Have the events of 2020 broken the financial planning process as we know it?

Historically, an annual budget would take months to pull together and then require constant reforecasting, having been rendered obsolete almost as soon as it was finalised.

There’s no question that a 12-month budget that takes six months to create is virtually meaningless in market and economic environments as volatile as those we’re currently facing. The dynamics of 2020 have caused a fundamental shift in the drivers behind many businesses. The models that underpin the planning process have to be looked at very closely to determine the real impact of these lasting changes.

Spreadsheets strangle capability

If your FP&A team is carrying out crucial planning processes within a spreadsheet-driven system, the pains involved in adapting your forecast models in line with ongoing developments is going to be immeasurable. With people currently working remotely, attempting to collaborate and maintain a single version of the truth within Excel is posing even more of a challenge.

The frustration for many organisations lies in the sheer amount of time currently spent on reducing the risk of error and the manual effort this requires. Factor in the impact of the iterative review cycle – which typically results in changes to the assumptions behind the forecast – and you have to account for an entire reworking process on a previously consolidated budget.

By spending most of its time gathering, amalgamating and checking numbers in these manual processes, your FP&A team is wasting a valuable resource – time for analysis. Without this capability, there’s no opportunity to open up conversation and engage the rest of the business in understanding the story behind the numbers.

Time to change the perspective

When the people involved in delivering the numbers presented in the budget – the business units actually tasked with hitting the targets – aren’t part of creating the numbers in the first place, there’s no engagement. This can lead to ‘gaming’ of the goals and, when forecasts aren’t met, it becomes finance’s fault.

Cultivating wider engagement from across the business allows FP&A to develop a better understanding of how functions like sales and marketing actually work and also encourages a greater awareness from these business units of the true financial impact of their actions. With everyone focusing on the reasons behind the numbers and the fundamentals of the drivers, companies can all pull in the same direction with the help of more nuanced and reflective forecasting models in which everyone is invested.

Whereas the classic budgeting approach tends towards a static, backward-looking process, businesses need to adopt a forward-looking, dynamic view if they are to thrive. We’ve previously shared the example of one of our retail clients who are using their rolling forecast as a day-to-day operational tool. With the forecast being used by the business, rather than purely as a measure by which to judge the business, the insight available can start to drive profitable decision making.

Don’t make a bad process more efficient

If you are currently expecting your finance team to deliver from a spreadsheet-based system, then rather than spending time and resource trying to improve upon an inherently inefficient and insufficient process, perhaps now is the time to equip your team properly with access to Planning Analytics.

The system will not only give your staff the capability to run agile forecasts to drive profitable decision making but will also free up their time to be spent on optimising the data and carrying out value-added analysis. IBM’s Planning Analytics on Demand offering has opened this tool up to enterprises of all sizes. Take this opportunity to drive more strategic planning and get in touch today to discover exactly how valuable Planning Analytics could be to you.

Simon Bradshaw

I have worked in finance and business systems development since 2001 and am an associate member of the Chartered Institute of Management Accountants. In 2016 I became a founding member of Spitfire Analytics, a consultancy specialising in IBM Planning Analytics. We are committed to building long-term relationships across all industries. I focus on my CPD through CIMA and IBM badges, ensuring I am always abreast of best practice and developments within the industry.


Spitfire have a depth of understanding not only in Cognos/TM1 technologies, but also in finance and accounting. It is this combination of expertise and their ability to get to the heart of business problems that has resulted in such confidence in their delivery and capabilities. The insight and value-add they have brought is evident.

- Peter Smith, Head of Solution Delivery, Edrington

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