The organizational planning process is rarely something that people look forward to. As we inch closer to the end of one year and the beginning of the next, the specter of yet another long, tedious, and quick-to-be-outdated planning process is upon us all.
But think for a moment about your business. It changes daily. What was a hot topic in the spring is probably not what you’re focused on now. Customers, competitors, and geopolitical issues are all in a constant state of motion, and so is your business. Opportunities appear and disappear, or things change to alter how you react to those opportunities you’re targeting.
The only certainty in business is change. When finance has more agility, more real-time intelligence, and more time to act, they can quickly identify and adapt to those changes. But when finance is bogged down with slow, manual planning and budgeting efforts, they can’t. As we head into another planning season, it’s time to rethink your approach.
Effective Planning is a Continuous Effort
Planning should be just as continuous as your business, especially if you want to elevate it to an insightful, collaborative, agile process that actually helps guide and define your business throughout the year. Focusing on an out-of-date plan and your adherence to it can take your eye off what’s currently happening. The real-time insights required for continuous planning give you a clear view of the opportunities your facing, as well as the risks, and gives you the insights to take the best action.
Continuous planning builds frequent cycles of planning, analysis, and refinement into your business. It’s a constant activity that involves the entire business and is built on a foundation of data that’s current, accurate, and complete. That data trifecta then gives you the insights to adjust your plan with confidence.
Building a foundation of current, accurate, and complete data is critical to the continuous planning cycle. Since you’re always building and working from current data, you have the luxury of constantly analyzing and evaluating potential business scenarios, identifying the relevant opportunities, and choosing those with the best forecasted outcomes. Accurate data helps you make better decisions and get more trust from the business in the outcomes you’re forecasting. Having data that’s complete lets you see how one decision impacts other parts of the business or the business as a whole.
Continuous planning takes that current, accurate, and complete data and puts it to use throughout the year. It not only helps you quickly identify and react to opportunities, it helps you plan and execute faster and with more precision. It also helps you gauge the success as it happens so you can apply more resources to winning strategies and quickly cut those that are underperforming…and look for more.
Obviously it requires an integration of systems to automate the data collection and eliminate the error-prone tedium of a manual planning process. But tackling that issue helps finance and the business far beyond just continuous planning in everything from quickly building rolling forecasts to easing the budgeting process to improving financial collaboration.
Continuous Benefits from Continuous Planning
The most recognizable benefit of continuous planning is agility. That might sound like a buzzword but think of it in the context of running your business. An annual planning cycle keeps you looking backwards while a continuous plan keeps you focused on today and the future. The agility that comes from a constant reevaluation of your plan puts you in a better position to quickly react to the business uncertainties around you.
More effective collaboration between finance and the business is another major benefit. If finance did it alone, it would consume all of their time, and it would result in a myopic and uninformed view of the business. Continuous planning has to be a joint effort between finance and the business. There needs to be constant communication, analysis, and iteration. That then turns into more direct feedback, more collaborative decision-making, and better alignment on the plan and the expectations and goals.
Benefits spread beyond just planning, however. Companies who employ continuous planning see greater forecast accuracy, faster budgeting cycles, better allocation of resources, and, obviously, less disruption from (and effort applied to) an annual planning exercise.
It’s clear that the speed of business is accelerating. Just making better decisions isn’t enough to win. Making better decisions and doing it faster than your competitors is what’s going to separate the winners from everybody else.
Make Continuous Planning Easy
Since continuous planning also requires more involvement from the business managers who own their distinct plans, they also need the tools to make continuous planning a seamless part of their day-to-day efforts. In other words, don’t look at this data foundation as a finance solution, view it as a solution for the whole business. Consider what’s in it for them (easier planning, competitive advantage, more wins) and pitch continuous planning as being in their best interest because it is.
The biggest obstacle to continuous planning is a reliance on spreadsheets and email to underpin the process. Automation is a requirement to help everyone. Using an FP&A platform further helps the business quickly create their plans and encourages consistency. Collaboration tools to chat, comment, and post assumptions directly help eliminate errors and doubt, and improve clarity. Modern technology also helps, with interfaces built for business owners, cloud-based tools that allow access from anywhere on any device, and even integration with spreadsheets when unique situations or legacy models require it.
Finance can still maintain their need for rigidity, compliance, and standards, however. Continuous planning encompasses structured and dynamic planning, so finance gets their control over budgets, forecasts, and structured planning, and the business gets the power to dynamically evaluate options, plan in real-time, and build models that reflect their business reality.
Put it all together and you have a solution for better, faster decisions, and who can argue with that?