Meeting the Needs of Operations Analysts
Business modeling is considered an essential element of the planning process within EPM. Modeling sheds light on the causes, not just the effects, of changes in variables that impact business performance.
It facilitates “what if” discussions and enables decision makers to identify and capitalize on opportunities for profitable growth while minimizing risk.
When it comes to modeling outside of Finance, CFOs have lost control. Operational business models typically aren’t aligned with the financial plans and forecasts. Modeling is happening in departments mostly on a standalone basis with Excel, and those departments are often modeling scenarios that could be material to the overall corporate plan. However, it’s rare that the departmental modeling is systematically connected to the overall corporate plan and forecasts.
One example of operational modeling is in Sales. Sales Operations is likely modeling sales territories and commission plans and forecasting bookings for this quarter and next. Iterations of these models happen on a weekly and sometimes daily basis, yet Finance is still operating according to the corporate plan established at the beginning of the year — which is now outdated. Having the Sales models connected directly to Finance models would provide Finance with an up-to-date view of the latest revenue forecast and the impact of the Sales staffing model on costs.
Another example is in Marketing. Marketing might be modeling new subscribers, customer retention, the impact of launching new products or services, and other initiatives that can impact corporate revenue and expenses. If these models are disconnected and Finance doesn’t have insight into these plans and initiatives, then the overall corporate plan may not reflect the impact of these initiatives.
Linking Operations to Finance
Finance needs to provide planning and modeling solutions that bridge the divide and link operational models to financial plans and forecasts. And we need to reduce reliance on Excel for operational modeling. Disconnected Excel models being built by operations analysts might be useful to those departments, but if they don’t align and integrate to the corporate financial plan, then there’s a gap. One that could impact the ability of the organization to meet its financial goals and targets.
A better approach would be giving operations analysts the ability to leverage corporate financial plans and models, but with the capability to extend those plans and models with additional operational metrics and drivers. And then analysts could share those detailed models with Finance. This type of modeling and planning should be supported by a centralized database and system that provides security and scalability, as well as common metadata and business rules. The user interface should be Excel-based or provide an Excel-like experience so that it’s easy for Finance and operations analysts to learn, use, and share their models across the enterprise.
This centralized database can be deployed on-premises, but cloud-based EPM applications provide significant time-to-value advantages over on-premises solutions and much lower cost of ownership. As more Finance and Operations professionals get comfortable with cloud-based applications, adoption rates are rapidly increasing and IT analyst firms such as Gartner expect the cloud to be the dominant deployment model for EPM applications going forward.
Empowering users within and beyond finance with easy to use, integrated tools allows them to gain deeper insight into their business. This also allows them to anticipate business outcomes and inform financial plans, which leads to a more aligned organization.
A good example of a software solution that can align Finance and Operations is Planful Modeling Cloud. This new module of the Planful Cloud EPM Suite allows users in Finance or Operations to perform advanced modeling on large volumes of data by creating what-if scenarios and adding members and calculations on the fly in their own environments.
Offering Excel, web, and mobile user interfaces, Modeling Cloud allows users to quickly perform real-time interactive data exploration with self-service query and analysis capabilities. After analysis and collaboration, their models can then be incorporated into the overall corporate model.
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