the upcoming year. Some endure the same budgeting, planning and forecasting frustrations year after year, including too many spreadsheets and lack of strategic insight, with little or no plans to make things better for the next cycle. Why fall victim to Einstein's definition of insanity (doing the same thing over and over again and expecting different results) when there's so much more to gain from taking charge of your planning?
1) Timely, accurate plans and reports
Planners are often plagued by disjointed information from various sources and multiple spreadsheets, where no "single version of the truth" exists and for all the numbers piling up, there's no supporting text. As a result, they spend a great deal of time consolidating and reconciling data, which is half the job but takes up 100% of the time. Many planners experience the misfortune of completing a plan weeks or even months too late, negating its validity and rendering the idea of replanning as conditions change totally impossible. It's a vicious cycle that doesn't yield a lot of value to the organization.
A software-enabled planning process can address these problems by providing a single, unified entry point for all data, thus shortening the time it takes to consolidate and reconcile reports, make plans, and create forecasts. In the Aberdeen Group's recent research, "Improving S&OP with Planning and Forecasting Technology," which you can download free until December 31, 2012, IMAX's SVP of Finance and Planning shared that their previous reporting and planning process took "weeks to close out a quarter and monthly reports were a logistical impossibility." Once arcplan stepped in to power their financial planning, the team at IMAX was able to consolidate information and quickly compile monthly reporting, quarterly forecasts, and accurate, timely annual plans. This led to the kind of dynamic planning and "what if" scenario analysis that Aberdeen says results in increased revenues and profits. arcplan enabled IMAX's finance team to provide the accurate, on-time plans that are the basis for sound decision-making at the company.
2) Alignment with corporate strategy/goals
Though financial planning is one of the cornerstones of corporate planning, plans from various business units contribute to the overall success of a company. In his blog post on Rethinking Budgeting for 2013, Robert Kugel of Ventana Research recounts the lack of coordination of plans between business units, and the negative impact it may have on the organization's goals. For instance, sales and operational plans may be updated weekly or monthly while financial plans might be submitted on an annual basis. This results in plans that are out of sync with corporate goals and contributes to diminished effectiveness of the overall organization.
According to Kugel, a critical first step towards alignment with corporate goals is a better budgeting process – one that's agile, able to respond to a changing business environment, and supports a comprehensive management style. A good budgeting process is not just seen as a to-do at the end of the year, never to be viewed again. Rather, good financial budgets and forecasts should support the corporate strategy and can serve as points of reference throughout the year for management teams to make operational decisions.
I'd say the number one best practice used in leading companies is linking budget development to corporate strategy so all team members have a clearer understanding of strategic goals and can work towards achieving those goals.
Admittedly, the end of a fiscal year can be demanding time for finance leaders with all the extra work that comes along with year-end reporting and planning. Think about how technology (beyond spreadsheets) can make your planning process smoother, alleviate many of your annual headaches, and provide perks throughout the rest of the year. Ultimately, our customers find that implementing a technology solution like arcplan improves planning from every angle, saves time, and results in budgets that are valuable and contribute to improved decision-making year-round.
arcplan Edge, our budgeting, planning and forecasting solution, shortens budgeting cycles by 50% or more, adapts to your existing planning cycle (not the other way around), and supports collaboration across the organization. Learn more about its integrated reporting, dashboards, workflow and analysis capabilities that give your planners more time to make strategic decisions in this brief video >>