Envisaging the financial future of the business is not easy but is critical for long term growth and profitability. Organizations with strong OpEx and revenue planning processes and tools are able to make informed business decisions and stay ahead of the curve at all times. However, we see the vast majority still struggling with manual processes, with a high dependency on spreadsheets which results in an error-prone and lengthy planning process. The outcome of such processes is in-consistent and in-accurate forecasts that ultimately lead to poor and ineffective decision-making. The low adoption of AI and analytics also implies that the traditional tools cannot adapt to changing circumstances and factor in business growth and other customer variables.

Re-imagining the finance function

The ability to make frequent adjustments enables better planning and more accurate forecasts. A pre-requisite for revenue and OpEx planning success is the in-built agility to quickly fine-tune in response to unexpected circumstances and market dynamics, as well as the resilience to accelerate revenue goals while aligning organizational execution to executive strategy. Let us look at the groundwork needed to improve multifaceted Revenue and OpEx planning processes:

OpEx optimization

Optimizing operating expenses provides the much-needed visibility into current spending and helps align the same to corporate objectives. It is important to ensure that the spending is against the right investment (people, projects, etc.) and not just another un-planned cost-cutting initiative. An efficient OpEx plan helps identify unnecessary spending and arms leadership with the relevant insight to determine areas that can be enhanced for higher productivity. For many CFOs, people productivity is the single and most common area of concern that contributes to a large portion of the overall organizational OpEx. Optimization efforts involve ensuring the right alignment of people skills to organizational objectives for higher productivity and reduced OpEx.

Designing scalable technology solutions

Even today the Finance function continues to reel under legacy technologies and the slow pace of change.  Many organizations are still locked in a spreadsheet world. While investing in new-age planning and forecasting solutions, organizations should prioritize agility or the ability to adapt quickly to changing business scenarios.  Modern solutions can leverage business drivers, zero-based methodologies, and other means to plan operating expenses and provide immediate aggregation and P&L impact. Most also understand the impact as information is updated, and have a dynamic set of drivers to model revenues and associated expense structures. The ability to evaluate the impact of operating expenses and implement course correction as required, provide real-time aggregation and income statement impact for leadership, and analyze various “what-if” scenarios for insightful decision-making, are some of the other key tenets of modern-day financial planning and forecasting solutions.

Establishing a collaborative culture

Advanced technology solutions will not enable planning efficiency and success if the organization remains embedded in age-old practices with little or no alignment between different business functions. Planning success calls for a strong finance leadership with practices in place to cascade top-down targets and aligns to bottom-up plans for consensus-building and collaboration. CFOs and other visionaries need to align revenue targets to long-term strategic planning and factor in other aspects of geography, product, business unit, etc. Measuring revenue growth and variances, and then building in course-corrections as required, is an organization-wide initiative.

A case in point- Top global insurer drives efficient, decisive action

A fortune 500 insurance company was spending weeks on data compilation. Their fragmented tools and manual processes slowed down decision-making, thus intensifying the competitive pressure to compete, deliver value, serve customers in a timely and efficient manner. Integrating multiple planning processes on a single platform, the enterprise achieved a 25% faster annual planning cycle and 3x faster expense reporting and end-of-month financial statements.

Connected Planning for financial success

Revenue and OpEx planning is one such activity that touches every part of the organisation, connecting people, processes, data, and technology. If executed properly, it has the potential to drive better business decisions and create a competitive advantage for the organization.  Leveraging the right tools to enable vast scenario modeling, predictive and prescriptive analytics can assist organizations to better react to market risks and opportunities and deliver long-term business value.