What happens when you ask ‘why’? If you’re lucky, you get an answer. And that answer will probably lead to more questions. Are you in a position to access the information you need to keep answering those questions?
Our clients are. Take Robertson Group, who, thanks to Planning Analytics, can follow lines of questioning all the way down to individual line items on invoices. All of the information that they have access to is scaled up to a top-level picture, but they can unpick it and interrogate it from all angles.
Consider the operation of a factory, manufacturing goods. When it comes to month end, the business has cash in the bank, finished items in stock, sales that have been made and orders that have come in. At the point of final analysis, the company has made either more or less money than expected.
Now the questions start:
- But why?
- Which product has performed better or worse than expectation?
- Did that product perform better because it cost less to manufacture; because they charged more for it; or because those variables were fixed and a higher volume of units were sold?
- Why did it cost less? Why were they able to charge more? Why were they able to sell more? Who bought more units?
And on and on. If you have the ability to continue to answer the questions.
Joined up data
If your FP&A team are using a spreadsheet-based system, they won’t be able to keep asking why until you reach the final answer that will drive profitable decision making. This depth of analysis requires a multi-dimensional system, functionality offered by the cubes used by TM1 in Planning Analytics.
A single spreadsheet containing the volume of items sold and the price charged will not link easily to the rest of the numbers underlying the products, leaving your team with basic data but none of the drivers behind it. If all of the contributing numbers can be drawn on and factored in by the system to provide the answers they need to keep asking questions, they gain the ability to continue drilling down until they reach valuable insights.
Answer the FAQs
Inevitably, the same questions will get asked again and again by other functions within your organisation. Once your FP&A team have access to the repeating, standard answers they can display those results in accessible tables and graphs within Planning Analytics’ dashboard function in Workspace. Suddenly, people across your business have access to the information that will drive their decision making without needing to come to the finance function to ask the questions in the first place. And when they become curious and want to look more closely at what’s behind those answers, FP&A have the ability to drill down again. All the answers they provide are connected to the wider data source and so can be pulled apart and looked at from every direction.
Giving the commercial parts of the business the ability to ask why, furnishes them with the power of discovery. They can stop asking ‘what’ and start to interrogate the reasoning behind the numbers, examining the drivers behind the results.
The reality behind the assumptions
Every business will use averages at some stage of their forecasting and planning processes. In complex operating models it’s almost impossible to avoid making assumptions to create some fixed values. What’s important is retaining the ability to ask why and to determine what would happen if certain steps were taken. With assumptions in place, if your FP&A team run a scenario with an amended input, the resulting outcome isn’t going to be based on a real-time picture. For instance, if an average has been taken for a unit cost, how many times across the last month did the reality deviate from the assumption?
Does your FP&A team have access to connected data sets to allow them to provide answers to the following?
If we’re operating within a certain tolerance 60% of the time, what would it be worth to the business if we could hit that 100% of the time? Why aren’t we doing it now? If the unit price isn’t actually fixed and is instead a function of a number of variables, what’s going on with those variables?
All organisations use assumptions, the power lies in being able to reach, top-down, the true data behind them and question it until you discover the answer that will drive profitable decision making.
Small changes, big impact
Having access to this forensic level of detail and being able to examine all the numbers at the lowest level, can be extremely valuable. Take the example of Robertson Group: they can drill from Planning Analytics into their ERP systems to component price within a project or contract. If that cost is incorrect, then even a single screw can have a genuine cumulative impact on the top-line numbers. A correction to an individual item’s price at the granular level, when factored in across numerous projects and then scaled up, has a compounding effect.
When results are coming down to margins, the ability to drill down becomes crucial. If you are highly attuned to every risk and opportunity and maximising the potential available, being able to access answers quickly and take decisive action can make all the difference. Get in touch today to discover the difference Planning Analytics could make to your ability to follow your curiosity and reach the insights you need to drive profitable decision making.