Ventana Research Analyst Perspectives

The Planning Center of Excellence

Posted by Robert Kugel on Dec 20, 2022 3:00:00 AM

In the face of a very uncertain future, companies have been discovering the value of rapid planning and budgeting cycles. As events unfold, they’re changing expectations for the future significantly on a daily or weekly basis. However, even when the world returns to a steadier state, companies will benefit from making their planning and budgeting processes faster, easier, more relevant, more strategic, more agile and more accurate.

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Topics: Office of Finance, IBP, Business Planning, CFO, Integrated Business Planning

The Bottom Line Is the Bottom Line

Posted by Robert Kugel on Apr 17, 2020 5:39:15 PM

The Chief Financial Officer can enable her or his finance department play a more strategic role in company operations by adopting what I call profitability management. In the interest of time I’ve made this a very high-level description that’s intended to be just an introduction to the topic. Profitability management is a cross-functional effort. It integrates finance and sales to achieve an optimal balance of revenue and margin objectives. It’s an analytics-based approach designed achieve higher sales and fatter margins. Why should the CFO drive a profitability management initiative? The main reason is that it will improve the company’s profitability and competitiveness. The bottom line is the bottom line.

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Topics: Office of Finance, Continuous Accounting, Integrated Business Planning, CEO, CFO, Financial Performance Management, Foreca

Fortune Favors the Prepared

Posted by Robert Kugel on Apr 7, 2020 5:20:14 PM

I like Louis Pasteur’s observation that “fortune favors the prepared mind.” So-called black swan events happen regularly and can have a very negative effect on a business. Of course, risk is inherent in any commercial undertaking; organizations don’t succeed by being overly cautious and reckless ones usually fail after awhile. Those that are consistently successful are ones that manage risk intelligently. That is, they correctly identify vulnerabilities, avoid the decisions and situations where risks outweigh the benefits, insure the risks that are economically insurable and quickly mitigate the impact of negative events. They are resilient in the face of change because they are adaptable.

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Topics: Office of Finance, Continuous Accounting, Integrated Business Planning, CEO, CFO, Financial Performance Management, Foreca

Self-Describing Data Powers B2B Blockchain Distributed Ledgers

Posted by Robert Kugel on Feb 15, 2018 7:22:37 AM

The use of blockchain distributed ledgers in business processes is now a common theme in many business software vendors’ presentations. The technology has a multitude of potential uses. However, presentations about the opportunities for digital transformation always leave me wondering: How is this magic going to happen? I wonder this because the details about how data flows from point A to point B via a blockchain are critically important to blockchain utility and therefore the pace of its adoption.

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Topics: Planning, Predictive Analytics, Forecast, FP&A, Machine Learning, Reporting, budget, Budgeting, Continuous Planning, Analytics, Data Management, Cognitive Computing, Integrated Business Planning, AI, forecasting, consolidating

Predictive Finance Organizations Are More Valuable

Posted by Robert Kugel on Feb 12, 2018 4:31:44 AM

Ventana Research uses the term “predictive finance” to describe a forward-looking, action-oriented finance organization that places emphasis on advising its company rather than fulfilling the traditional roles of a transactions processor and reporter. Technology is driving the shift away from the traditional bean-counting role. The cumulative evolution of software advances will substantially reduce finance and accounting workloads by automating most of the mechanical, rote functions in accounting, data preparation and reporting. (I recently summarized these in a “Robotic Finance”)

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Topics: Planning, Predictive Analytics, Forecast, FP&A, Machine Learning, Reporting, budget, Budgeting, Continuous Planning, Analytics, Data Management, Cognitive Computing, Integrated Business Planning, AI

Prophix – Financial Performance Management for Midsize Organizations

Posted by Robert Kugel on Dec 12, 2017 5:47:08 AM

Prophix is an established provider of financial performance management (FPM) software for planning and budgeting, forecasting, analysis and reporting, and managing the financial close and consolidation process. Its eponymous software is designed specifically for midsize companies or midsize divisions of larger corporations. These organizations are a distinctive segment of the market in that they have almost all the functional requirements of large enterprises but have fewer resources to apply to these critical tasks. Fortunately, the evolution of information technology over the past decade has been especially beneficial to midsize customers, bringing them expanded capabilities, substantially better performance and greater automation of routine tasks at an affordable total cost of ownership.

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Topics: Planning, Office of Finance, Reporting, Budgeting, Consolidation, Continuous Planning, Analytics, Business Intelligence, Collaboration, Financial Performance Management, Integrated Business Planning, accounting close, Price and Revenue Management, Work and Resource Management, Sales Planning and Analytics

Workday Planning Improves Control and Visibility

Posted by Robert Kugel on Nov 21, 2016 8:58:42 AM

Ventana Research recently awarded Workday a 2016 Technology Innovation Award for its newly released application, Workday Planning, because it simplifies and streamlines the budgeting and planning processes while facilitating collaboration, deepening visibility into spending and enabling tight fiscal control. These capabilities can help a variety of user organizations in several ways.

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Topics: Big Data, Marketing, Office of Finance, Budgeting, Controller, In-memory, CFO, Workday, demand management, Financial Performance Management, financial reporting, FPM, Integrated Business Planning

Steelwedge Enables Actionable and Continuous Planning

Posted by Ventana Research on Dec 16, 2015 10:19:32 PM

Supply and demand chain planning and execution have grown in importance over the past decade as companies have recognized that software can meaningfully enhance their competitiveness and improve their financial performance. Sales and operations planning (S&OP) is an integrated business management process first developed in the 1980s aimed at achieving better alignment and synchronization between the supply chain, production and sales functions. A properly implemented S&OP process routinely reviews customer demand and supply resources and “replans” quantitatively across an agreed rolling horizon. The replanning process focuses on changes from the previously agreed sales and operations plan; while it helps the management team understand how the company achieved its current level of performance, its primary focus is on future actions and anticipated results. Adoption of S&OP has increased as software to support the process has become more powerful and affordable and as a growing list of companies demonstrated its value in producing meaningfully improved business results. Even without adopting a full-scale S&OP management approach, companies can benefit from better coordination and collaboration between their supply and demand functions. Software plays an important role here, too, in facilitating this coordination and collaboration.

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Topics: Planning, SaaS, Sales, Sales Performance, Supply Chain Performance, Forecast, Human Capital, Mobile Technology, Supply Chain Planning, Operational Performance, Analytics, Business Analytics, Business Collaboration, Business Performance, Cloud Computing, Financial Performance, Sales Performance Management (SPM), Sales Planning, Supply Chain, Demand Chain, Integrated Business Planning, SCM Demand Planning, S&OP

Tidemark Enables More Effective Business Planning

Posted by Robert Kugel on Nov 17, 2015 10:27:58 PM

Tidemark Systems offers a suite of business planning applications that enable corporations to plan more effectively. The software facilitates rapid creation and frequent updating of integrated company plans by making it easy for individual business functions to create their own plans while allowing headquarters to connect them to create a unified view. I coined the term “integrated business planning” a decade ago to highlight the potential for technology to substantially improve the effectiveness of planning and budgeting in corporations, and it remains true that integrating business planning can produce superior results. Companies that maintain direct links between functional or departmental plans more often have a planning process that works well than others. Our next-generation business planning benchmark research shows that two-thirds (66%) of those that maintain such links have a planning process that works well or very well, compared to 40 percent that copy information from individual plans into an overall plan and just 25 percent in which plans have little or no connection.

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Topics: Planning, Sales Performance, Supply Chain Performance, Customer Experience, Human Capital, Marketing Planning, Reporting, Budgeting, Operational Performance, Analytics, Business Performance, Customer & Contact Center, Financial Performance, Business Performance Management (BPM), Business Planning, Financial Performance Management (FPM), Demand Planning, Integrated Business Planning, Project Planning

Host Analytics Modeling Cloud Simplifies Planning and Reporting

Posted by Ventana Research on Jul 10, 2015 6:04:28 AM

Our benchmark research on next-generation business planning finds that a large majority of companies rely on spreadsheets to manage planning processes. For example, four out of five use them for supply chain planning, and about two-thirds for budgeting and sales forecasting. Spreadsheets are the default choice for modeling and planning because they are flexible. They adapt to the needs of different parts of any type of business. Unfortunately, they have inherent defects that make them problematic when used in collaborative, repetitive enterprise processes such as planning and budgeting. While it’s easy to create a model, it can quickly become a barrier to more integrated planning across the business units in an enterprise. As I’ve noted before, software vendors and IT departments have been trying – mainly in vain – to get users to switch from spreadsheets to a variety of dedicated applications. They’ve failed to make much of a dent because although these applications have substantial advantages over spreadsheets when used in repetitive, collaborative enterprise tasks, these advantages are mainly realized after the model, process or report is put to use in the “production” phase (to borrow an IT term).

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Topics: Planning, Predictive Analytics, Marketing Planning, Reporting, Sales Forecasting, Budgeting, Customer Performance, Operational Performance, Analytics, Business Analytics, Business Collaboration, Business Performance, Financial Performance, Business Planning, Demand Planning, Integrated Business Planning

Adaptive Insights Highlights Importance of Strategic Finance

Posted by Ventana Research on Apr 30, 2015 10:24:16 AM

Adaptive Insights held its annual user group meeting recently. A theme sounded in several keynote sessions was the importance of finance departments playing a more strategic role in their companies. Some participating customers described how they have evolved their planning process from being designed mainly to meet the needs of the finance department into a useful tool for managing the entire business. Their path took them from doing basic financial budgeting to planning focused on improving the company’s performance. This is one of the more important ways in which finance organizations can play a more strategic role in corporate management, an objective that more finance organizations are pursuing. Half of the companies participating in our Office of Finance benchmark research said that their finance organization has undertaken initiatives to enhance its strategic value to the company within the last 18 months.

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Topics: Planning, Predictive Analytics, Human Capital, Marketing, Reporting, Sales Forecasting, Budgeting, Customer Performance, Operational Performance, Analytics, Business Analytics, Business Collaboration, Business Performance, Financial Performance, Business Planning, Supply Chain, Demand Planning, Integrated Business Planning, Project Planning

Integrated Business Planning Is More Effective

Posted by Ventana Research on Feb 24, 2015 8:02:12 PM

Ventana Research recently released the results of our Next-Generation Business Planning benchmark research. Business planning encompasses all of the forward-looking activities in which companies routinely engage. The research examined 11 of the most common types of enterprise planning: capital, demand, marketing, project, sales and operations, strategic, supply chain and workforce planning, as well as sales forecasting and corporate and IT budgeting. We also aggregated the results to draw general conclusions.

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Topics: Big Data, Planning, Predictive Analytics, Sales, Sales Performance, Social Media, Supply Chain Performance, Human Capital Management, Marketing, Office of Finance, Reporting, Budgeting, Controller, Customer Performance, Operational Performance, Business Analytics, Business Performance, Cloud Computing, Financial Performance, In-memory, Workforce Performance, CFO, Supply Chain, capital spending, demand management, Financial Performance Management, financial reporting, FPM, Integrated Business Planning, S&OP

Making Business Planning More Accurate, Effective and Useful

Posted by Robert Kugel on Feb 5, 2015 8:09:52 PM

Business planning includes all of the forward-looking activities in which companies routinely engage. Companies do a great deal of planning. They plan sales and determine what and how they will produce products or deliver services. They plan the head count they’ll need and how to organize distribution and their supply chain. They also produce a budget, which is a financial plan. The purpose of planning is to be successful. Planning is defined as the process of creating a detailed formulation of a program of action to achieve some overall objective. But it’s more than that. The process of planning involves discussions about objectives and the resources and tactics that people need to achieve them. When it’s done right, planning is the best way to get everyone onto the same page to ensure that the company is well organized in executing strategy. Setting and to a greater degree changing the company’s course require coordination. Being well coordinated in this case means being able to understanding the impact of the policies and actions in your part of the company on the rest of the company.

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Topics: Big Data, Planning, Predictive Analytics, Sales Performance, Supply Chain Performance, Human Capital, Marketing, Office of Finance, Reporting, Sales Forecasting, Budgeting, Operational Performance, Analytics, Business Analytics, Business Collaboration, Business Performance, Customer & Contact Center, Financial Performance, Business Planning, Supply Chain, Demand Planning, Integrated Business Planning, Project Planning, S&OP

Tagetik Advances Disclosure Management for Office of Finance

Posted by Robert Kugel on Jul 16, 2014 9:06:01 AM

Tagetik provides financial performance management software. One particularly useful aspect of its suite is the Collaborative Disclosure Management (CDM). CDM addresses an important need in finance departments, which routinely generate highly formatted documents that combine words and numbers. Often these documents are assembled by contributors outside of the finance department; human resources, facilities, legal and corporate groups are the most common. The data used in these reports almost always come from multiple sources – not just enterprise systems such as ERP and financial consolidation software but also individual spreadsheets and databases that collect and store nonfinancial data (such as information about leased facilities, executive compensation, fixed assets, acquisitions and corporate actions). Until recently, these reports were almost always cobbled together manually – a painstaking process made even more time-consuming by the need to double-check the documents for accuracy and consistency. The adoption of a more automated approach was driven by the requirement imposed several years ago by United States Securities and Exchange Commission (SEC) that companies tag their required periodic disclosure filings using eXtensible Business Reporting Language (XBRL), which I have written about. This mandate created a tipping point in the workload, making the manual approach infeasible for a large number of companies and motivating them to adopt tools to automate the process. Although disclosure filings were the initial impetus to acquire collaborative disclosure management software, companies have found it useful for generating a range of formatted periodic reports that combine text and data, including board books (internal documents for senior executives and members of the board of directors), highly formatted periodic internal reports and filings with nonfinancial regulators or lien holders.

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Topics: Big Data, Mobile, ERP, Human Capital Management, Modeling, Office of Finance, Reporting, Budgeting, close, closing, Consolidation, Controller, Finance Financial Applications Financial Close, IFRS, XBRL, Analytics, Business Analytics, Business Intelligence, Business Performance, Financial Performance, Governance, Risk & Compliance (GRC), CFO, compliance, Data, benchmark, Financial Performance Management, financial reporting, FPM, GAAP, Integrated Business Planning, Profitability, SEC Software

Anaplan Springs Forward with Winter Release

Posted by Robert Kugel on Apr 4, 2014 8:36:21 AM

Anaplan, a provider of cloud-based business planning software for sales, operations, and finance and administration departments, recently implemented its new Winter ’14 Release for customers. This release builds on my colleagues analysis on their innovation in business modeling and planning in 2013. Anaplan’s primary objective is to give companies a workable alternative to spreadsheets for business planning. It is a field in which opportunity exists. Our benchmark research on this topic finds that a majority of companies continue to use spreadsheets for their planning activities. Almost all (83%) operations departments use spreadsheets for their plans, as do 60 percent of sales and marketing units. Yet the same research shows that satisfaction with spreadsheets as a planning tool is considerably lower than satisfaction with dedicated planning applications. But despite general agreement in companies that the planning process is broken and spreadsheets are a problem, companies seem reluctant to break the bad habit of using spreadsheets. This conclusion suggests that either switching to dedicated software hasn’t been easy enough or that the results of doing it have not been compelling enough to motivate change. Anaplan intends to address both of these issues.

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Topics: Big Data, Performance Management, Planning, Predictive Analytics, Sales Performance, Supply Chain Performance, Marketing, Office of Finance, Operations, Reporting, Budgeting, Controller, Operational Performance, Business Analytics, Business Performance, Cloud Computing, Financial Performance, In-memory, Workforce Performance, CFO, Sales Planning, Financial Performance Management, financial reporting, FPM, Integrated Business Planning

Tidemark Unifies New Generation of Business Planning Software

Posted by Robert Kugel on Nov 1, 2013 6:56:27 AM

Tidemark announced the release of the Fall 2013 version of its eponymous cloud-based application that my colleague assessed earlier in 2013. This new release adds capabilities for labor planning and expense management as well profitability modeling and analysis. These two areas of planning and analysis are common to all businesses. The new release adds features that enhance the software’s ability to do sales forecasting, initiative planning and IT department planning. The company continues to refine its modeling capabilities to make it easier for people engaged in the planning process to translate their expectations and concerns into a quantified view of the future. For example, users now can build models using natural-language modeling. The objective is to eliminate the need for help from business analysts or experts trained in the use of a tool and immersed the details of the IT plumbing, such as the metadata used for specific general ledger accounts or operational data.

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Topics: Big Data, Performance Management, Planning, Predictive Analytics, Sales Performance, Supply Chain Performance, Office of Finance, Reporting, Controller, Operational Performance, Analytics, Business Performance, Cloud Computing, Customer & Contact Center, Financial Performance, In-memory, Workforce Performance, CFO, Tidemark, Financial Performance Management, financial reporting, FPM, Integrated Business Planning

CEOs and Executives Need Business Planning Software

Posted by Robert Kugel on Oct 22, 2013 10:19:24 AM

Business planning is a new software category. These applications enable senior executives to integrate all the plans of business units into a single, integrated view, which helps them have more accurate plans, do more insightful what-if planning, achieve greater agility in reacting to changing business and economic conditions, and execute plans in a more coordinated fashion than was possible. Business planning software is intended for CEOs and COOs, who are not well served by current capabilities. Business planning software enables executives and managers to understand both the operational and the financial consequences of their actions, but it emphasizes the things that the various parts of the business focus on: units sold, sales calls made, the number and types of employees required, customers serviced and so on. Lines of business already do this but in a fragmented fashion using desktop spreadsheets circulated within silos via email. Business planning software provides a platform to support modeling in individual business units, individual planning processes and visualization of the impacts of changes in what-if scenarios. It offers a central data repository for all plans; our benchmark research shows the advantage of this approach: Companies that directly link individual business unit data to an integrated plan get more accurate results. To be specific, 22 percent of those with such links have very accurate budgets compared to just a handful with less direct links and none that employ summarized data.

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Topics: Big Data, Performance Management, Planning, Predictive Analytics, Office of Finance, Reporting, Budgeting, Controller, Operational Performance, Business Analytics, Business Collaboration, Business Performance, Cloud Computing, Financial Performance, In-memory, Workforce Performance, CFO, Financial Performance Management, financial reporting, FPM, Integrated Business Planning

Oracle Hyperion Products Challenged by New Generation of Expectations

Posted by Robert Kugel on Oct 16, 2013 7:22:36 AM

Oracle continues to enrich the capabilities of its Hyperion suite of applications that support the finance function, but I wonder if that will be enough to sustain its market share and new generation of expectations. At the recent Oracle OpenWorld these new features were on display, and spokespeople described how the company will be transitioning its software to cloud deployment. Our 2013 Financial Performance Management Value (FPM) Index rates Oracle Hyperion a Warm vendor in my analysis, ranking eighth out of nine vendors. Our Value Index is informed by more than a decade of analysis of technology suppliers and their products and how well they satisfy specific business and IT needs. We perform a detailed evaluation of product functionality and suitability-to-task as well as the effectiveness of vendor support for the buying process and customer assurance. Our assessment reflects two disparate sets of factors. On one hand, the Hyperion FPM suite offers a broad set of software that automates, streamlines and supports a range of finance department functions. It includes sophisticated analytical applications. Used to full effect, Hyperion can eliminate many manual steps and speed execution of routine work. It also can enhance accuracy, ensure tasks are completed on a timely basis, foster coordination between Finance and the rest of the organization and generate insights into corporate performance. For this, the software gets high marks.

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Topics: Big Data, Mobile, Planning, Social Media, ERP, Human Capital Management, Modeling, Office of Finance, Reporting, Budgeting, close, closing, Consolidation, Controller, driver-based, Finance Financial Applications Financial Close, Hyperion, IFRS, Tax, XBRL, Analytics, Business Analytics, Business Intelligence, Business Performance, CIO, Cloud Computing, Financial Performance, In-memory, Oracle, CFO, compliance, Data, benchmark, Financial Performance Management, financial reporting, FPM, GAAP, Integrated Business Planning, Price Optimization, Profitability, SEC Software

It’s Past Time for the Next Generation of Business Planning

Posted by Robert Kugel on Oct 11, 2013 12:17:50 PM

Business planning as practiced today is a relic, a process hemmed in by obsolete conceptions of what it should be. I use the term “business planning” to encompass all of the forward-looking activities in which companies routinely engage, including, for example, sales, production and head-count planning as well as budgeting. Companies need to take a fresh view of all these, adopting a new approach to business planning that while preserving continuity makes a substantial departure from what most companies do now. Currently, in most organizations the budget is the only companywide business plan. However, while necessary for financial management and control, budgets are not especially useful for running an organization.

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Topics: Big Data, Planning, Predictive Analytics, Sales Performance, Social Media, Supply Chain Performance, Office of Finance, Reporting, Budgeting, Controller, Operational Performance, Business Performance, Financial Performance, In-memory, Workforce Performance, CFO, Financial Performance Management, financial reporting, FPM, Integrated Business Planning

Rising Rates Will Catch Companies Flat-Footed

Posted by Robert Kugel on Feb 13, 2013 10:37:03 AM

One of the important lessons company executives should have learned over the past 15 years is that it’s dangerous not to do contingency planning, a subject that I’ve written about before. By this I mean real, think-outside-the-box contingency planning (not just extrapolating), which is especially important when doing long-range planning. The past decade or so has been punctuated by periods of elevated volatility in financial and product markets, and there’s a good probability it will occur again in predictable yet improbable ways. The dot-com boom and its resulting bust as well as the real estate bubble and collapse were in part liquidity-driven events. Many people recognized the artificiality of the rise in values during both of those boom times. There were naysayers questioning the longevity of the upturns, but as they continued unchecked and proved the skeptics wrong, most investors, analysts and advisors grew complacent and unwilling to consider truly unfavorable scenarios. By not planning for a bust, companies and individuals were not in position to react as swiftly and intelligently as they could have.

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Topics: Big Data, Planning, Office of Finance, Reporting, Budgeting, contingency, currency, driver-based, Business Analytics, Business Collaboration, Business Performance, Financial Performance, Financial Performance Management, Integrated Business Planning

Why Maturity is Important for More Effective Planning and Budgeting

Posted by Robert Kugel on Dec 28, 2012 9:10:02 AM

Ventana Research does benchmark research that assesses the maturity of organizations across four dimensions: people, process, information and technology. We examine business issues along those dimensions because we recognize the interconnected relationships among them. Especially in larger companies, data issues such as accuracy and accessibility are often a root cause of poor performance of a core function. It may be a factor in such areas as poor customer service, sales execution or operations planning, to name just three.  Addressing only the people-related issues of some challenge a company faces (such as communications, training or management style) may produce positive results in the short run, but these gains are likely to fall short of their potential or prove to be transitory unless companies tackle related process, technology and information problems at the same time. Our comprehensive approach is the foundation for our research, and what makes our benchmark research different and relevant to executives and managers.

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Topics: Big Data, Planning, Sales Performance, Supply Chain Performance, Office of Finance, Reporting, Budgeting, driver-based, Operational Performance, Business Performance, Customer & Contact Center, Financial Performance, Workforce Performance, Financial Performance Management, Integrated Business Planning

Adaptive Planning Helps the University of Central Florida Plan Faster and More Accurately

Posted by Robert Kugel on Dec 18, 2012 11:25:39 AM

When they were first introduced three decades ago, electronic spreadsheets provided a major advance in corporate planning compared to the paper spreadsheet-and-adding-machine systems they replaced. However, time passes and, as our research shows, desktop spreadsheets often hamper productivity because they were designed for personal productivity, not for managing repetitive, collaborative, enterprise-wide processes such as financial planning. The finance organization at the University of Central Florida’s College of Medicine was grappling with this reality.

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Topics: Big Data, Planning, Human Capital Management, Office of Finance, Reporting, Budgeting, driver-based, Operational Performance, Business Performance, Cloud Computing, Financial Performance, Workforce Performance, Financial Performance Management, Integrated Business Planning

Longview Helps 3M Shape Its Future in Business Planning

Posted by Robert Kugel on Dec 14, 2012 11:47:16 AM

Effective planning has always been a challenge for companies, and it’s all the more so today. Even when companies deploy dedicated planning applications, they often do not or cannot use them to full advantage. I had a chance to learn more about 3M Corp. use of business planning in our recent 2012 Leadership Awards, who is the diversified global manufacturer of consumer and industrial products, several years ago acquired a dedicated planning application, but because the system could not scale to handle all of its planning contributors, it was forced to collect data from its worldwide business units using Excel templates. Desktop spreadsheets impose severe constraints in the planning process and do not readily handle the complexities of a large multinational firm, such as intracompany allocations, multiple currencies and changes in organizational structure. Modeling both product and financial elements is difficult and, for a company of 3M’s size, the processes do not scale well. The planning process was therefore prolonged, complex and could not readily adapt to change.

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Topics: Big Data, Planning, Sales Performance, Supply Chain Performance, Human Capital Management, Office of Finance, Reporting, Budgeting, driver-based, Operational Performance, Business Performance, Customer & Contact Center, Financial Performance, Workforce Performance, Financial Performance Management, Integrated Business Planning

The Right Software is Crucial for Effective Planning

Posted by Robert Kugel on Nov 27, 2012 9:39:43 AM

I’ve been examining how corporations plan and budget for more than decade. One clear pattern that has emerged is the difficulty that using desktop spreadsheets imposes on the process. Ventana Research recently published findings from our trends in business planning benchmark research, and the research once again confirms this observation. It shows that companies that use dedicated applications are consistently more satisfied (and much less dissatisfied) with the software they use than users of spreadsheets. Twice as many said their third-party planning application performs very well in financial and cash-flow forecasting. While one-third (32%) said their dedicated application performs the complex task of compensation planning very well, just 7 percent of spreadsheet users say so. Dedicated applications also have capabilities that spreadsheets lack; those include easily integrating data from multiple systems, drilling down on demand to understand the underlying causes of variances in reviews and performing extensive what-if planning. All of these enable more accurate planning.

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Topics: Big Data, Planning, Sales Performance, Supply Chain Performance, Office of Finance, Reporting, Budgeting, driver-based, Operational Performance, Business Performance, Customer & Contact Center, Financial Performance, Workforce Performance, Financial Performance Management, Integrated Business Planning

What’s Wrong with Today’s Planning and Budgeting

Posted by Robert Kugel on Nov 15, 2012 11:12:24 AM

People have been complaining about the budgeting and planning processes in their organizations for decades. If you’re old enough, you may recall President Carter’s failed attempt to use something called zero-based budgeting to impose discipline in federal outlays. (In his first year in office the federal government reported a whopping $54 billion deficit.) Some complaining is almost inevitable, but some reflects the one-way nature of the process. People spend time on creating a budget and don’t feel they get enough back from their time spent.

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Topics: Big Data, Planning, Sales Performance, Supply Chain Performance, Office of Finance, Reporting, Budgeting, driver-based, Operational Performance, Business Performance, Customer & Contact Center, Financial Performance, Workforce Performance, Financial Performance Management, Integrated Business Planning

Business Planning Benchmark Shows No Improvement in How Companies Plan and Budget

Posted by Robert Kugel on Nov 13, 2012 10:42:39 AM

Organizations engage in a range of forward-looking activities. Sales organizations have pipelines to forecast sales. Manufacturing organizations set and reset demand plans and near-term production schedules, often in response to longer-term production plans that determine what they will make and where and how they will make it. Logistics people plan inbound and outbound shipments. Marketing departments plan advertising and promotion campaigns. HR departments project staffing requirements and associated salary and benefit costs. A lot of planning goes on in any business, but most of it is done in business silos and little of it is integrated, so companies spend a lot of time on planning but get less out of the effort than they should. We recently completed our integrated business planning benchmark research, which followed similar research we completed in 2008. The research shows that companies have done little to mature their planning processes over the past four years.

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Topics: Big Data, Planning, Sales Performance, Supply Chain Performance, Office of Finance, Reporting, Budgeting, driver-based, Operational Performance, Business Performance, Customer & Contact Center, Financial Performance, Workforce Performance, Financial Performance Management, Integrated Business Planning

Rethinking Budgeting for 2013

Posted by Robert Kugel on Sep 7, 2012 11:16:57 AM

Budget season is about to open at most companies that operate on a calendar year, so this is probably as good a time as any to rethink the process. Almost all companies will undertake the construction of a budget this year the same way they did it last year, despite widespread complaints that it is a monumental waste of time. One major reason why budgeting never changes is that it isn’t important enough to be worth serious rethinking. Another reason is that too many vested interests are aligned with the status quo, especially because compensation is tied to budgets. Despite this, I think companies can do better, evolving the process from a finance-centric activity to one that serves the needs of broader business interests as well.

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Topics: Big Data, Planning, Sales Performance, Office of Finance, Reporting, Budgeting, Controller, Operational Performance, Business Performance, Financial Performance, CFO, Compensation, cash management, FPM, Integrated Business Planning

How to Start Integrating Business Planning

Posted by Robert Kugel on Jul 26, 2012 10:56:59 AM

Usually, just figuring out how to start the process of change is a major barrier to improvement in business. I think that’s especially true when it comes to integrated business planning (IBP). I started using that term six years ago to differentiate that process from financial budgeting and the many other forward-looking activities used in companies. IBP applies to a longstanding objective: bringing together the disparate strands of forward-looking activities across a corporation to foster internal alignment, enhance agility and therefore increase financial returns and improve strategic position. Especially in larger companies, fragmented planning efforts prevent companies from achieving these goals. They miss opportunities to sell more, incorrectly allocate their resources to less productive or less profitable activities and react too slowly to changing market conditions.

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Topics: Big Data, Planning, Sales Performance, Supply Chain Performance, Office of Finance, Reporting, Budgeting, driver-based, Operational Performance, Business Collaboration, Business Performance, Customer & Contact Center, Financial Performance, Workforce Performance, Financial Performance Management, Integrated Business Planning

Tidemark Reaches the Starting Gate

Posted by Robert Kugel on Jan 3, 2012 11:50:33 AM

My colleague Mark Smith and I recently chatted with executives of Tidemark, a company in the early stages of providing business analytics for decision-makers. It has a roster of experienced executive talent and solid financial backing. There’s a strategic link with Workday that reflects a common background at the operational and investor levels. As it gets rolling, Tidemark is targeting large and very companies as customers for its cloud-based system for analyzing data. It can automate alerts and enhance operating visibility, collaboratively assess the potential impacts of decisions and support the process of implementing those decisions.

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Topics: Big Data, Data Warehousing, Master Data Management, Performance Management, Planning, Predictive Analytics, Sales Performance, GRC, Budgeting, Risk Analytics, Operational Performance, Analytics, Business Analytics, Business Collaboration, Business Intelligence, Business Mobility, Business Performance, Cloud Computing, Customer & Contact Center, Data Governance, Data Integration, Financial Performance, In-Memory Computing, Information Management, Mobility, Workforce Performance, Risk, Workday, Financial Performance Management, Integrated Business Planning, Strata+Hadoop

Kinaxis Users Deal with Supply Chain Complexity

Posted by Robert Kugel on Oct 27, 2011 2:53:55 AM

I recently attended Kinaxis’ users’ group meeting and learned some interesting things. The company, which has been around since 1995, provides software for large corporations with complex supply chains. Over the past decade its product has evolved well past its roots as a material requirements planning (MRP) support tool. It is now an analytics suite that facilitates supply and demand planning, analysis and optimization with a focus on sales and operations planning (S&OP). This is a discipline that is much talked about but less well practiced, done effectively by only a handful of very large companies (Cisco, for example) and smaller ones that have defined their functional strategy around S&OP and logistics management. In our S&OP benchmark research, we assessed the degree to which companies have a broad cross-functional representation in the process (a critical aspect of an effective S&OP effort) by asking which parts of the business were involved. When it comes to five of the most important ones – executive management, manufacturing, operations, sales and finance – our research showed that only 21 percent of companies have four or five participating, while 45 percent of companies have none or just one.

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Topics: Planning, Sales, Sales Performance, Supply Chain Performance, Office of Finance, Budgeting, Kinaxis, Operational Performance, Business Analytics, Business Collaboration, Business Performance, Cloud Computing, Financial Performance, Supply Chain, demand management, Integrated Business Planning, S&OP

Mining Its Business, Alight Partners with Scope Systems

Posted by Robert Kugel on Sep 14, 2011 9:27:22 AM

Alight has announced that it is partnering with Scope Systems to provide the mining industry with planning and financial reporting systems tailored for extraction companies. Scope creates ERP solutions for companies engaged in mining, drilling and natural resource exploration.

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Topics: Planning, Sales Performance, Office of Finance, driver-based, Operational Performance, Business Analytics, Business Performance, Financial Performance, Integrated Business Planning, Spreadsheets

Rolling Forecasts Are a Good First Step toward Smarter Financial Planning

Posted by Robert Kugel on Sep 6, 2011 9:54:45 AM

I recently participated in a panel discussion about the rise in the use of rolling forecasts in corporate planning. I’m not surprised by this trend; I have encouraged it. Ever since the financial crisis started three years ago, I’ve been writing that companies should rethink how they plan and budget to respond to increasing business volatility. Rolling forecasts are useful because they continually extend the formal planning horizon out more than a year rather than having it stop abruptly at the end of a company’s fiscal year. They can be the right first step in improving the effectiveness of a company’s budgeting process, but ultimately I believe that organizations need to adopt a better approach to planning – what I refer to as integrated business planning. Moreover, companies that want to adopt a rolling forecast approach must first make important changes to their planning and budgeting processes to make them leaner, more focused and faster. 

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Topics: Big Data, Performance Management, Planning, Sales Performance, Social Media, Supply Chain Performance, Office of Finance, Budgeting, IBP, Operational Performance, Business Analytics, Business Collaboration, Business Mobility, Business Performance, Cloud Computing, Customer & Contact Center, Financial Performance, Workforce Performance, CFO, COO, Integrated Business Planning

Predictive Analytics Support Human Judgment

Posted by Robert Kugel on Jun 10, 2011 12:17:59 PM

Predictive analytics can be valuable tools for performance management. When the term is applied to planning or forecasting, many people take it to mean the ability to automate plans or forecasts. It’s true that using predictive analytics correctly is likely to enhance their accuracy, but these techniques do not eliminate the need for judgment; in practice, many organizations may realize more value from applying predictive analytics  to assess results than to forecast outcomes. Moreover, as regards performance management the usefulness of predictive analytics extends beyond planning and forecasting. They also can serve to set benchmarks that can be used to assess performance or generate alerts to accelerate necessary action. Although I advise companies to be more aggressive in adopting predictive analytics, I doubt that they will adopt them as fast as they should because of perceptions that the tools are too hard to use and the data too hard to get at.    

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Topics: Big Data, Performance Management, Planning, Predictive Analytics, Sales Performance, Supply Chain Performance, Budgeting, Operational Performance, Analytics, Business Analytics, Business Intelligence, Business Performance, Customer & Contact Center, Financial Performance, Information Management, Workforce Performance, Financial Performance Management, Integrated Business Planning

Budgeting Is So Unimportant

Posted by Robert Kugel on Jun 8, 2011 1:02:14 PM

I think one of best epigrams attributed to Mark Twain is, “Everyone talks about the weather but nobody ever does something about it.” This also has relevance to the situation with corporate planning and budgeting. Bemoaning its lack of value and calling for some sort of change goes back a long way, but few companies have matured their process. In the 1970s something called “zero-based budgeting” was all the rage in business and accounting periodicals. It was energetically advocated by President Carter to counteract the incremental budgeting that made it so difficult for the U.S. Congress to cut spending. (Of course, nothing changed.) Efforts to reform budgeting gathered steam in the 1990s as software vendors began offering dedicated applications designed for planning and budgeting. Even if one doesn’t fully embrace the idea of going budgetless, the book Beyond Budgeting is full of sensible management approaches (such as using league tables for internal benchmarking or using relative rather than fixed measures of performance). Of course, unlike the weather, people can change company practices. Yet when it comes to budgeting and planning, the same old stuff persists even as people like me continue to point out how using the right software can help transform the process into a valuable business tool. I’ve discussed why it’s important to adopt integrated business planning from my research, in which the budget is an automatically generated end product of the process, not the objective itself. And I’ve explained why driver-based planning produces better results. If it were just me advocating change, I might take its absence personally, but there have been scores of people, libraries of books and years of webinars focused on this topic for decades. Why has so little changed? 

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Topics: Planning, Predictive Analytics, Sales, Sales Performance, Supply Chain Performance, Office of Finance, Budgeting, contingency planning, Operational Performance, Business Analytics, Business Collaboration, Business Performance, Financial Performance, CFO, finance, Financial Performance Management, Integrated Business Planning

SAP Advances Enterprise Performance Management in Version 10

Posted by Robert Kugel on May 21, 2011 12:12:30 AM

SAP announced the release of version 10 of its SAP BusinessObjects Enterprise Performance Management (EPM) Solutions suite, an enhanced and updated set of applications and capabilities for executives and managers. In our Value Index assessment of financial performance management suites and my analysis of it last year, Ventana Research gave SAP’s offering the highest score, and this new release builds on that solid foundation that I already assessed in my blog. It has been several years since SAP began acquiring and assembling its performance management and analytical software assets, and the company has progressed to the point where discussing the integration efforts is becoming irrelevant. This release revamps the user interface of the different components to provide a more consistent look and feel – a crucial factor in facilitating training and improving user productivity. Outside of the suite itself, the current release is designed to integrate better with ERP, SAP NetWeaver BW, risk management and BI. In facts it establishes a foundation for finance analytics that I have researched and is essential for doing what I call and have written about in putting the “A” back in FP&A

EPM incorporates a range of financial and performance management functionality, including strategy management, planning, sales and operations planning (S&OP), financial information management, profitability and cost management, spend management and supply chain performance management, as well as finance department process management software for financial consolidation, intercompany reconciliations and disclosure management. These components now have a more consistent user interface and all have been given some enhancements to their functionality especially in the path to supporting the need for I call integrated business planning that SAP has indicated is strategic to its future and use of its in-memory computing technology called HANA.

SAP also has improved integration of EPM with mobile devices like Apple iPad, which allows executives and managers who spend a large portion of their time away from their desks to have access to the information they need in a timely and contextual fashion, and lets them interact with the data to gain deeper understanding of underlying causes and potential outcomes. (My colleague Mark Smith covered mobile business intelligence in this blog.)

Release 10.0 includes the Disclosure Management application, which enables companies to automate the process of preparing external financial reports and regulatory disclosures. This capability will aid the increasing number of public companies in the U.S. that need to file their financial statements with a more complete set of eXtensible Business Reporting Language (XBRL) tags that I already assessed on the importance of automating. Companies can save considerable time using the software by systematizing their data collection, using workflows for managing the assembly of the text that goes into these filings, applying tags to text and data (if necessary) and automating the assembly of text and numbers in the exact format required. Automating this process gives executives more time to review filings and lessens the risk of reporting errors by changing mainly manual processes into a more systematized one. Performing this work in-house rather than outsourcing it gives companies greater control over the process and likely will save them a considerable amount of time following a relatively short learning curve. I provided some insight on this advancement when SAP acquired software assets for this new offering that has now come to market. 

The current release builds enhanced enterprise risk management procedures into the overall performance management process. Outside of financial services, few companies explicitly quantify risk in their planning and performance assessment processes. Too often, managers are evaluated solely on productivity measures and therefore can be given disincentives to weigh risk factors. These risks may be well understood by business unit and divisional managers but are almost never communicated to senior executives. As I noted in a previous blog, this gives rise to agency risk within a company.

Although almost every company is mindful of achieving its profitability objectives, many fall short in coordinating the actions of their various silos and operating units to optimize the trade-offs they must make, especially as events unfold after the annual planning process. Profitability management enables senior executives to analyze and assess alternatives and optimize these trade-offs. 

EPM 10 continues the necessary evolution of the financial performance management suite. It’s not necessary for finance organizations to manage performance and core finance operations using software from a single vendor (and most don’t). However, suites give companies the option of doing so, which can be a less costly way of buying and maintaining this functionality. Finance organizations looking at a consistent user experience and technology for GRC will find SAP BusinessObjects GRC 10 is empowered by SAP EPM 10 capabilities. 

Today, technology is pushing a fundamental shift in how companies use financial performance management software. The increasing availability of in-memory computing (HANA in SAP’s case, which my colleague David Menninger discussed in his blog), cloud computing and mobile devices enables a fundamental shift from today’s once-a-month, accounting-based rear-view-mirror approach to assessing performance via an anywhere, anytime interactive view that blends financial and operating results and provides a richer, more accurate measure of results. In fact my colleague at SAPPHIRE NOW 2011 user conference has already seen how SAP was demonstrating a new dynamic cash flow management on SAP HANA to help advance the efficiency of accounting and financial operations. 

I recommend that organizations considering any component of a financial performance management suite should include SAP BusinessObjects EPM 10 in their list of products to investigate. This application suite can clearly help finance and is a better path than doing what I call the ERP forklift migration

Regards,

Robert Kugel – SVP Research

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Topics: Planning, Sales Performance, SAP, Supply Chain Performance, Sustainability, Forecast, Office of Finance, budget, Budgeting, XBRL, Operational Performance, Business Intelligence, Business Performance, Customer & Contact Center, Financial Performance, Governance, Risk & Compliance (GRC), Information Management, Workforce Performance, CFO, agile, budgeting software, CEO, Corporate Finance, Financial Performance Management, Integrated Business Planning

Alight Does Agile Planning

Posted by Ventana Research on Apr 25, 2011 7:18:58 AM

Alight Planning sells planning and budgeting software mainly to midsize  companies and stresses its software’s ability to support a more effective approach to corporate planning and budgeting. It calls this “agile planning,” a term used to contrast a traditional, highly deterministic method of drawing up and executing plans with an “agile” mindset that is better able to deal with the high level of economic volatility that most businesses confront today. In many respects Alight’s approach is consistent with what Ventana Research refers to as “integrated business planning,” which I have written about as a business priority and an area that I have extensively researched.

 What distinguishes agile planning (and integrated business planning) from budgeting is this: In the end, the purpose of budgeting is to create a fixed budget for the finance department that constrains spending and attempts to hold people accountable to financial results. In contrast, the purpose of agile planning is to create a plan that enables a company to achieve its business objectives and then generate (as automatically as possible) a financial budget consistent with that business plan.

 The most distinctive feature of Alight’s software – an explicit unit-times-rate structure for building plans – does a great job of supporting a more advanced approach to planning and budgeting that is consistent with a performance driver planning methodology. The unit-times-rate method disaggregates the planning of “things” (for example, how many units will be sold and how many sales calls it will take to sell this many units) from the financial consequences of those activities (that is, revenues and cost of selling). Keeping units and rates explicit during the planning process can lead to a more effective allocation of resources. For example, executives can quickly compare average sales per employee by store or region or invoices processed per employee to see if headcounts are appropriate. Keeping units and rates explicit also can make the process of planning and (as important) replanning faster and more accurate because things and their prices are stored and calculated separately. For example, over the course of time, a company may find that its sales funnel model (the description of the progression from lead generation to closing a sale) remains accurate, but the cost of some components (such as an in-person sales call or the structure of sales incentives) changes. This approach also facilitates more effective contingency planning. Continuing the example, sales executives are able to calculate the impact of changes in average travel costs in real time to discuss and determine the best response if those changes come about.

 Moreover, compared to line-item budgeting, the unit-times-rate planning structure is more conducive to keeping everyone in the company focused on the important drivers of the business. It recognizes that the planning process should explicitly project the most important “things” that take place in business (for example, sales calls are made, units are sold and labor hours and materials are consumed) and the financial consequences that stem from these activities (travel expense, revenue and cost-of-sales impacts). When the time comes to compare actuals to the planned results, rather than just comparing accounting figures and trying to divine whether the difference was driven by units, the price of these or some combination of the two, executives and managers can see the explicit factors at work. By contrast, when companies do line-item budgeting, they can waste time on irrelevant items and become distracted from understanding and resolving important business issues (such as a declining close rate) because the drivers are not necessarily obvious.

 Alight Planning also stresses the importance of improving the maturity of a company’s planning process as a way of gaining greater business advantage from the planning process by using driver-based planning (and focusing only on the drivers that have a material impact on a company achieving its goals), integrating actuals into reviews (that is, incorporating operating, CRM, HR and any other relevant information, not just accounting data) and increasing the amount and sophistication of a company’s contingency planning.

 All dedicated planning applications compete with spreadsheets, which our research shows continue to be used by a majority of small and midsize companies. By stressing the need for a more effective approach to planning and budgeting, Alight is making the case for dropping desktop spreadsheets in favor of a dedicated planning solution; we concur with this because desktop spreadsheets are not capable of handling a dynamic, driver-based, operationally focused planning process.

 Alight Planning competes with a range of on-premises and hosted solutions aimed at midsize companies (which we define as those with 100 to 999 employees). These include Adaptive Planning and Host Analytics as cloud-based solutions, IBM Cognos, Infor, Prophix and Tagetek, as well as to a lesser degree, Budget Maestro (which focuses on small business and smaller midsize companies) and Oracle Hyperion and SAP Business Objects (which overlap at the higher end of the midsize spectrum). Alight’s most distinctive positioning against these companies is its focus on the unit-times-rate approach to planning and its advocacy of maturing the process.

 Companies should focus their forward-looking efforts on planning rather than simply budgeting. Our research continues to uncover reasons to use a dedicated application rather than desktop spreadsheets to manage the process so as to achieve the greatest business value for time spent. Some organizations are moving in this direction. For example, in 2010, Ventana Research gave Pittsburgh Mercy Health System our Overall Business Analytics and Performance Leadership Award for its implementation of a more collaborative and interactive, business-focused planning process.  I recommend that organizations that want to make their planning and budgeting process a more valuable management tool use software that will support those efforts. If you’re at a midsize company looking to purchase a dedicate application and gain greater business value from the time spent, I recommend including Alight Planning on your list of software to evaluate.

 Regards,

Robert D. Kugel – SVP Research

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Topics: Planning, Sales Performance, Supply Chain Performance, Forecast, Office of Finance, budget, Budgeting, Business Performance, Financial Performance, Workforce Performance, CFO, agile, budgeting software, CEO, Integrated Business Planning

Putting the “A” Back in FP&A (Financial Planning & Analysis)

Posted by Robert Kugel on Feb 10, 2011 4:32:45 PM

People who perform the financial planning and analysis (FP&A) function in the finance organization put together and update the budgets and forecasts. In many companies, the “A” portion of this activity gets short shrift. That’s because the mechanical process of pulling together and collating the data takes up so much time that very little remains for analysis. The result is that planning and budgeting is a less useful business tool than it could be. Improving FP&A can give executives and managers more insightful analytics and easier access to analytical tools that support more accurate and timely planning and budgeting.

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Topics: FP&A, Finance Analytics, Financial Applications, Business Performance, Financial Performance, CFO, finance, Integrated Business Planning

Integrating Strategic Planning With Jonova

Posted by Robert Kugel on Nov 27, 2010 5:32:32 PM

I’ve focused attention of integrated business planning for the past several years as our benchmark research on business planning and other related topics consistently finds companies are not getting enough of a return on the considerable amount of time and effort they spend on budgeting and planning. Moreover, the current economic climate makes substantive contingency planning more important than ever. Our research finds that there is a great deal of planning going on. Most managers and executives participate in multiple planning exercises, although these are focused on their own business silo and do not have a firm, ongoing connection with other plans. Unfortunately, this leads to a lack of coordination between various parts of the organization because the plans in one area are only vaguely understood by others. Moreover, when changes take place in the future outlook of one part of the business, they are not immediately communicated (or communicated in sufficient detail) to everyone that would benefit from this knowledge. The main form of integrated business planning is the annual budget and the periodic budget review and re-forecast. However, this is relatively short-term and financially focused, usually does a poor job of projecting the operational aspects of a changing business landscape and is not always in sync with the company’s various operating plans. Even when companies do some integrated operational planning, it often does not do a good job of measuring the financial impact of changes in the operational forecast because the models use simplistic financial assumptions that can quickly become outdated.

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Topics: Jonova, Operational Performance, Business Performance, Financial Performance, Financial Performance Management, Integrated Business Planning

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