Maximising your FP&A activities

Automation is one of the key benefits of using a tool like Planning Analytics, but it is not a complete solution – you cannot entirely replace human involvement with business performance management tools and, ultimately, machine learning.

The system brings speed, accuracy in following rules and capability with repetitive processes and undoubtedly these are all benefits in freeing up your team’s most important resource – time. What the machine can’t replicate are the ‘grey hair and grey matter’ side of things; knowledge and experience combined with the ability to exercise judgement and display creativity. These human qualities are essential and must come directly from your FP&A team, no system will be able to imitate them.

With the current business environment in a state of constant flux, allocating the right resources to the right areas couldn’t be more crucial. The correct balance of the best of human and machine qualities needs to be found to survive and thrive in the coming months and beyond.

More bang for your forecasting buck

Part of achieving this balance will involve automating as many inputs as possible to allow you to get more from your resources. If all your calculations are systemised, your team can focus on the areas which require their nuanced attention, rather than spending their time performing processes which can be easily handled by the machine.

For instance, one of our clients, a large international retailer, is spending a lot of their time working manually on specific supplier forecasts. The areas which are likely to have the biggest impact on the business in the current situation are receiving an enormous amount of attention with daily calls and the team diving into the detail to get a full understanding of the latest best estimate of what is going to happen that day or week. However there are other forecasts within their model which are entirely automated.

This is a great example of reserving human creativity and judgement for the most impactful areas. The business is using scenario planning where it is likely to make the most difference to the results of any decision making and letting the system take care of other areas. The general rule of thumb is that 20% of your drivers will have the biggest impact on your overall forecast. So it’s those areas where you need to apply the human attention and intervention and the other 80% can be automated.

The difference between identifying and solving problems

The machine element of your FP&A activity can tell you if your forecast is inaccurate. Your system can recognise patterns and show where a model is failing. What the machine can’t do is explain why. Yes, the system learns and evolves, but it’s no match for human experience and understanding in analysing an issue, establishing the cause and innovatively designing a more effective model as a replacement.

Automation saves time and money but the ability for human intervention to override a forecast that isn’t working hard enough is crucial. If you’d like to know more about getting the balance right and making the most out of your FP&A activity with Planning Analytics, get in touch with us today.