Providing Visibility & Agility: The Key Components of Success in Planning, Budgeting, and Forecastingby Nick Castellina
In my previous post, I discussed the role of spreadsheets in financial planning, budgeting, and forecasting. My key conclusion was that organizations need more substantial technology to facilitate these processes through automation. What I did not discuss was how these technologies provide greater visibility into the data that is essential for successful decision-making as well as the importance of utilizing this data to create forecasts that constantly reflect current business conditions. Today I would like to discuss these themes, but let’s first take a step back to why they are important.
Aberdeen’s 2013 Financial Planning, Budgeting, and Forecasting survey illustrated the top pressures hindering planning processes (Figure 1).
Figure 1: Pressures in Planning, Budgeting, and Forecasting
Source: Aberdeen Group, January 2013
Highlighting the importance of agility, organizations are pressured with volatile markets that make it extremely difficult to forecast effectively. This is compounded by the fact that 25% of organizations reported that their current budgeting process is too long and resource intensive. So organizations are spending all this time and effort, and by the time the planning process is complete, the output is already based on old data.