For long, businesses have built their financial planning and budgets based on past performances, and these budgets have been an essential part of an organization’s overall annual strategy. The increased uncertainty in the current times has placed CFOs under duress to anticipate and react to market changes more quickly and efficiently. Finance organizations are also walking a tightrope with the realization that financial plans, budgets and forecasts need to reflect the current reality and not that of bygone quarters. The typical first-generation planning tools for finance, the likes of Oracle-Hyperion, SAP and IBM (Cognos Planning and then TM1), have not been able to keep pace with the market evolution. They fell out of favor with finance managers and leaders owing to the expensive infrastructure, heavy reliance on IT systems, long implementation times, complex upgrades, and lack of integration capabilities. With financial planning technology having remained stagnant for a long time, very recently business have started to appreciate the need for continuous planning and an access to real-time plans, budgets and forecasts throughout the year.
The continuous struggles of finance teams to deliver timely and relevant insights has led to the evolution of connected planning solutions that integrate people, data and processes across the enterprise. The new systems could easily automate manual data for quick insights to enable business decision-making. Let’s look at how these new solutions take a renewed approach to traditional finance challenges.
A global FMCG organization took a phase-wise approach in their connected planning journey. They started out by mitigating their immediate challenges around revenue forecast, P&L budget, long range plan, and profitability modeling. In the second phase, they connected volume and revenue plans, followed by workforce and project portfolio plans in phase 3. The fourth phase took care of production planning and inventory optimization challenges, and in the fifth phase OpEx and CapEx issues were streamlined. Trade promotion planning was integrated in the sixth phase and then a zero based budgeting initiative was deployed in the final phase.
Connected planning takes organizations on a transformation journey. Starting with immediate pain points, organizations gain efficiency by automating basic financial activities. The next stop on the journey is driving agility by adopting best practices and connecting multiple finance use cases. At the final stage, real transformation happens with the integration of key business units – supply chain, sales, marketing and HR, creating a dynamic, collaborative, and intelligent organization.