Gartner Corporate Performance Management (CPM) Magic Quadrants 2017 – A New World Order Emerges

Gartner Corporate Performance Management (CPM) Magic Quadrants 2017 – A New World Order Emerges

In my 20+ years of working in the corporate performance management (CPM) market (a.k.a. EPM) I’ve witnessed a lot of change.  But with the shift to the cloud, a new world order has emerged.

The corporate performance management (CPM) market is an established one that has long been dominated by legacy, on-premises solution providers, such as Oracle, SAP, and IBM.  However, in recent years, the market has been shifting to cloud/SaaS as the preferred deployment model for CPM solutions.

Thousands of companies have reaped the benefits of cloud-based CPM solutions – faster time to value, lower cost of ownership, autonomy from IT, and rapid innovation.

Recognizing this shift in the market, Gartner, focused its 2017 Magic Quadrant Research for Financial CPM (FCPM) and Strategic CPM (SCPM) on cloud-only solutions.  The result is a “new world order” in terms of market leadership, where the legacy on-premises vendors no longer dominate.  The next generation of CPM solution providers has emerged.

Planful Recognized as a Leader in Both Cloud FCPM and SCPM

I am proud to report that Planful was recognized as a leader in both the Gartner Cloud FCPM1 and Cloud SCPM2 Magic Quadrant reports.  Moreover, Planful is the only cloud-only vendor recognized as a leader in both CPM MQs.

This recognition follows on other firsts for Planful:

  • 2010: First cloud only vendor to be listed in the Gartner CPM MQ
  • 2013: First cloud only vendor to be named a Visionary in the Gartner CPM MQ
  • 2016: Only cloud only vendor to be listed in both the FCPM and SCPM MQs
  • 2017: Only cloud only vendor named a leader in both the Cloud FCPM and SCPM MQs

Based on Gartner’s commentary, we believe Planful was named a leader in the Cloud FCPM and SCPM MQs based on our experience in the cloud market, our high customer satisfaction ratings, and our ability to address the more complex use cases.

We believe these reports provide strong validation of the breadth and depth of CPM capabilities provided by Planful across multiple CPM domains – including budgeting, planning, forecasting, modeling, financial consolidation, and reporting.

Commenting on the report, Planful CEO Dave Kellogg said, “We are extremely pleased to be in the Leaders Quadrant for both Cloud Strategic CPM and Cloud Financial CPM Solutions this year.  With Gartner confirming the market shift toward cloud-based solutions, it’s a huge validation of our breadth and depth for Planful to be the only pure-play cloud vendor in the Leaders Quadrant for both CPM reports.”

Learn More

Planful is pleased to offer our readers complementary copies of both the Gartner Cloud FCPM and SCPM Magic Quadrant reports. 

Download Report

1Gartner Magic Quadrant for Cloud Financial Corporate Performance Management Solutions, John E. Van Decker and Christopher Iervolino, 29 June 2017.

2Gartner Magic Quadrant for Cloud Strategic Corporate Performance Management Solutions, Christopher Iervolino and John E. Van Decker, 29 June 2017.

Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner’s research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.

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It’s a Wrap:  Planful World 2017

It’s a Wrap:  Planful World 2017

While planning for Planful World 2017 was a huge task, I must say we had a blast welcoming and Planfuling more than 700 EPM rockstars in the iconic home of country music, Nashville.

A year of preparation all led to an amazing event packed full of highlights, insights, customer interactions, and many takeaways to make every attendee’s experience the best it could be.

In case there’s anything you missed, or if perhaps you could not be with us, here’s my rundown of the top 5 highlights from Planful World 2017 – Perform.

#5 – Tic and Tie Went #AWOL

Planful mascots Tic and Tie hit the road to Nashville this year to do a little boot scooting with our attendees at the conference party.  Not only were they a huge hit with our attendees yet again, but were sharing the FP&A love out and about on the streets of Nashville as they discovered all the great things to do in Nashville – from the Grand Ole Opry and the Country Music Hall of Fame to Planful World 2017.

HA World 2017 Tic n Tie.jpg

#4 – Presentations, Workshops, Demos, and More…..

Multiple workshops, presentations, campfire sessions, and demos were major highlights during the event – allowing our attendees to learn more and dive deep into our products.  It was great to watch them in action.  Thank you to all our speakers who filled the agenda with fantastic case studies, practical tips and tricks, and lessons learned for all attendees.  If you missed any of the sessions, they’re available for viewing at www.hostanalyticsworld.com.

#3 – Daymond John’s 5 Shark Points for Success

I get the opportunity to work with many keynote guest speakers, and Daymond John is up there as one of my all-time favorite keynotes.  I am a huge fan of the TV show “Shark Tank.”  In fact, it’s a regular family gathering in our household to watch aspiring people pitch to the Sharks every Friday night, and see what the outcomes will be.  I never thought that one day I would get to meet one of them in person.

To have Daymond at our event was exciting – I couldn’t wait.  What would he be like?  Is he as tough-looking in person as he in on TV?  As it turned out, he was just the opposite.  Not only is he a successful entrepreneur, but also a philanthropist, US ambassador, and family man.  And when he wowed our Finance audience for over 60 minutes – there was not a dry eye in the room.

Put simply, Daymond John emphasized his “5 shark points for success” – set goals, do your homework, Amor, remember you are the brand, and no matter what, keep swimming.  And in them, there’s plenty of wisdom to be found to help us all in whatever we’re doing.  Did I also mention what a super nice guy he is?

#2 – Dave Kellogg Keynote

Every year our attendees look forward to the opening keynote.  They’re always in for a real treat when our CEO Dave Kellogg takes to the stage for the opening of Planful World – and this year he didn’t disappoint.  Highlighting our customers is always a key theme for Dave’s keynote session, and he was head to toe rocking it in Planful customer gear as he kicked off the event.  You can check out his full keynote here, along with all of our other great keynote sessions at www.hostanalyticsworld.com.

HA World 2017 Dave Kellogg.jpg

#1 – Planful World Gives Back + Inspiring Finance Rockstars

Planful World is not just about innovation, learning, and having fun.  It’s also about giving back.  This year, in conjunction with one of our great customers, Thrivent Financial, we helped homeless children have a better night of sleep through supporting one of my favorite charities – Project Night Night.

Attendees stuffed packages that we sent to two Nashville shelters, along with nearly 600 children’s books that attendees donated and brought to the event and displayed onsite for our Planful World Book Drive.  These were boxed up and donated back to Project Night Night to use in future packages for homeless kids.  Thank you to all who supported this great cause!

HA World 2017 night night.jpg

What does it take to be a Finance Rockstar?  Dedication, hard work, love of the job, and a willingness to always share ideas and success with your peers.  We honored 4 individual Finance stars who do just that and, in turn, not only achieve outstanding results in various aspects of their day-to-day jobs, but are strong advocates and support to the Finance community at Planful World.

My warmest congratulations to Reggie Newsome (NPR), Lee Johnston (LT Apparel Group), Ryan Scafidi (Boston Red Sox), and Paula Pouliot (accepted by Nino Storelli of Martin Brower) – thank you for being our customers and all that you do for the Finance community!

HA World 2017 rockstars.jpg

And that’s a wrap for Planful World 2017.  We have already begun planning for next year’s event in Dallas, and I want to take the opportunity to thank all of those who attended the event this year and all of those who participated in so many ways to make it such a success.  Most of all, I love to see and catch up with all the customers who I correspond with during the year, as well as meet new ones at the event.

Thank you all for taking the time out of your busy schedules to be with us at Planful World.  You are all #EPMRockstars!

Watch the video

See you next year in the heart of Dallas – save the date: May 21 – 24, 2018!

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5 Critical Steps in Successful Finance Transformation From Accenture [Webinar Recap]

Predicting the future with perfect clarity is impossible. Who saw Brexit coming? How about the end of brand loyalty or the rise of Snapchat? Accounting for change when everything is changing can make business planning a difficult affair.

And yet, none of this is new. If there’s one unalterable truth about business it’s that change is constant and there will always be new data, new scenarios, and new questions to answer. In an ever-changing corporate world, finance teams have become the first responders. Few are ready to meet the very real demands of that role today, and it’s only going to get tougher in the years to come.

To help close the gap we recently held a webinar with Accenture in which Matt Aldridge, a senior principal consultant with a specialty in corporate financial planning and analysis (FP&A) processes, explained best practices pulled from the firm’s recent survey of U.S. and international companies. Read on for a summary of his findings.

Why Transform Finance?

At a high-level, the call to get finance more deeply involved in the business is less about finance and more about what it means to be a nimble company. Response time is more crucial than ever.

“What’s the goal of transformation? To elevate finance from a backward-looking function focused on capturing and reporting results to that of a forward-looking business partner that captures and analyzes data to assess opportunities and drive new value,” Aldridge said during the webinar.

If that sounds like a tall order, it’s because it is. To do it right, executives and finance teams need to work together and take action in these five areas.

  1. Get the right people involved. Start at the top. Who needs to see the data? Why and for what purpose? When you really dissect and understand how decisions get made, it’s easier to get key executives the information which helps them get to done. Just be judicious. According to Aldridge, most executives at companies large enough to need an enterprise performance management (EPM) platform are looking at between 10-15 key performance indicators (KPIs) “ideally,” he said. “And they won’t all be financial.”
  2. Look at all the drivers of your business. To do that, you need to look at “a well-balanced mix of leading and lagging indicators,” Aldrige said. He’s referring to both prior quarter performance (a lagging indicator) and leading indicators that suggest where demand is headed. What’s a leading indicator? In the auto industry, gas prices help inform consumer buying patterns, They’re a leading indicator that tells carmakers to build more economy cars when gas prices are high, and more SUVs when they’re low.
  3. Align business and finance processes everywhere. Performance management is a “continuous process” that works at every level, Aldridge said. First, you set targets, then you plan, report, and ultimately find and fix gaps. Think of a large logistics company which operates a network of distribution centers. Matching revenue to delivery times could be a crucial indicator, with slips revealing a potential gap in service.
  4. Choose flexible technology for performance management. The right mix can produce “a huge return on investment,” Aldridge said. Key is having tools that allow for proper governance and management of the data used by FP&A teams so there’s one version of the truth instead of 30 Excel spreadsheets in a commingled mess. At that level, automation become possible and finance teams “to get out of Excel … to focus on business partnering,” Aldridge said.
  5. Take a phased approach. Moving from Excel to a more automated and intelligent EPM approach takes time and focus. Decide on your key performance indicators (KPIs). Look at how you get the data today and who needs access, then automate everything that’s not giving you KPIs. That’s finance transformation in action, and it needs to cover all three “dimensions of people, process, and technology” to be effective, Aldrige said of the most consistent finding in Accenture’s research..

Learn More

Watch this on-demand webinar to learn essential steps to prepare for and begin implementation of a practical financial transformation strategy.

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What is the Financial Consolidation Process in the Accounting World?

In the accounting world, financial consolidation is the process of combining financial data from several subsidiaries or business entities within an organization, and rolling it up to a parent company for reporting purposes.

So, exactly what is consolidation and consolidation accounting? In the accounting world, financial consolidation is the process of combining financial data from several subsidiaries or business entities within an organization, and rolling it up to a parent company for reporting purposes.

Financial Consolidation in the Accounting World

By itself, the term “consolidation” simply means to put things together.  But in the accounting world,  “financial consolidation” is a well-defined process that includes several complexities.

Here are the key accounting consolidation steps in the finance consolidation process:

  • Collecting trial balance data (e.g., Assets, Liabilities, Equity, Revenue, and Expense accounts) from multiple general ledger systems, and mapping it to a centralized chart of accounts
  • Consolidating the data following specific accounting rules and guidelines, such as U.S. GAAP or International Financial Reporting Standards (IFRS)
  • Reporting results to internal and external stakeholders

Key financial reports generated from consolidated financial statements include the income statement, balance sheet, and statement of cash flows.

Financial Consolidation is More Than Just Adding Up Numbers

To those who aren’t familiar, financial consolidation might sound like simply adding up numbers—but it’s more than this. In financial consolidation, there are specific calculations and consolidation adjustments made as the numbers are consolidated from the subsidiary level to the parent company level. This includes the following:

  • Foreign currency translation
  • Elimination of intercompany transactions and balances
  • Adjusting journal entries
  • Accounting for partial ownership

There are also different consolidation accounting methods. These types of consolidation accounting can vary depending on the controlling stake a parent organization has in a subsidiary. For instance, if the parent has a controlling interest in the subsidiary (more than 50%), then consolidation accounting is used. In this case, all the subsidiary company’s assets, liabilities, revenues, and expenses are combined into the parent company’s consolidated financial statements.

When a company owns a stake that is less than controlling but still allows it to exert significant influence over the business, it must use the equity method of accounting. Accounting rules generally define a controlling stake as between 20% and 50% of a company.

Under the equity method of consolidation in the financial consolidation process, the parent company reports the investment in the subsidiary on the balance sheet as an asset that is equal to the purchase price. Then when the subsidiary company reports its net income, the parent company reports revenue equal to its share of the subsidiary’s profits. So if a subsidiary has $100,000 in profit and the parent owns 30% of the subsidiary, the parent company would increase the value of the investment asset by $30,000 and record the $30,000 in revenue as an increase to retained earnings.

Using the Right Tool for the Job

In a large enterprise, the financial consolidation process is typically handled by the Accounting department, which is under the supervision of the Controller or VP of Accounting/Reporting, and ultimately overseen by the Chief Financial Officer (CFO).

While financial consolidation and consolidation accounting were done manually for many years, in today’s world there are several types of financial consolidation software used to support financial consolidation and reporting.

  • General Ledger System – works well if an organization has a single ERP system, but becomes cumbersome if there is a need to collect consolidated financial statements and results from multiple systems used by different locations or subsidiaries.
  • Spreadsheets – while these are widely used by Finance and Accounting professionals, they weren’t designed to support a complex process, such as financial consolidation. Loading data from different systems is a manual process. With multiple tabs in a workbook, the spreadsheet can become unwieldy. Undetected errors can occur and spreadsheets don’t provide adequate audit trails regarding changes to financial results in the consolidation process.
  • Purpose-Built Financial Application – purpose-built financial consolidation applications are designed to integrate data from multiple sources, have specific functionality built in to handle the complexities of financial consolidation, and typically have all the required security and audit trails. While these systems have historically been deployed in on-premises data centers, they are now available as Cloud Financial Planning and Analysis Solutions.

More Information

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A View From the Top:  Improving Performance in Finance

A View From the Top:  Improving Performance in Finance

One of the final sessions at Planful World 2017 in Nashville was a panel discussion focused on how to improve the performance of the Finance organization.

Moderated by Andre Lafayette, VP of Product Marketing at Planful, the panelists included two CFOs and three Finance experts from leading system integration firms:

Here’s what they had to say about improving Finance performance.

The Changing Role of the CFO

The role of CFO has become more strategic, a key partner to the CEO.  The CFO and Finance are also becoming a business partner to the line-of-business leaders – HR, Marketing, Sales, and other departments.  This includes helping to drive tracking of the right KPIs and supporting better decision-making across the enterprise.  These groups are looking to the CFO and Finance for guidance on key business decisions.

To fulfill this role, Finance staff need to make sure they have a strong understanding of the business and must organize themselves to ensure alignment between Finance and operations.  It’s also important for Finance to be efficient in doing its day-to-day role and having more time available to perform analysis and drive strategic insights for operating teams.

What Can Finance Organizations Do to Adapt to Change?

Disruption is everywhere.  Finance must leverage technology to become more efficient in its role and to become more agile and competitive.  This is a good time for Finance organizations to step back and look at all the regular tasks they perform and ask why they’re doing it.  One example given was annual budgets.  Are these really necessary?  Many organizations are moving away from annual budgets and managing based on stale information.  Instead, they’re shifting to rolling forecasts.

Robotic process automation.jpgCFOs should look at Finance more holistically.  They should look at day-to-day activities and try to automate as much of the trivial work as possible.  In order to scale and be competitive, Finance needs to be more efficient and analytical.  To do that, Finance organizations should make sure they’re taking full advantage of the technology available to them.  This includes using existing systems and leveraging all available features that can enable efficiency.  Finance must look for opportunities to automate menial tasks through robotic process automation (RPA) and free up Finance for more value-added activities.

Another area of opportunity is to better leverage the data that’s available.  This means integrating and leveraging all internal systems.  While doing this, it’s important not to get lost in managing too much data – it’s about using the right data.  Finance must focus on selecting the right metrics and KPIs to drive the business.

Many managers may say they want dashboards.  But these must provide timely and meaningful information.  A dashboard with stale data is no help.  Instead, managers should revisit metrics and KPIs on a regular basis, adjusting them as needed.

What Are the Key Ingredients to Success?

Enacting change in organizations is hard work.  It often meets resistance.  CFOs need to involve their teams, help them understand the big picture, the long-term vision.  People get nervous when consultants show up to transform Finance.  But Finance transformation is designed to help Finance do its daily jobs better and add more value to the business.  It’s not about eliminating jobs – it’s about changing the nature of jobs and adding more value.  People must get out of their comfort zones, be willing to question the norms, and look at opportunities to do things better.

Alignment of Finance and operations is also key to success.  Finance needs to reach out and help other departments be more effective.  The organization needs to be aligned culturally.  People need to feel empowered to be leaders, drive change, and suggest ideas for improvement.

Adapting Budgeting, Planning, and Forecasting Processes

Long-range planning and target-setting are critical to effective planning.  When it comes to budgeting, companies need to rethink why they’re doing it.  They must embrace more dynamic techniques that align with the fast-changing marketplace.  Rolling forecasts are becoming widely adopted as a way to be more agile.  These can be updated quarterly, monthly, weekly, and sometimes daily.

rolling_budget.jpgAdopting rolling forecasts requires fast and efficient planning cycles.  Data needs to be readily available, and collaboration between Finance and operations needs to be effective.  New technologies such as cloud, mobile, and real-time data are enabling rapid planning.

Planning and forecasting based on internal data is great, but Finance organizations should also leverage external data.  They should look at ways to better incorporate outside data into planning and forecasting.  This could include economic, weather, and other external data – such as the data provided by the partnership that was announced this week between Planful and Prevedere.

Another powerful technique is benchmarking.  Comparing the organization’s processes and metrics to industry averages and competitor practices is important.  This can provide a useful guide in moving the Finance organization forward.

Final Recommendations

Examine and rethink everything you’re doing. One panelist mentioned a technique she referred to as “zero-based reporting.”  This means looking at all the reporting that Finance generates and understanding whether this is really needed.  Are people using the content you’re creating?  Ask them, or stop doing it and see what happens.  Look at who’s receiving information and what will help them be more effective.

Performance scorecarding can be helpful.  Celebrate the groups that are doing well, but focus on the folks that are underperforming.  Then work with them to improve.

Communicate up and down the chain when looking to enact change.  In meetings, argue points with information to support your point of view – don’t rely on opinion.  Building consensus takes a lot of work.  Change agents must socialize ideas with many people, including key influencers or those impacted by proposed changes.  Get buy-in from key stakeholders in advance.  Be ready to address objections when they come up in meetings.

In order to help improve overall enterprise performance, the Finance organization must ensure that it is running efficiently, and is effective in running its own processes.  During this discussion, the panelists offered many actionable tips and recommendations for improving performance in Finance.

To learn more check out the video of this session at Planful World 2017.

Watch the Video

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In recent years, the FP&A function has clearly become the “cool” group within the Finance department.  FP&A is forward-looking and has become a key business partner.

Organizations are increasingly relying on this team to provide the business with the information needed to remain agile – and to react quickly to changes in the business environment.  So what does the day-to-day role of FP&A look like in today’s landscape, and how has it evolved?  How can the executive team best support and invest in the FP&A function?

This was the focus of a recent Argyle/CFO webinar sponsored by Planful.  During the event, a panel of two FP&A experts shared their insights on the current state of the FP&A function, the forces driving an increased need for accurate planning and forecasting, and where the function is going in the future.

The panel included James Myers, Founder and CEO of FP&A Strategy Consulting, and Jennifer Nicholson, Partner at Executive Finance.  Here are some of the highlights of the discussion.

Key Challenges Facing FP&A

There are several challenges facing FP&A in 2017.  The biggest is the level of uncertainly in the global economy and the business outlook.  Of course, there’s more data than ever available to analyze and understand key trends. 

data_integration_bloor.jpgAs a result, FP&A teams are often challenged in gathering, managing, and gaining insights from all of the data that’s available from internal systems, websites, social media, and other sources.  Part of the challenge here is having the time to perform their normal work planning and reporting on the business, doing meaningful analysis, and partnering with key executives across the business. 

How the Role of FP&A Has Changed

FP&A teams have certainly gained more visibility in recent years, and the role has become more important.  It’s no longer just about pulling together the annual budget and reporting on variances.  FP&A teams are now taking the lead in ongoing planning and forecasting, as well as in scenario modeling.  And the techniques they’re employing – such as driver-based planning, rolling forecasts, and predictive modeling – are getting more sophisticated. 

FP&A has become more data-driven, taking a leadership role in supporting strategic planning at the corporate level and across lines of business.  From a reporting standpoint, FP&A can now deliver results to management via graphical dashboards and mobile devices that can put real-time metrics and key performance indicators (KPIs) in the hands of managers, anytime, anywhere.

Being a Better Business Partner

Most FP&A departments are now supporting the lines of business and helping them to improve performance.  From an organizational standpoint, many FP&A groups are assigning their team members to specific functions or businesses – which helps to form a strong bond and provide the opportunity to truly understand the business.  New technologies are also helping here, including some of the reporting tools mentioned earlier (cloud-based planning solutions), as well as analytic applications and tools.   

Investments in FP&A

While many organizations have been adding staff in FP&A, sometimes shifting them from other Finance functions, they’re also investing in technology to improve FP&A productivity.  This includes the following investments:

Cloud-and-Finance-1.jpgCompanies are now better understanding the ROI from investments in Finance technology – including the time and resource savings in processes such as the financial close, planning, and forecasting.  The panelists expect continued investment in analytic tools and cloud-based applications that can complement existing systems, as well as dashboards, and mobile capabilities.  One of the advantages of cloud-based platforms is that they make powerful applications more accessible and affordable to small and mid-sized companies, in addition to large enterprises.

What Lies Ahead – Skill Sets Required

The panelists agreed the future is bright for the FP&A function.  As the focus in Finance continues to shift from back-office support to front-office strategy, FP&A will continue to be the source of analytical support for the entire business.  In larger organizations, it could even evolve into a formal “center for performance analytics” that is a resource for the entire enterprise. 

From a skill set standpoint, FP&A departments will need to continue to train their teams, or add new talent, to beef up their expertise in strategic planning, risk management, data analytics, business acumen, and communications.

Learn More

To learn more, check out the replay of this webinar, titled “The Evolution of the FP&A Function.”

Watch the Webinar Replay

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Finance Transformation –  How to Get Started Using a Maturity Model [Webinar Preview]

Finance Transformation –  How to Get Started Using a Maturity Model [Webinar Preview]

Many Finance organizations today want to transform their departments or enterprises.  But transformation means different things to different people.

It can mean using a new application to streamline financial planning and reporting to allow time for more strategic work. It can also mean realigning the Finance organization to better meet the organization’s needs.

Being in the business, we’re always hearing about Finance transformation and how people are trying to make changes to the Finance function within their own organizations. That’s why we decided to do this webinar.

Join our Upcoming Webinar

Whatever your definition of transformation, as all Finance professionals know, it is always easier said than done.

Join Planful on Thursday, June 15th at 11:00AM PT to learn how to use our EPM Maturity Model. Based on market research and hundreds of implementations, our roadmap and process will get you started on your transformation journey.

After the webinar, you will be able to use the maturity assessment model to understand the current capabilities of your department and organization, create a path to success, and internally make the case for change.

You will be able to answer questions like:

  • Where should I start?
  • In what order should I attack different problems?
  • How can I leverage technology to support transformation?
  • How can I make the business case?

To learn more – register for our upcoming webinar.

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4 Steps to Successfully Implementing Rolling Forecasts | Planful

4 Steps to Successfully Implementing Rolling Forecasts | Planful

Does this scenario sound familiar?  It’s the final month of Q2, and the Finance department will soon be looking at mid-year financial results and comparing them to the original budget.

But at this point, the budget is most likely obsolete due to changing business conditions.  So most of the work is spent analyzing and explaining variances to budget, and not enough work is spent on making mid-course corrections.

To address this issue, many organizations are adopting rolling forecasts as a way to periodically update budget assumptions throughout the year, reallocate resources, and more accurately predict future results.  But managing a rolling forecast process can be difficult when relying on Excel spreadsheets and email.  Thus, many organizations are implementing cloud-based planning platforms to facilitate more dynamic planning techniques, such as rolling forecasts.

Planful recently sponsored an Argyle/CFO webinar on this topic.  The event was moderated by me and featured two experts in the field of financial planning & analysis (FP&A):  Brian Kalish, Founder and Principal at Kalish Consulting, and Larry Maisel, President at DecisionVu Group, Inc.

Here’s what our panel of experts had to say about planning challenges and four steps to successfully implementing rolling forecasts.

Challenges in Planning and 4 Steps to Implement Rolling Forecasts

With increasing volatility in the business environment, it’s more important than ever for organizations to have agility in planning.  This means they must adopt new techniques and tools to remain competitive.  Finance organizations are being asked to do more with the same or fewer resources.  This is driving the need to reduce or eliminate manual processes, and spend more time on analytics and supporting decision-making.

Step 1 – Streamlining Budgeting

Budgeting 123RF-887820-edited.jpgThere are several techniques organizations are using to streamline the annual budgeting process.  One example is using driver-based planning techniques, which put focus on material items that truly impact revenue and expenses while focusing less on the minutiae of budgeting.  Robotic process automation (RPA) tools can help automate manual processes, such as data collection and integration.  Many organizations are implementing rolling forecasts to get a head-start on the annual budget.

From a technology standpoint, organizations are moving away from reliance on spreadsheets and email. Instead, they’re adopting packaged budgeting and planning software applications that include purpose-built functionality and workflow capabilities to facilitate faster budgeting and planning.

Step 2 – Plan Continuously

rolling_budget.jpgMany organizations are now adopting the rolling forecast technique to better adapt to change and set future direction.  This notion of “continuous planning” helps improve decision-making in fast-changing business conditions.  It provides predictive insight for both corporate executives and line-of-business (LOB) managers to improve resource allocations.  The frequency of forecasting varies in different industries and organizations based on their requirements.  This can be semi-annual, quarterly, monthly, weekly, or more frequently if needed.  In a 6-quarter rolling forecast, one emerging best practice is to forecast the next 4 quarters at the monthly level, then 2 additional quarters at the quarterly level.

Step 3 – Adopt Best Practices

Best practices for successfully implementing rolling forecasts is to “teach managers how to fish” – in other words, have them update their own forecasts instead of Finance doing the work for them.  This requires new skill sets in Finance and LOBs, including predictive modeling and how to leverage data.  Finance needs to act as a business partner, supporting LOB executives throughout the business cycle.  Finance should position themselves as helping the LOB perform better.  This can be done by assigning specific staff in Finance to each department or by embedding Financial analysts within the LOBs so that they can gain an in-depth understanding of the business.

For those first starting out with rolling forecasts, don’t try to implement this across the entire enterprise.  A better approach is to start in one area or department, prove the success, then expand into other departments.

Step 4 – Pick the Right Tools for the Job

Cloud-Accounting_1.jpgThe panelists both agreed that spreadsheets and email don’t provide the agility needed to support rolling forecasts.  Software packages purpose-built for FP&A are a better choice, and cloud-based applications are becoming the preferred approach in today’s environment.  The advantages of cloud-based planning applications include faster deployment, improved collaboration, reduced costs vs. on-premises applications, and the fact that cloud applications provide Finance with autonomy from IT.

Learn More

Having moderated many webinars over the past few years, I have to say this was one of the most lively panel discussions I’ve been involved with, and the conversation could have gone on for hours.  To hear for yourself, listen to the replay of “Spotlight on Implementing Rolling Forecasts.”

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Planful World 2017: Daymond John’s 5 Shark Points for Success

Most of us know Daymond John as one of the sharks of Shark Tank, the unscripted ABC primetime drama wherein entrepreneurs pitch for funding from titans of business.

John, founder of FUBU and worth an estimated $300 million, told the gathered attendees at Planful World 2017 how he defines success.

“I always thought success was a bank account. A name on a card. The size of a house. A title. How many friends. How many people acknowledge you. But success is not that. Success is, amid constant change, doing everything you love,” John said from the stage, addressing a freshly caffeinated audience the second morning of the conference.

How do get to do “everything you love?” John laid it out in a high-energy, music-filled, hour-long pitch, taking the audience through a narrative journey of his five “shark points”—ideas forged by over 25 years of seizing opportunities and persevering through mistakes.

S – Set Goals

“If we don’t set goals, they’ll be set for us,” John said. For him, there was no bigger goal than creating the outfit for the world of hip hop and meeting some of his celebrity idols—from Michael Jackson (“a bad man”) to Muhammad Ali (“a bad, bad man”) to Prince.

fubu jersey.jpgJohn has done all that and more, turning his first $40 worth of fabric into a global empire that’s gone on to sell more than $6 billion in apparel worldwide. He couldn’t have done any of it without first setting goals and then doing the hard work to fulfill them, including spending years “slinging Cheddar Bay biscuits” as a waiter at Red Lobster to keep money coming in during FUBU’s startup days.

H – Homework

Your degree of business success is in large measure determined by how much homework you do about your customers and their needs. And you need the “financial intelligence,” as John called it, to properly capitalize on what you know.

Skip this step and you could make a multi-million dollar mistake, as Gap did when it hired rapper LL Cool J to write a song for an ad that included FUBU’s “for us, by us” moniker. Add the hat with the “FB” logo and John’s company had scored an unexpected and 100% free marketing coup.

“Gap paid $30 million to advertise FUBU,” John said. “They didn’t do their homework.” As a result … “kids thought it meant they could get [our gear] at The Gap.” It didn’t take long before John and his partners received a call asking about a deal.

A – Amor

Financial success followed and John said he spent years hanging out with the crowd he’d cultivated, drinking and partying long into the night while missing time with his family. “Isn’t that why we do what we do? For the people that we love? That’s the most important part, I lost that love,” John said.

In the divorce that followed John said he recommitted to connecting with his two young daughters and finding a better balance between work and the rest of his life. He’s also strove to maintain integrity—including turning down the first offer to appear on Shark Tank because the contract wouldn’t allow him to keep a commitment he’d already made to appear on Keeping Up With the Kardashians.

R – Remember You Are the Brand

Having integrity isn’t just about keeping commitments; it’s also about knowing what you stand for. “If you can’t put yourself into 2-5 words, you leave it up to us to interpret,” John said. “They say a jury exonerates or convicts you in the first 30 seconds after seeing you. After that, all they want to do is think about or listen to the things they already know about you.”

The lesson? Information is good, but it’s better to understand motivations and incentives. Analytics in context are always more meaningful.

K – Keep Swimming

Finally, John told the story of how earlier this year he’d gone in to have half his thyroid removed only to learn he had stage 2 cancer. All is well now, but the experience gave him perspective.

“The anethesiologist told me something before I went under: When people lose faith and they’re scared, that’s when it’s a problem. I want you think of something beautiful, something that makes you smile … so I thought of the newest edition to my life, my baby daughter Minka.”

John played a quick video of her thanking the crowd before exiting to a standing ovation and a selfie. The shark and his school, swimming together.

Whether you’re starting a business or helping the CEO navigate a new phase of the company you work for, there’s plenty of wisdom to be found in John’s shark points and the other keynote speakers—including CEO Dave Kellogg and Constellation Research founder and principal analyst Ray Wang.

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What is a Rolling Forecast?

Rolling forecasts are becoming a popular add-on or an alternative to the traditional approach of annual budgeting in organizations.

A rolling forecast is a report that uses historical data to predict future numbers and allow organizations to project future budgets, expenses, and other financial data based on their past results.

The idea is that instead of managing the business based on a static budget that was created in the prior year, rolling forecasts are used to revisit and update budgeting assumptions throughout the year.  This enables organizations to adapt plans and resource allocations based on changes in the economy, the industry, or the business.

In their purest form, rolling forecasts allow organizations to project future results based on a combination of actual YTD financial results and the original budget, or updated revenue and expense forecasts for future periods.  The future forecast period can extend to the end of the fiscal year, but in most cases, the rolling forecast period typically extends out 4 to 6 quarters into the future.  See example below.

rolling forecast v2.png

The technique relies on an add/drop approach to forecasting that creates new forecast periods on a rolling basis. Businesses establish a set period, such as quarters or months, to update their forecast. At the end of every period, a new period is added to the forecast, so businesses can regularly adapt their financial plan to reflect recent trends.

This approach provides organizations with the agility to re-allocate resources based on changing business conditions.  It also provides the organization with a head-start on budgeting for the next fiscal year since the work is done in advance and considers the latest results and assumptions about the business going forward.  In some cases, organizations that have adopted and executed a rolling forecast process have eliminated the need for an annual budget.  This concept is promoted by the Beyond Budgeting Roundtable, which is led by industry guru Steve Player.

Planful’s rolling forecast solution allows your organization to create continual forecasting for more accurate financial plans, increased agility, and optimized financial results.

 

Learn more about rolling forecast best practices by downloading Planful’s white paper. You will get access to the the 10 best practices for implementing rolling forecasts and how to get started with rolling forecasts for your own organization.

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