Overcoming static planning

Before the current COVID-19 crisis created worldwide disruption, planning on an annual cycle was already becoming a thing of the past.

The focus has been shifting away from this static approach towards more dynamic planning options, allowing businesses to respond to changing circumstances at speed and with real, up to date, insight.

Dynamic planning allows for organisations to concentrate on crucial functions individually, and provides the capability to deal with unknown unknowns – which we’re seeing plenty of at the moment.

Defining characteristics of static planning:

• Functions well in periods of high stability. The finance team can build a plan on January 1^st and there is then a roadmap in place until December 31^st. However, in times of uncertainty, most businesses don’t have the luxury of following a single course for a full year.
• Often reliant on spreadsheets and therefore resource intensive because of the amount of manual intervention required. The unwieldy system makes it hard for the finance team to always provide the answers asked for by the rest of the organisation; the data is all present somewhere but not necessarily immediately accessible in its current form.
• Tends to accompany an organisational dependency on legacy systems. This set-up frequently leads to the belief that because something has always been done in a certain way, there is no alternative available.
• At risk of errors. The combination of spreadsheets and legacy systems leads to increased risk, particularly of human error. One mistake can lead to hours spent rectifying the fault.

How dynamic planning differs:

• The ability to focus on long-term plans and goals is still in place but with the additional benefit of being able to accommodate unforeseen events.
• This is achieved by working in short-term cycles based on a foundation of longer-term plans.
• Rather than trying to use historical precedent to predict long-term futures, uses recent and current information to inform decisions about the near-future.
• The evolving bigger picture is incorporated into plans for the year. The focus on short-term cycles allows for active analysis of the planning efforts and results from the previous period, with learnings being factored back in to the longer-term plan.

This agile form of planning quite obviously requires more than spreadsheets – they are not capable of this level of dynamic planning. New tools like Planning Analytics are necessary to unlock the full potential of this approach and increase the productivity and flexibility of the FP&A function within your business.

You may assume that this type of system comes at an enormous cost and therefore is only available to larger organisations. However, IBM’s new Digital Planning Analytics offering opens up the possibility to companies of all sizes and cash flow levels. For an inexpensive monthly subscription you can have access to multi-dimensional planning capabilities; self-service contribution and dashboards; what-if modelling and sandboxing potential.

Data can be consolidated from any existing operational system and loaded into the software. Your current set-up doesn’t require expensive or time-consuming changes in order to harness the power of Planning Analytics. With the increased functionality, information will be at the fingertips of your FP&A team without the need for any of the prolonged extraction, consolidation and verification tasks so integral to a spreadsheet-based system.

Moving your planning processes from a static approach to a more dynamic outlook will create valuable new insights for your organisation and leave you far better prepared to evolve and adapt to the changing world around you. Get in touch with us today to find out how we can support you on the start of your journey towards greater agility and profitable decision making with IBM® Planning Analytics.