Is Excel holding you back in lockdown?

The defining characteristic of those organisations which will make it through the current Covid-19 crisis will undoubtedly be agility.

The ability to anticipate developments as they emerge; the mechanisms in place to act quickly; and the capability to respond decisively to evolving conditions.

As the first economies start to reopen and emerge from lockdown situations, thoughts around the globe are undoubtedly turning towards exit strategies. The main issue facing companies is the volatility and uncertainty present in almost every variable and driver making up their financial forecast. In a week when the price of US crude turned negative for the first time in market history and suppliers were forced to pay buyers to take barrels off their hands due to oversupply, it’s clear that markets have a long way to go before a return to ‘normal’ is seen.

Ordinarily, financial models use the past to predict the future. But it will be impossible for models to take recent events into account – there are too many exceptional circumstances. Instead, the finance function will be required to run scenarios based on what they think will happen.

If your finance team is reliant on MS Excel, their key tool is only capable of dealing with changes in two dimensions or through pivot tables. But with so many variables present and so much instability, when modelling in a restrictive environment, many of the drivers are going to have to be assumed as fixed or averaged.

We’ve talked before about the pain of working in Excel and how blunt a tool it is when simplifications have to be applied to multiple variables. The resulting restrictions are undoubtedly a barrier to agility for your business.

Consider the issue from the perspective of a clothing manufacturer with a global supply chain distributing to sales outlets worldwide. All of the following must be taken into account:

• Which markets will open next, and when?
• What state will the retail outlets in each market be in when they reopen? Will they be able to sell at full price or will it be necessary to discount?
• What existing stock are you holding, and where?
• Which production sites will return to operation next, and when?
• Will there be an ongoing impact on production costs? Will this vary across sites?
• What will the impact be on transport times and costs?
• What will the availability of raw materials be like? What will the impact on costs be?

That’s a lot of variables – even at the global level.

What if your FP&A team were able to work in as many dimensions as they needed to incorporate all of these variables into a single model? What if this were possible in an environment where new scenarios could be mapped out at the speed of thought? What if this capability meant that for the above example it was possible to drill down and model scenarios at local, regional, national and global levels?

What if this capability could be implemented fast and with no change required to existing systems?  And what if cost wasn’t a barrier?

This isn’t too good to be true, it’s a very real possibility for every business, including SMEs. Whilst some of our clients are operating with the full Planning Analytics enterprise system behind them, thanks to the new release of the IBM® Planning Analytics Digital, companies of all sizes and budgets can now access the power of this tool.

At minimal cost, you will have the capability to work through multiple potential eventualities, decide on the appropriate course of action and move quickly. You have the opportunity to drive truly profitable decision making through tapping into the agility and speed of Planning Analytics, allowing you to adapt as new information emerges and to weather the current storm.

If you’d like to hear more about Planning Analytics Digital or find out what support we can provide you when using the tool, get in touch today.